Many first time buyers choose brand new homes but what do you need to know if you do the same? Emma Newby leads the specialist New Build Department at Beaumont Legal – First Time Buyer’s Best Law Firm for Conveyancing in 2013, 2014, 2015 and 2016 – and explains what you should keep in mind
Exchanging contracts is the point at which the sale is confirmed – when neither seller nor buyer can pull out – and many developers insist you exchange contracts to a strict deadline, whether or not the property is complete. Typically this will be within four weeks of reserving your property but it can be as little as three, so you have to act quickly to get things moving or you could lose any reservation fee you’ve paid to the developer.
This means you need to work closely with your solicitor, making sure you complete all the paperwork you’re given quickly, plus supplying all ID documents needed as soon as you can. Choosing a solicitor who’s experienced in new builds or special factors that may be involved in your case is crucial to ensure that any deadlines are met – some smaller firms will rarely handle complex cases like help to buy, shared ownership or leasehold properties (e.g. apartments).
Help to Buy
If you’re using Help to Buy you need to complete your application for the scheme as soon as possible, which will be more of a challenge if there’s a 28-day exchange target. You might do this on your own, with the help of the developer or financial advisor and if you’re successful the result will be an Authority to Proceed form. You will need to confirm you won’t own part of any existing property at the point of exchange of contracts, a copy of your mortgage valuation, details of any incentives you’re receiving from the developer, plus proof you have the 5% deposit needed and confirmation this won’t come from further borrowing. You need to get all of this to your solicitor as soon as possible.
Completion on Notice – in case the property’s not ready in time
Sometimes new build properties aren’t ready when it’s time to exchange contracts and you have to go ahead with no fixed date for completion – the date you can move in. Even if you have somewhere else to live for this period, you need to ensure your mortgage won’t expire by the point of completion.
One solution is a long stop completion date – effectively a deadline by when, if the house isn’t ready, you can withdraw from the purchase and recover any deposit you’ve paid. Not all developers will agree to this – but it’s worth keeping in mind if they can’t guarantee a date.
Most developers have their own procedures in place for dealing with items that aren’t perfect, or snags, when the house is completed. Often there will be minor works that can’t be done before completion takes place, which is where the new home warranty provider comes in.
Once the property is signed off as ready for occupation you’ll likely be invited for a tour. Here you make sure all items of snagging are listed and the developer should give you dates for when the work will be done. You won’t be able to delay completion or hold back any funds until the snags are fixed – the contract and warranty are your guarantee they will be – but if you’re buying from a smaller house builder you should check to ensure the contract doesn’t have any onerous conditions to stop you insisting they fix any snags.
As with buying a new car, you might purchase extras from the builder, and you’ll normally be required to pay for these in full before completion – if not the cost will be added to the final completion statement your solicitor receives, in which case it’s the solicitor you’ll need to give this money to. Whether you’ve paid for any extras or not, make sure you inform your solicitor so this is accounted for in any final completion statements.
One last thing to remember
The key thing to remember with new builds is to have as much in place as you can before you reserve your property. If you know you’ll be using Help to Buy and shared ownership, or that it’s a leasehold, look for a solicitor that has experience in those areas because you won’t want to any delays once your offer is accepted.
Emma Newby is the head of the specialist New Build Department at Beaumont Legal – who won First Time Buyer’s Best Law Firm for Conveyancing Award in 2013, 2014, 2015 & 2016. They let you buy your first home without hanging around for the paperwork – you send and receive documents online, securely and instantly, to really speed up the whole legal process. You can start your conveyancing anywhere, anytime, with any device, by visiting beaumont-legal.co.uk or calling 0345 122 8080