It’s fair to say the new build market is a busy one and demand for newly built properties is growing – NHBC have reported that builders registered nearly 38,000 new homes in the UK during quarter 3 of 2017 representing a 6% increase for the same period last year.
New or “pre-loved”?
Essentially it is a matter of personal preference, some people prefer the character of an older property whereas some prefer a shiny new one, but there are slight differences in the purchase procedure.
When purchasing a new build property it is fairly common to commit to the purchase and exchange contracts before the house or home is even built! You may have heard the expression “purchasing off plan”…because you are buying “off the plans”.
Of course when purchasing a re-sale property you get the opportunity to inspect the property then and there.
As a buyer it may be daunting to exchange contracts without seeing the actual house you are buying, hence it is a good idea to visit the show homes to get a feel for what you want/need and inspect the plans carefully. It can be helpful to visit other sites for an idea of a particular design of property.
28 days later
Usually a developer will impose a 28 day deadline to exchange contracts from the date the property is reserved. In view of this it is important to have everything in order for example your mortgage offer in principal, easy access to the necessary funds to facilitate the purchase and instruct your solicitor as soon as possible. In a buoyant market there is sometimes little flexibility on this as such it is important to appoint a solicitor who is experienced in dealing with new build properties and can assist you to ensure the deadlines are met.
Purchasing a re-sale property does not usually have the same deadlines imposed, although it is still a good idea to get everything in order as quickly as possible to ensure delays do not cause issues with the chain.
It is also important early on to make any applications under the Help to Buy Scheme or any shared ownership schemes and deal with any requirements for your Help to Buy ISA (if any).
Are completion dates set in stone?
Completion of a newly built property will also differ from buying a property in the re-sale market. The weather, suppliers and other factors can all impact on the speed of the build and completion dates are generally a guide at best.
When purchasing a re-sale property the completion date is usually fixed a the point of exchange of contracts, as such you know the date you are moving and can organise work and family commitments around it. When purchasing a newly built property unless the property is complete at the point of exchange, the builder gives notice to the buyer that it is ready…..and completion must take place within the time frame specified in the contract (usually 10 working days). This allows time for final inspection by the mortgage lender’s valuer (if necessary), and for a snagging list (a list of faults or things for rectification) to be prepared by the buyer; for the builder to remedy these items; and for the (mortgage) funds to be released for completion.
It is important to note that mortgage offers are only valid for a certain period of time and completion of your purchase must take place prior to the expiry date. Completion of your new build property may be months down the line. As such it is important to keep in touch with your lender and broker to ensure that an extension of the offer will be granted if it expires prior to actual completion. This is vitally important as you will be contractually committed to your purchase and without a valid mortgage offer are unlikely to be able to raise the funds to complete your purchase. Financial penalties will be imposed for breach of contract (if you are unable to complete on the contractual completion date) and ultimately you could lose the property and your deposit paid on exchange.
This is less of a problem when purchasing a re-sale property. Usually most transactions are completed easily prior to the expiry date although this is something to keep in mind if the completion date will be some time in the future or if there are delays during the transaction.
Pre-exchange searches are accurate only at the date of the search – things may change – for example planning permissions or road proposals may be submitted subsequent to the date of the search. Lenders will not allow searches to be more than 6 months old at completion. As such it is necessary to either undertake new searches prior to completion or an indemnity policy may also be available to provide cover for any adverse entries that would have been revealed had the search been carried out.
Why choose Wilson Browne Solicitors?
Whatever your decision we have teams experienced in both re-sale and new build transactions on hand to help you…we weren’t finalist in the national awards for Excellence in Conveyancing for nothing! Also, let’s not overlook the fact that we’re on most of the major lenders’ panels too so you can be assured we’ll get you into your new home as quickly as reasonably possible.