By Chloe Smart
With Government targets to increase housing, new-build homes are a popular choice. However, there are also common problems that some buyers may not be aware of at the outset, as Licensed Conveyancer Chloe Smart explains.
Often buyers commit to purchase a new-build property when only the show home has been seen. Instructing a conveyancer who has experience in dealing with new-build properties is a distinct advantage to ensure your purchase is a smooth transaction.
Reservation fees are generally paid to the developer before your conveyancer is instructed. The reservation agreement will impose an exchange deadline. In a buoyant market the developer can be particularly ruthless, and, if the timeframe is not achieved, you may be at risk of losing your reservation fee and the property. Our experienced conveyancers at TWM understand the complexities of purchasing a new-build property and the deadlines involved.
What are the complexities?
Below, we highlight a few:
The Developer's Contract and Transfer/Lease - this will contain obligations and restrictions which bind your future use of the property. Your conveyancer will review this with a fine toothcomb and ensure that you are aware of the implications before committing to the purchase.
Deposit - the developer will likely insist this is held as agent rather than stakeholder. This means your deposit money goes straight to the developer. It is essential your New Build Warranty protects the deposit to ensure the deposit will be protected if the developer goes into liquidation.
New Build Warranty - this should be provided at the developer's expense and must be acceptable by your lender. Your conveyancer would expect to see evidence of the scheme prior to exchange of contracts.
Planning Permission - has the developer met all pre-commencement conditions? Does the Contract contain warranty confirming the developer has complied with conditions contained in the Planning Permission? Failure to comply with Planning Permission can lead to enforcement action for which buyers may be liable on completion.
Community Infrastructure Levy and Section 106 Agreements - these are planning obligations potentially involving financial contributions to the Council. Your conveyancer needs to ensure they have been paid or a plan to do so is in place. The payment obligations run with the land. Liability could therefore fall on you.
Road and Sewers - an adoption agreement may be required with the Highways Authority and Water Authority respectively. If the developer were to go into liquidation following completion of your purchase without completing the roads the bond could be relied on to meet costs. If there were no such agreement this liability would be yours.
Completion on Notice - completion is usually on 10 working days' notice of the property being structurally complete. Small outstanding works will not prevent completion. Does the Contract contain a provision for re-entry for completion of these works? Can a retention of part of the purchase price be agreed to give the seller a financial incentive to complete work?
These are all factors the conveyancer should be considering. At TWM Solicitors we pride ourselves on the service we provide to new-build buyers. We understand the deadlines involved and can guide the buyer through the process, adopting a personal and approachable service. Or aim is to make the process as stress-free as possible, using our professional experience to drive the process smoothly throughout. We are also experienced in dealing with Help to Buy Mortgages and Help to Buy ISA Bonuses.
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