Whether you are a first-time buyer or looking to upgrade to a better property, new-builds are undoubtedly an enticing option. Light, airy, modern, warm, chain-free; what’s not to get excited about? But be warned, new build homes require just as much, if not more, caution and due diligence as a sturdy Victorian terrace property. There are several pitfalls buyers need to watch out when considering new build properties. The best way to protect yourself is to instruct an experienced conveyancing solicitor to manage the legal aspects of the purchase and make sure buyer’s remorse does not strike (along with thousands of pounds in expenses) after you move in.
Make sure your finance and professional advisors are organised before paying a reservation fee
Often the new build home you wish to purchase hasn’t been constructed if you choose to buy ‘off-plan’. When you make an offer, the developer will usually require a non-refundable reservation fee before accepting. Once this has been paid, you normally need to exchange contracts within four weeks. This is a very short period of time; therefore, it is essential that you have an ‘offer in principle’ from a mortgage lender and use a conveyancing solicitor who understands the new-build conveyancing process.
Within the four weeks, your conveyancing solicitor will:
- Raise any queries based on the paperwork received from the builder’s solicitors. This includes checking the property complies with all planning and building requirements and making sure there are no issues regarding right of way access and drainage to the home. They will also check the terms of your new-build insurance (more on this later) and any environmental reports if the development has been built on brownfield land (land that has been previously developed on, often for industrial or commercial purposes).
- Run all the relevant searches with the local authority.
- Check the mortgage offer and make sure there is an ability to extend if required. Due to weather conditions, supplier difficulties and other unforeseen complications, it is often impossible for a builder to provide an exact completion date (when buying off-plan). Therefore, your mortgage offer needs to have an option to extend the time frames built into it.
- Discuss the results of any searches and receive answers to any questions you have on the property back from the builder’s solicitors.
- Pay your deposit and exchange the contracts.
Developers can be very strict about meeting the four-week deadline for completion, especially if there is a great deal of interest in your property. Failing to complete all the legal work on time could result in your losing your reservation fee and your dream home.
Check you have the necessary insurances and warranties
Most mortgage lenders will require that a new build property be covered by a new build warranty or architects certificate. You should make sure that the scheme being offered by the developer is acceptable to your mortgage lender. The warranty will only cover you for poor workmanship, not flooding, fire or other disasters that could damage your home. Therefore, it is crucial you take out house insurance and have your solicitor check over the policy, so you understand exactly what you will be covered for.
Invest in a snagging survey
Fortunately, despite the media’s love of horror stories about some new build homes, in most cases, developers and builders put the utmost dedication into their projects and any defects found in a new build are usually minor and cosmetic in nature. A snagging survey is designed to pick up any minor problems with a new build. If any issues are picked up in the survey, the builder will be required to fix them, ideally before you move in. You can have a snagging survey done anytime within the first two years of owning your new build. So if you happen to look up one day, a year after moving in, and notice a crack in the ceiling, you may be within your legal rights to ask the builder to come and fix it. Snagging surveys cost between £300-£600, but are well worth the satisfaction they bring from knowing your new build is pristine and perfect on the day you move in.
Buying a new build home is different from purchasing a pre-owned property; the process is faster, and the risks can be slightly higher. Having an experienced solicitor by your side, managing the due diligence and conveyancing process will give you the confidence that your new build will be a dream come true rather than a nightmare you cannot afford to escape from.
Nalders Solicitors is one of the oldest and most highly respected law firms in Cornwall. Our experienced residential conveyancing team will manage the sale and purchase of your home in a friendly, professional manner. To make an appointment, please call us on 01872 241414.