New Build Property Conveyancing

New builds are increasingly popular. However, when purchasing a new build property, you have often committed to the purchase before the building work is completed. This is why the new build conveyancing process is different to buying an older property.

Our conveyancing team specialises in dealing with new build property conveyancing. Our aim is to make the process as stress-free and efficient as possible. All of our clients deal with a dedicated individual who will guide them through the process. 

When purchasing a new build, the property is most likely to be “off plan” this means that the property you are purchasing is not yet built.

Once you have found the right property and you have a mortgage offer in principle, then its time to reserve the property.

Before securing a new build property, you should ask the developer to see the estate plans and specifications for the specific plot. You must ask the developer what’s included in the price, such as options to choose fittings and appliances at no extra charge. Also check if any financial incentives are on offer to you. Such as legal fees paid, stamp duty paid, gifted deposit, or mortgage payments paid. 

You are required to pay a reservation fee when you make an offer on a new build property, at which point the sale will be agreed. The reservation fee can be anything from £500 to £2000 and this will be deducted from the final purchase price upon completion.

After paying the reservation fee for a new build property, you should receive a written agreement that sets out: 

1. The amount of the fee
2. The purchase price
3. What you are buying
4. When the reservation agreement will end
5. Any Service charge or maintenance charge payable
6. Terms and conditions

Typically, you have six weeks to exchange contracts on a new build property. If you are unable to meet these deadlines, then the developer can pull out of your deal. Should this happen, it will mean that you lose both your reservation fee and the property. Therefore, you need to act quickly to ensure both you and the developer are legally bound to proceed with the transaction within the timeframe. As soon as you have reserved a new build property, you should instruct a conveyancing solicitor to undertake the transaction for you. 

Once you have instructed a member of our experienced team, they will make contact with the developers’ solicitors on your behalf and request a copy of the draft contracts and title documents.

Once the contracts have been received your conveyancer will:

1. Provide you with a copy of the plot plan for you to confirm the plan reflects the extent of what you believe you are buying.
2. Once confirmed we will request the property searches for you (Local Search, Groundsure Avista, Drainage, and water search)

We will then go over the title documents to: 

1. Ensure that the relevant planning permissions have been granted and that any conditions either have already been, or will be, complied with at the various stages of the development.
2. Make sure the developer has obtained building regulations consent and that any conditions have been complied with, or will be.
3. Review the TP1 or Lease is checked for any restrictive covenants which prohibit you from making certain alterations to the property.  
4. Establish if the property is freehold or leasehold.
5. Ensure the Transfer/Lease includes the relevant rights required to access the property and estate until the time of legal adoption.
6. Check the rights reserved and any restrictions and stipulations in the TP1.
7. Reviewing the legal title. We will check to see if the developer has or will enter into a Highways Act 1980 Section 38 Agreement and bond. This is where the developer agrees with the council that the Estate Road will be built to an adoptable standard. The Transfer will also need to include the relevant rights of way over the Estate roads up until the time of legal adoption.
8. Ensure that there is a suitable section 104 agreement and bond has been entered into with the water authority.
9. Check to make sure the property will have a suitable new home warranty.
10. Make sure that the contract is in your favour and that your deposit is suitably protected

Often with a new build Property, you will be expected to exchange contracts within the reservation period and completion will then be on notice. Notice is normally served when the property is structurally complete, and completion is then carried out within 10 working days of receipt of the notice.

Please note that, unless the property is complete at the point of exchange, you cannot set an exact completion date. The challenge with this is the completion date is only estimate which means there is a possibility your mortgage offer may expire before the completion date. 

The developer will offer a longstop date or termination period within the contract. A longstop date is the date that the developer has set for the property to be completed by. If the long stop date is not fulfilled by the developer and the contract has been exchanged, you have the right to rescind the contract and are entitled to receive your deposit back. 

The type if survey required for a new build Property differs from a second-hand property. A snagging survey is recommended on a new build Property, and this is completed by a professional surveyor. The snagging survey is a detailed inspection of the property, reviewing the condition, building materials and quality of building work. 

New build conveyancing is more complex than your normal residential conveyancing. This is due to there being a higher number of risks of things going wrong. 

For example:

1. Failure to arrange a NHBC inspection or suitable New Homes Warranty.
2. Non-compliance with planning regulations.
3. Failure to complete Section 38 and 104 agreements for the roads and sewers.
4. Properties not being built in accordance with the original plans.

Therefore, it is extremely important to instruct a conveyancer who is experienced in handling new build conveyancing. That’s where our team can help.

As part of the Water Industry Act 1991, A section 104 agreement is between a developer and the water company. The developer agrees to construct the drains and sewers to adoption standard so that in due course these will become maintainable at public expense. The drains/sewers will be repaired and maintained by the developer until such time as they are adopted by the water Authority. 

A section 38 agreement is where the local authority enters into a legal agreement with the developer to adopt a highway, provided the highway has been constructed to a specified standard and to the satisfaction of the local authority. 

We ensure that the legal documentation states that the developer remains liable for the maintenance and repair of the roads and sewers until such time as they are adopted. I.e. when the development is complete. The benefit of this agreement is that it ensures that the developer remains liable until such time as legal adoption occurs. Meaning that you, as the homeowner, are not responsible for the roads and sewage systems serving the property. 

A section 106 agreement is generally used by the local authority to ensure that developers include infrastructure improvements that will benefit the whole community. On large developments, such agreements can be long and complex. They can involve provisions of services by the developer running to many hundreds of thousands of pounds. On a small, local development, the agreement may simply require the payment of a modest sum by the developer on commencement of the development. Often, S106 Agreements are used to ensure a certain amount of social housing is provided by the developer. Such agreements are a pre-condition to securing the planning permission. 

This is a local tax, based on the size and type of new build property development. It is charged on new developments in the area to assist in financing infrastructure to increase housing supply and is a charge on new buildings and extensions to help pay for supporting infrastructure. The money is paid by landowners and developers to the local council and can then be used by the council for Infrastructure, like new or safer road schemes, par improvements or a new health centre. 

A building, or structural warranty, is an insurance policy provided on a new build property. The warranty is taken out by the developer but is in place to protect you (as the buyer) and your mortgage lender. Most warranties typically cover you for defects that arise due to faults in the design, workmanship or materials that remain undiscovered at the time of completion. 

There are three well known providers of new home warranties:

1. National House Building Council (NHBC)
2. Local Authority Building control warranty (LABC)
3. Premier Guarantee.

NHBC is the most common on the new build market.

New build warranties typically last for 10 years but this can be increased to 12 years in certain cases.

Once the property is built, the warranty is split into two periods:

1. The defects period which covers the first two years, and
2. The structural period which is for 10 years when you complete on your purchase.

During the first two years in the home, if there are any issues with the work the builder has undertaken on a new build property, then the builder is responsible. I.e. The heating is not working because the pipes are faulty, or the windows are not sealed correctly. 

During the period of 3-10 years, the builder is only responsible for major problems relating to the structure of the house. This includes foundations, the external render, rooves, ceilings, chimney, and load-bearing parts of the floors.

Smaller defects are your own responsibility. This includes non-structural defects such as problems with your gutters or fixtures and fittings. 

Natural wear and tear on a new build property are not covered. Neither is weather damage or problems resulting from you not maintaining the property adequately.  

Damp and condensation may be covered, but only if they occurred as a result of the builder’s failure to comply with the warranty provider’s standards.

Contact one of our specialist residential property experts for further advice on how we can help you by completing our online form or call us on 0113 320 5000.