Purchasing a property is arguably one of the most stressful times of our lives, given the huge financial commitment it entails, and the complexities that can often be encountered with the conveyancing process. Finding your dream home is only the first milestone, followed by mortgage considerations, valuation surveys, searches, legal documentation, deposits, and the all-important exchange and completion. So what is different between a standard property purchase and that of a new-build property?
Developers are showing no signs of slowing down, with statistics for new homes built in the first few months of 2019 up by 3% from the previous year. The Government has announced an extension to the Help to Buy equity loan scheme, which from 2021 to its new end date of 2023, will become available solely to buyers of new-build properties. What is new with new-builds therefore remains a prevalent question for our client base. Hay & Kilner Law Firm discuss what you need to know about buying a new-build property in particular and how they can help.
Whether you are new to the house-buying process or well-versed in packing up your boxes, there are important differences in the way the purchase of a new-build property works. Put simply, as the properties are not yet built and the individual units’ titles not formed, the transactions are more complex and can be somewhat uncertain for the purchaser. However, we at Hay & Kilner strive to remove the legal jargon for our clients, with a designated new-build team offering tailored knowledge and competitive fees.
We are accustomed to the 28 day exchange timescale that is crucial for the majority of Developers, which gives both you and the Developer security. Swift action is required from the very outset to ensure everything is in place before you are comfortable with being legally tied into the purchase of a property that often does not exist at that time! There may also be further considerations prior to exchange, such as Help to Buy loans, Help to Buy ISAs and Lifetime ISAs, the intricacies of which we can guide you through.
Possibly the most notable difference in purchasing a new-build property is that, more often than not, the property will not be ready and the precise completion date will be unknown at the point of exchange. Legally, this means your contract will include an anticipated completion date and a longstop date; an estimate for when the Developer thinks your house will be finished. On exchange of contracts, you will remain tied into the purchase until the longstop date passes. It is important to bear in mind that if the completion date becomes delayed, your searches, mortgage offer and Help to Buy loan (if applicable) may expire. We are able to advise you as to how to properly protect your interests should the worst happen.
Completion longstop dates can be problematic if you are also selling a property and your purchase is financially dependent on your sale. Usually you do not need to worry that both transactions will seamlessly tie together and complete on the same day, as the completion date is set on exchange of contracts. However, with no fixed completion date on a new-build purchase, your sale is open to the same delays you may face with the build of your new property. We are able to fully advise you about your options in these situations and how best to achieve clarity and the desired result for you, the Developer and your buyer. Completion of a new-build purchase will, more often than not, take place on notice. This means the Developer informs you when the property is complete and you have, on exchange, contractually agreed to complete within a certain number of days of such notice (usually 10 working days). Our new-build team is familiar with the importance of promptness in such new-build transactions and will ensure everything is in place for a smooth completion, as well as taking timely action from your very initial instruction to push for an early exchange and make your experience as hassle free as possible.
For more information on any of the above, or to discuss how we can work with you for your new-build purchase, please contact Charlotte Barker, or call 0191 232 8345.