New builds are an increasingly popular purchase as more and more pop up across the country. They provide a blank slate for you to create your own home. You’ll typically find top-spec modern living with inbuilt appliances, fresh carpets and coats of paint. One of the great things about buying a new-build is also that they are completely chain free as you buy directly from the developer. Once the property is built and approved the house is ready to go. This can make for an incredibly quick and simple process for the buyer. Find out what is included in the process of new build conveyancing and everything you should know along the way.
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Differences in the conveyancing process of new build properties
As you may have already realised, buying a brand-new property will offer a different experience to purchasing an existing property. This is due to the fact that you are buying from a developer rather than an independent seller. You will find that the process is much more like purchasing a product than the traditional alternative.
This occurs because new builds are built to be sold by a company. More often than not, the new build property you are looking to purchase will be part of an entire estate of properties. This means the developer has multiple products to sell.
There are some things you should therefore consider before starting the conveyancing process for a new build.
There are a handful of newbuild developers in the UK that hold the monopoly on the most popular properties. There are vast differences between the properties that are built by these companies. They can vary in the quality of workmanship, the price, design and sales service.
You want to ensure that your property is finished to a high standard to protect the re-sell value of the property further down the line. If you discover structural or aesthetic deficits with the property, this can affect your chances of getting back what you paid for the property. You might find that these issues can be addressed with snagging checks or warranties. Keep reading to find out more.
Researching the area that the new build resides in should certainly be at the top of your priorities before making an offer. In highly populated areas, there may not be much space for a new build development, this can often place the estates outside the popular local areas and into slightly less-desirable locations.
Our recommendation is to thoroughly research the surrounding areas. You want to be aware of your local amenities, such as the closest supermarket. Public transport if required. Trainlines and bus routes that are out of your way can become a real pain if you need to travel frequently. Nearby main roads, motorways or dual carriage ways can generate a lot of noise.
Before even considering accepting your offer on a new build property, a developer will insist that your finances are in order. You are likely going to need to arrange a mortgage agreement in principal before you pay a reservation fee for the property.
A mortgage agreement in principle (AIP) is provided by a mortgage lender to represent your eligibility for a mortgage if you were to purchase a property. The lender will perform several checks on your financial situation and provide you with a figure for the amount you would hypothetically be able to borrow.
New Build Conveyancing
Step 1: Make an offer
The very first step to begin your conveyancing journey for a new build property is to make an offer on the property. Unless you’re a first-time buyer, you’re likely going to have a different experience in making an offer for a new build property than you would for an older house.
Negotiating on a new build can be rather difficult, but not impossible. The developers value each of their property designs and tend to stick to their guns when selling a property. They usually won’t accept an offer that is lower than their asking price. This is to protect their profit margins; if they take a lower offer from one party subsequent buyers will expect lower prices. Instead, you might find that they will offer some premium upgrades to the property. This could include higher quality carpeting or white goods.
To get the most value out of your property, it is worth attempting to negotiate with the sales team, you never know what you might get in addition to the standard price of the house.
Step 2: Secure your property
Once you’ve made agreements with the developer regarding the price of the property you may be required to pay a reservation fee. The reservation fee covers a set period of time (usually 28 days) which allows for the legal proceedings to occur. This period is expected to end in the exchange of contracts.
If you are buying a property that has not yet finished being built, this is called buying ‘off plan.’ You will also want to pay a reservation fee to secure the property. This will prevent somebody else from buying it whilst you wait for it to be built. An off-plan reservation fee usually costs around £1000 but will be deducted from the cost of the property once contracts are exchanged.
If the buyer doesn’t make it to the final stage of the exchange process, the reservation fee is non-refundable. This is part of the reason why you would want to secure a mortgage in principle. You wouldn’t want to lose money through the fault of financial circumstances.
Step 3: Instruct your conveyancing solicitor
At this point you are now in the swing of completing the purchase for your new build property. The next thing you need to do is work with a conveyancing solicitor to take care of the legal proceedings of the exchange. There are a number of checks specific to purchase of new build properties that your conveyancing solicitor will need to complete. These will include:
- Ensuring legal and appropriate planning permission of the lot. Before being built, the developer would have had to attain planning permission from the local council or government. This would have included a number of restrictions or contingencies that your solicitor will ensure have been suitably met.
- Determining whether the property is Leasehold or Freehold. Buying a Leasehold is highly recommended against. The developer would still own the land that the property resides on, even though you own the property itself. This can negatively impact your experience as the owner can charge inflated ground rent which doubles every 10 years. Your conveyancing solicitor should explore all of the included fees and advise you on your most preferable option, which is usually to purchase the property Freehold.
- Make clear any restrictive covenants. This is a detail that will be registered against the property and will state any prohibited alterations to the property. This can include addition of extensions or making fixtures without prior permission. This commonly occurs in leasehold properties, less so in freehold property. Your solicitor will discover any of these restrictions and thoroughly discuss them with you.
Step 4: Snagging & Warranties
When buying a new build, it is common to view a show home before agreeing on an offer. This can occur when the property you want to purchase is not yet finished being built. Before paying any money, you will want to view the actual property you are purchasing. This is because there can be occasions where the finish of the product is not the quality you are expecting. For further inspection you may also request the completion of a snagging survey.
The purpose of a snagging survey is to create a comprehensive list of any problems within a new build property. They check and validate the quality of the workmanship against the current regulations and standards. Your surveyor will highlight any issues within the property from structural and significant hazards to cosmetic or small snags.
Once this survey is complete, you will be able to discuss with your conveyancing solicitor. This discussion may lead to adjustments to the cost of the property, or remedial work to reach the expected standard. Your solicitor will take these matters to the developer to come to an agreement before purchase.
After this work has been completed and you are satisfied with the standard of the property, you should ensure that the NHBC warranty is in place to cover future structural defects. The warranty will usually remain in place for up to 10 years, your solicitor should confirm the details of this.
Step 5: Exchange and Completion
Now the new build conveyancing process is complete, you should hopefully have your finances in order to be able to complete on the exchange of your property. Before this stage occurs, you should be entirely happy with the agreed contract and terms of exchange. Don’t be in a rush to sign the contract to get into the property quicker. You need to ensure you are not agreeing to any restrictive clauses or irrelevant agreements that could hinder your enjoyment of the property.
Before moving in, you should request a handover of the property. A representative from the developer will guide you through your property. They will hand over the keys as well as owners’ manuals and building guides. If there are any additional white goods provided with the property such as dishwashers, fridges or freezers, you should ensure you have access to guarantees.
Knowing you have done everything you can to complete the purchase in your favour, you can enjoy your new build property in its fullest.
My Conveyancing Specialist
As you will have discovered within this article, the conveyancing process for new build properties can differ from the process that typically occurs. For the best outcome you should work with an experienced conveyancing solicitor. This individual should be well practised in the new build exchange process and work in your favour at all stages.
My Conveyancing Specialist are a network of conveyancing solicitors located across the UK. We operate entirely online but will accompany you every step of the way. Licensed solicitors who are fully equipped and well experienced in new build exchange are ready to take your case. Complete your free online quote today to experience affordable and professional conveyancing.Get an Instant Quote >>