Buying a New Build Property

We are frequently employed by our clients to represent them when buying a new property which is a more time consuming and complex transaction than that of the purchase of an existing house or building and certain additional factors must be considered which are exclusive to new properties:-

1. Where the property comprises a plot on a new estate the contract will often be in a standard form and the Developer is very often reluctant (and will often refuse outright) to allow any amendments to that form. With the sale of a new-build it is an offer to sell by the Builder as opposed to an offer to buy from the Buyer, ( which is the case with second-hand properties).

As mentioned, unlike sales of second-hand property, a Buyer usually has little room for negotiation on the terms of the contract and this can lead to problems including:

1. Late completion of houses

 

2. Pressure to accept an incomplete house

 

3. An after-build service delivered late, or in some cases not at all: and

 

4. Inadequate means of redress

 

Property purchases are also exempt from the protections provided by The Sale of Goods Act 1979 which leaves a Buyer with fewer statutory rights than when buying goods on the high-street!

2. The contract usually provides that you cannot delay completion because of what the Developer will often refer to as a "defect of a minor nature" (which is very often not defined in the contract). What a Developer will consider to be a small matter or "minor" is obviously bound to be of great importance to you. It is perfectly possible that when you get to the completion day, you may be unhappy with various aspects of the Developers work but you will have no choice other than to go ahead and complete so it is essential that you keep an eye on the building of the property as it moves along and that you constantly keep in touch with the Site Office in relation to these "snagging" problems. According to an article in the Guardian (28th March 2007 "Take care when buying a new-build house") the average new home will have one hundred or so snagging defects and a number of them may well not come to light until well after completion.

3. Another main issue of concern is the lack of a specific completion date. When a property being sold is in the course of construction, it may not be possible for the Developer to agree a definite completion date at the time of exchange since he will not be able to guarantee that the building work will be completed by a specified time. Most builder's contracts simply define the date of legal completion within a "Notice Period" e.g. the contract may say that completion must take place within ten working days of receipt by the buyer of a Notice stating that the property is now complete. This type of condition gives rise to difficulties from the buyer's point of view since, if you are involved in a chain of transactions, such a condition may make it difficult to synchronise the chain unless similar conditions relating to completion are imposed in every transaction in the chain. We have known cases where this has led to transactions not being synchronised and the buyer having to complete his dependent sale first and move into temporary accommodation.

Also, if you are buying with the aid of a mortgage then please bear in mind your mortgage lender will need at least 5-7 working days notice to release mortgage monies and if your lender requires a re-inspection of the property then there may well be the need for another week or two in order to organise the valuation . The onus is entirely upon you to ensure that your Mortgage Lender visits the property to carry out that inspection and you will need to liaise closely with your mortgage advisor.

At this point, we should mention that although a Developer may give you an approximate timescale for completion, it is quite usual for this to over run, sometimes by several months which can be distressing and cause severe difficulties for buyers.

4. Another point with a new-build contract is that the agreement for sale will often state that the property will be constructed in a good and proper manner in accordance with Planning Consent but they also reserve the right to amend their plans and specifications if they consider this to be necessary e.g. because of site conditions, availability of materials or indeed any other matter. Technically therefore, you could end up buying a property that not only looks quite a lot different from the plans and specifications that you have seen but also may not even be the same size as the plot that you were expecting. This also includes internal fittings e.g. kitchens, bathrooms etc. If the Developer suddenly finds that they are unable to obtain your particular choice of fittings then you may end up being entirely subject to what is available and again, according to the terms of the contract which the Developer will not amend, you have to accept this whether you like it or not.

5. Most new residential properties will be offered with the benefit of structural defects insurance, for example, the NHBC "Buildmark" or a similar scheme, which will provide a buyer and his successors in title with insurance against structural defects in the property for a number of years after completion of the building (usually 10). The contract will normally provide for this cover to be obtained by the Developer but, please bear in mind that its scope does not extend to decisions on whether it is actually satisfactory to live in that property and it does not adequately insure home buyers against poor quality housing. At the present time there is no fully independent redress scheme which frequently means that buyers have no option but to resort to court action to resolve disputes. Please also note that the builder's liability under these schemes is often limited to the first two years after completion. After that time, the policy only covers structural defects so a full structural survey of the property may be desirable immediately prior to end of the two year period.

Please contact us for further information.