Tip And Traps – New Builds

Why is purchasing a new build so different from buying an existing property?

Buying a new build property from a developer is quite different to buying an existing property. There are different issues and time scales. We can advise on this in detail. This article is written to answer some of the most common questions we are asked when dealing with New Builds.

Garner & Hancock has expert lawyers to help you to secure your new home.

What are the areas that my solicitor will need to particularly look at in the contract?

Garner & Hancock understands how new-build contracts work and has experience in dealing with planning permission implementation and road and drainage adoption.  We shall carry out searches for you. These will check the ownership of the development, rights of way, access, or future new developments in the area; and local authority searches, including proposed changes to roads, housing or shops. This is very important when there a number of new developments in the area. West London in particular LB of Hounslow, Ealing and Richmond have changing rules of what can and cannot be built. But we have found a lot of planning has eased up to release more land for housing.

Can you ask the developers to change their standard contract terms?

Up until recently, in virtually all new build conveyancing cases, the developer’s property solicitors will not agree to any change to the new build contract documentation and if you want to buy the property you are stuck with their conditions however one-sided in favour of the developers they may be.

We were very much used to a “ take it or leave it “ approach even were our conveyancing lawyers were asking for reasonable contract provisions. Times have changed over the last year and developers are slightly more flexible. Garner & Hancock will at all stages advise you on the possible pitfalls and even try to in certain cases suggest contractual changes.

Request for a Legal Consultation

Garner & Hancock realise that the prospect of pursuing a legal matter can be challenging, so we offer an initial phone consultation to discuss your options, and to give you information that will help you make the right choices affecting your case.

Can I extend the time for Exchange of Contract?

In nearly all cases the developer will require an exchange of contract within a prescribed time frame ( normally this is about 28 days or less), after which they reserve the right to remarket the property and or revise the price – often upwards. Garner & Hancock recommend that you at least have a mortgage offer in principle in place.  New Build contracts often state that you have had the opportunity of inspecting the overall site plan at the site office and also the ‘spec’ of the property and the materials used.

Due to the fact that it could be several months and even years between exchange of contracts and completion, the mortgage offer may need to be extended, but it is important that you ensure a mortgage could be obtained and such a mortgage offer is extendable.

Can the developers make changes to the original plans?

Garner & Hancock have found that  that very few buyers look at the site plan. It is common for new build contracts to give the developer the option of switching materials in the event of unavailability of a product, provided of course that this does not significantly alter the property to be purchased. One should look to see that the replacement materially should be of similar standard and not adversely affect the value of the property.

The new build contract will refer to a plan in the Lease or Transfer ( depending if the new build is leasehold or freehold ) identifying the new build property but this is for identification purposes only and whilst it is unlikely that the actual boundary position will change, the developer reserves the right if they consider it necessary to change the plan and if necessary the physical boundary be it a fence or whatever, provided that such variation does not largely lessen what you were expecting to get in the first place. Garner & Hancock were recently able to renegotiate the price of the contract on the basis that the garden on a new build  was significantly smaller than on the original draft lease plan. There was also an instant where the width of the entrance in the property was not as per the brochure (this was particularly an issue as our client was disabled).  You normally have no right to be compensated if they do alter the boundary or make such changes either before or after exchange of contracts. Garner & Hancock’s litigation department can assist with any such issues arising.

In what circumstances can I delay completion?

More often than not you will not be entitled to delay completion, i.e. refuse to pay the balance of the purchase price, on the basis only that there are minor defects, or things to be attended to. For instance, if landscaping has not been done or minor defects to the property. You must complete and rely on the developer’s word that such work will be attended to after you have taken possession of the house. You should be aware that you will normally be required to agree a “snag list” with the site office about ten days prior to completion, of things to be attended to by the developer. Each developer has its own particular way of dealing with this and we shall advise of this.

What needs to be done before completion?

Garner  & Hancock  will carry out final searches such as Land Registry checks.  We will finalise your mortgage documents and arrange for you to sign them. Finally, we will make sure that the mortgage funds are available to complete the sale.

When our property is built and ready for completion what happens?

Your mortgage lender releases the money to pay for your new home. You will need to pay other costs, such as stamp duty.  We shall then  receive the title deeds for the home. We will register the transfer of ownership of the home with the Land Registry.

What are the risks of buying off plan?

Garner & Hancock are able to go through the usual risks of such development but in many new build conveyancing cases it may be that the development is a number of years away from completing that there is little point in having a mortgage offer prior to exchange.   That being said, you need to be aware that there is a significant risk that as the property markets fluctuate that property may go down in value and therefore you may struggle to obtain a mortgage at the level that you would like prior to completion of the purchase of the property.  Although currently we are  experiencing an extraordinary boon in the property market that can change very quickly due to world or government policy changes. The most important issue for you is the very real possibility of interest increases.   Failing to complete on a new build property has exactly the same legal consequences as failing to complete on a second-hand property, namely that you will be liable for significant levels of interest and damages.   Failing to complete on any conveyancing transaction should not be taken lightly as there are serious legal implications.

What if there is a serious delay in finishing the property, what are my rights?

Very few developers are prepared to agree a cut-off date by which a property should be finished and ready for completion. Whilst developers often communicate in correspondence (and sometimes through their sales team) they very rarely agree to being tied into a completion date and often will not even agree a long stop date (a cut-off date set long in the future).   This is because developers realise that there are often matters outside their control such as lack of materials or disputes with builders that can dramatically slow down the building process of a development. Recent case law has established that buyers who have attempted to rescind the contract on the basis that developers have gone beyond their estimated completion date have failed. However there is also case law which supports a breach if the developer has caused unreasonable delay in completion. Again, our litigation department can assist you with this.

Once I have brought the property can I insist the developers to deal with snagging?

There is often no contractual obligation on the part of the developer to put right anything that is not on the list and your act of taking possession denies you any legal recourse in requiring other items to be attended to by the developer. So be sure to include everything that requires attention on the list to be agreed prior to completion with the developer through their property solicitors. As is the case with estate agents when buying an existing property you will not be entitled to rely on anything that has been said to you by the staff at the site office unless it is either included in the contract, or referred to in written information prepared by the developer’s property solicitors. It is vital therefore that if anything of any great importance has only been confirmed to you by sales staff by word of mouth, that you advise your conveyancing lawyer about it so that it is recorded in the contract with developer’s property solicitors or licensed conveyancers.

Garner & Hancock are used to working with new build developers and their property solicitors and new build property sales teams. As conveyancers, we are often asked to act on developments by new build property developers. Over the last few years, we have acted as preferred conveyancers for local new build property buyers.

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