Q&A When should I appoint a solicitor and apply for a mortgage on a new build house?

A Guide to Buying a New Build House – when to appoint a solicitor and apply for a mortgage

By Wendy Marles, a Senior Solicitor and Head of Residential Property at GHP Legal

There are many new housing developments springing up across England and Wales, but the process of buying new build property is quite different to buying older residential properties – particularly if you also have a property to sell. And timing is key to everything.

When buying an older property, it is customary to ‘make an offer’ and wait for it to be accepted. But Developers are less open to negotiation on purchase price, contracts are subject to certain conditions, and any negotiations are usually confined to ‘optional extras’.

As new build homes are usually sold off plan (prior to the property being completed or even built), on agreeing to purchase the Developer will ask for a reservation fee which you will forfeit if you later pull out of the purchase.  If you go on to exchange contracts and complete your purchase, then the reservation fee will be credited against the purchase price.

Upon reserving the property the selling Developer will require your solicitor’s details for their reservation form.  Contract papers will be issued to your solicitor, and you will be required to enter into a legal binding agreement within a prescribed timeframe. Early appointment of a solicitor is therefore essential.

If you require a mortgage, you must obtain a mortgage offer before exchange of contracts to ensure that you can borrow sufficient monies to enable completion on your purchase.  In the pre-contract stage searches will be undertaken, the title will be investigated, and checks on planning and building regulation documentation and warranties will be made.

Be aware that if there is a long period of time between exchange and completion, your mortgage offer may expire, and you may need to extend or obtain a new offer in time for completion.  Similarly, searches may need to be repeated if they go out of date.

Once the property build is completed, the Developer will serve a Notice giving the Buyer around 10 days to complete on the purchase.  This notice is accompanied usually by a cover note from the company providing a warranty, and a Building Regulation compliance certificate.

You will be required to pay your deposit for the purchase of the property at the exchange of contracts stage - usually 10% of the purchase price.  Whilst you will not receive a move in date as completion will be on notice, you should be given a target date for completion.   The contract often contains a long stop date.  If you pull out of the purchase prior to the expiry of the longstop date you will lose your deposit - unless it is because the Developer has not fulfilled its obligations, in which case you may be entitled to reclaim your deposit.

Your conveyancer will guide you through the process of purchasing a new build property and ensure that it runs as smoothly as possible.

Wendy Marles

Wendy Marles

Senior Solicitor

Part of our Conveyancing team in Wrexham