With the government continuing to support the building of new homes, it is becoming more and more likely that the property you’re interested in buying will be a new build. New builds have many benefits; they’re a fresh canvas that you can make your own, chain free, energy-efficient, and they come with a new build warranty.
However, the legal process of buying a new home differs from the traditional process of buying an older property and can be more complex.
How does conveyancing for new builds work?
Often, if you’re buying a new build property, you will need to commit to the purchase before the building work is completed. In some cases, you may be buying a property before construction has even started, so you’re effectively going off what you’ve seen in the show home or from a computer-generated set of drawings.
There is also a higher risk that things will go wrong with a new build, such as:
- Non-compliance with planning regulations
- Failure to arrange new build warranty inspections such as those set out by the NHBC (National House-Building Council)
- Developers failing to complete agreements for roads and sewers
- Homes that are built not in accordance with the original plans
Hence why it is essential to instruct a property solicitor who is experienced in handling the nuances that can have an impact on purchasing a new build.
What is the new build conveyancing process?
1 - Secure the property
You may need to pay a non-refundable reservation fee (which can be anything from £100 to £2000 or even more for high-end properties) when an offer is made or a sale is agreed upon to ‘reserve’ the property for a set period, this is usually 28 days. The fee will then be deducted from the final purchase price upon completion. If you pull out of the purchase or fail to exchange contracts within the stipulated period, you will lose the reservation fee.
It is necessary to have your mortgage agreed upon in principle before you commit to paying the reservation fee. Developers and estate agents are likely only to accept offers from potential buyers who already have a mortgage in principle, as it proves they are serious buyers.
2 - Instruct a conveyancer
Once you have reserved the property, you should instruct a conveyancing solicitor to manage the legal transaction of transferring ownership from the developer to yourself.
As part of the process, your solicitor will work with the developers’ solicitors to obtain a copy of the draft contract. Your solicitor will:
- Check planning building regulations approvals
- Ensure that the property has access to gas, electricity, water and drainage
- Check for any restrictive covenants
- Establish if the property is leasehold or freehold
- Conduct local authority searches
- Check the conditions of your formal mortgage offer
This is all part of your solicitor's job when they check that the contract is in your favour and raise any issue that they may come across.
It is at this stage that you will also need to take out new-build insurance from companies such as the NHBC, Local Authority Building Control Warranty (LABC) and Premier Guarantee. You'll need to check that the terms of the policy cover you against any issues that should arise, including structural damage. When you purchase with a mortgage, insurance is essential.
The exchange of contracts will take place with the developer’s solicitor when your solicitor is happy that all issues have been resolved. Muve will always aim to meet the developer’s 28-day exchange deadline in all new build cases it takes on.
Once the exchange of contracts has taken place you will now have to pay your deposit, which is typically 10% of the full purchase value and sign a contract to say that you agree to purchase the property at the current asking price and to pay off the balance upon completion.
In order to protect you from any rise or fall in property prices before completion, which could have detrimental effects on your chance of securing a mortgage, your solicitor should ensure that the contract price is ‘locked’ at the exchange.
4 - Completion
For new builds, completion usually takes place 10 working days after the developer has finished the building work and the property has been signed off as structurally secure by Building Control.
Within the 10 days, it is important that you arrange a final inspection to be carried out by the mortgage lender’s valuer and for a snagging list to be prepared for the developer. A snagging list compiles any details of cosmetic or structural issues with the property, for example, smudged paint or a faulty roof. The developer will then work to fix any of the issues listed in the report.
Finally, your solicitor will arrange payment of stamp duty, if it is required, as well as register your ownership at the Land Registry. They will also register your ownership with the NHBC and forward your guarantee certificate to you.