When looking to secure a new home there is a swathe of paperwork and checks to have completed and one part of the process that is vital to completing on a property transaction is the conveyancing.
With the rise in new build houses meaning that more of us are looking to move into a previously unoccupied property, it is important that all the t’s are crossed, and the i’s are dotted to ensure everything is compliant and ready for you to move in.
Why is conveyancing for new builds different?
For a new build property, you are likely to have to commit to purchasing before the building work is finished. Whereas with an older property you obviously wouldn’t. With a new build, it could be that you are buying a property before the foundations have even been dug, or before the roof has been put on the shell of the building. This means you are in effect buying property based on what you saw in a show home. Therefore, the level of risk is potentially far greater than if buying a property that has been lived in, had conveyancing carried out on it before and may even be known to you. Common risks people are concerned about include:
- A non-compliance with building regulations
- Failure to arrange NHBC inspections
- Developers failing to complete agreements for roads and sewers
- Homes not being built to the original plans
Do I need a new build conveyancing solicitor?
Without a doubt, hiring a conveyancing solicitor is key to any house purchase. In particular with new builds being much more complicated and in-depth. You need to make sure you hire someone that fully understands the variety of issues that may arise from a new build. Things such as non-compliance with planning regs or failure to arrange the correct inspections could see huge costs to yourself if not done correctly.
As well as ensuring all issues with the property are resolved, they will also ensure the contract is suitable for you, that your deposit is protected and that there is what is known as a “long-stop” completion date on the property. A long-stop date means that you have a guaranteed date for which the property will be complete. If it is not completed by this date, you can leave the contract and have your deposit returned.
It has been known in the past for developers to put increased pressure on people to complete the transaction without conveyancing being completed. By hiring a solicitor, this is less likely to happen.
Steps before new build conveyancing can begin
There are several steps to have conveyancing completed on a new build but before it starts there are a few other things you must do to help the process move smoothly.
Secure your mortgage
The developer of your new build home will want to see that a mortgage is available to you. Just keep in mind that as your property is being built and mortgage agreements in principle tend to be valid for just 6 months, you may need to apply for an extension from your chosen mortgage provider. This will be treated like an initial application and your circumstances will be reassessed. In some cases, you will have to reapply for a mortgage altogether, however, some lenders offer mortgages specifically created for new builds. Ask about these should your property have a completion date of around 9 months.
Check the property details
A property is a serious investment, so it is important before instructing your conveyancer to proceed that you are sure you are interested. Ask for building plans as well as any obtainable information relating to the property. You could also view other properties built by the same developer to see how they look. You can also look to see whether the property developer is offering incentives which could save you money in the future. Stamp duty, furnishings, or free parking are common. By finding out this information, you will be able to ascertain whether the property value matches your estimation of it.
If after these steps you are happy and have made an offer, if it is accepted, reach out to your chosen conveyancing solicitor.
What is the process for new build conveyancing?
Now that an offer has been accepted, you are taking the next steps to secure the home.
Reserving your new home
Next would be reserving your property, a reservation fee will need to be paid that then holds the property for 28 days. This can vary but is typically around £500-£2000 depending on the property value and begins the legal process that leads to an exchange of contracts. This amount is deducted from the final sale price but is non-refundable should you pull out of the sale. When you pay this fee, you should receive a reservation agreement that shows all that is included in the purchase price. Ask for one if not given it upon payment.
It is recommended that your MIP/AIP (Mortgage/agreement in principle) has already been organised before making a reservation.
Instruct your conveyancing solicitor
With a property now reserved, the process of conveyancing can begin. It would always be advisable to choose a conveyancer experienced in new build properties. They will then carry out their checks that are essential before purchase. These would include, but are not limited to:
- Checking that the correct planning permission is granted
- Ensuring the property has access to gas, water end electricity
- Checking for restrictive covenants
- Finding out if the property is leasehold or freehold
- Complete local authority searches
- Checking the T’s and C’s of your mortgage offer
Once these checks are complete, the correct new build insurance must be taken out. Known as NHBC, this new build insurance will protect you against things like a structural defect.
Exchanging contracts on a new build property
Once your conveyancer has assessed everything and deemed the property suitable and any issues that they have discovered have been rectified, they will exchange contracts. At this stage, you will need to pay your deposit.
In most cases, this will be 10% of the property price but can be 30%. Following this, you will be given a contract that states you are agreeing to purchase the property and will settle the balance upon completion. Your conveyancer should, at this stage, be checking the contract to ensure the price is locked at the time of exchange. This would then protect you from any price changes before completion.
Before moving on to completion, the conveyancer will do any outstanding searches and financial checks.
Completing on a new build property
Completion of a new build can take as little as ten days from when the builders have finished work and the property is signed off as structurally secure. When contracts were drawn up, you may have been advised of a snagging survey-a survey that establishes any structural defects or cosmetic issues within the property- This should be completed so that the developer can rectify them.
Once this is done, the conveyancer will arrange the payment of stamp duty and register your ownership with the land registry. They will also contact the NHBC to register your ownership and forward the guarantee certificate to you.
How long does new build conveyancing take?
It can vary. Exchange of contracts needs to be completed within 28 days as this is the duration that your reservation fee covers. This is why hiring a conveyancer with expertise in new builds is particularly useful.
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