The conveyancing process involved in the purchase of a new build property is often the most complex process a conveyancing solicitor will work on.
Why is Conveyancing different for New Build Home Purchases?
It is often the case that, when a buyer is purchasing a new build property, the exchange of contracts and the committal to the purchase is finalised before the property has even been constructed. In most instances the buyer will have made the purchase mid-way through construction or even before construction has even begun with only the show home or plans to really go off. It is important, when buying a new build property that you instruct a solicitor with the knowledge and experience of dealing with this kind of conveyancing process. Experience in road and drainage adoption and in dealing with planning permission implementation are a huge advantage to ensure your move is as stress free as possible.
Why choosing the right Conveyancing Solicitor is important
As mentioned above, the conveyancing process surrounding the purchase of a new build property is more complex than many other types of conveyancing process a solicitor will take on. There are a number of additional ways for the purchase of a new build property to fall through that are not relevant during a regular house purchase. Some of the most common issues that arise include:
- incomplete agreements for roads and drainage
- non-compliance with planning regulations
- lack of NHBC inspections and no plan for the maintenance of common areas of the new developments.
A good conveyancing solicitor will take care of ensuring that all of the additional things to worry about are well taken care of and will also ensure that all of these things are in order before you complete. They will also take care of the more regular aspects of conveyancing as well as ensuring your deposit is fully protected, the contract is in your favour and there is an agreed date for the house construction to be completed. You solicitor will also rebuff any pressure exerted by the sale’s team and solicitors of the developers who will be keen to push through the sale as quickly as possible, even if there are obvious issued that require addressing.
The Stages involved in instructing your New Build Conveyancing Solicitor
Before you instruct your solicitor there are a number of things that you should have in order. One of the most important is ensuring that your finances are in order and it is a regular occurrence for the developers to want you to have a mortgage secured prior to contracts being exchanged. Some lenders offer specific new build mortgages; however, a standard mortgage is usually only valid for 6 months. If the completion has not happened within this time then you may have to apply for an extension or reapply for your mortgage.
You should also thoroughly research the property you are intending to buy. Requesting the specifications, blueprints and landscape drawings is a sensible move, as is visiting other developments built by your developer. You should also double check what is (or is not) included in the price you are paying. There are often incentives associated with buying a new build property, but you should not assume that everything you think is included in your purchase actually is included. Read the fine print and any other documentation carefully to ensure you know exactly what you are getting.
After you are happy with the finer details you are free to make an offer, after which the conveyancing process usually begins. You will usually have to pay a reservation fee on a new build property, after you have made an offer. This will be deducted from the final sale price of the property and can range from £500 - £2000 or even more for higher end properties. This fee is non-refundable if the you pull out or the contracts are not exchanged within the agreed period and this is one of the reasons to ensure you have your mortgage agreed in principle before reserving.
Additional Searches carried out by a New Build Conveyancing Solicitor
Some of the searches that relate only to new build properties include:
Restrictive Covenants - These will be highlighted by your solicitor to inform you of anything prohibiting building alterations, such as extensions or conversions, that is written within the lease or is registered against the freehold.
Planning Permission – Your solicitor will ensure that every part of the build associated with the construction of the property has been done in accordance with the appropriate planning permission required. Roads and drains will also be checked to ensure they have been properly adopted.
Freehold or Leasehold – It is important to understand whether your new property is to be held under a lease or a freehold agreement. If the former, your solicitor will explain the conditions of the lease which may include additional management fees and other associated costs.
Once this is complete you will be required to pay the deposit upon exchange of contracts. This can vary from 10%-30% of the final agreed purchase price. You will also have to sign a contract agreeing to buy the house at the current listed price. This can become an issue if there is fluctuation in the housing market causing the property you are buying to decrease in value. This can leave the buyer with a shortfall as the mortgage lender will have estimated the price of the house at the start of the process and many factors could result in the mortgage being lost. This would leave the buyer in breach of their contract with the developers and could result in the loss of the deposit. There is also the possibility of the developer taking the buyer to court and suing for the difference in price between the original agreed price and the new re-sale price. New build warranties such as NHBC are in place to protect your deposit if the builder goes into insolvency but it is important to check whether this covers the entire deposit or only a portion of it. You can also withdraw from the purchase and claim a refund if the build is not complete within 6 months. This falls under the Consumer Code for Home Builders).
There are other areas that are important to consider before finalising your property purchase. Often, the buyer will not be allowed to view the property until the work has been completed and, once the property has been viewed the buyer may have issues with the quality of the workmanship. By having a snagging provision written into your contract you are protecting yourself against any errors or defects that are present which are then passed to the developers for repair. The best time to survey for any snagging points is before the final payment is made as doing this after you have moved in leaves you open to the developer claiming it to be part of regular wear and tear from the building being inhabited. The developer is, however, responsible for remedial work on your property within the first two years of purchase. You NHBC warranty should also cover specific structural issues and the vast majority of new builds come with a 10 year NHBC warranty.
Upon Completion the buyer will be officially handed the property with the appropriate keys and documentation. Within this documentation you should be given all guarantees relating to items in the property including white goods.
The conveyancing calculator makes it easy to find a quality solicitor for the best price possible. Our solicitors have a huge amount of experience and will be able to guide you effortlessly through the process of buying a new build house. Use our online comparison tool to compare conveyancing fees today.