New Build Conveyancing Explained

Introduction to new build conveyancing

There is a great appeal in buying a new build property and being the first people to live in a new home. However, the conveyancing process for new builds can be more complicated to that of existing properties for a variety of reasons.  

Here we break down the new build conveyancing process, and explain everything you can expect during the conveyancing process for your new home.

Why is conveyancing important for new builds?

Making sure you choose a solicitor or conveyancer who has experience with new build conveyancing is important as they will better understand the complexities that come from buying a new build home and dealing directly with the property developers’ solicitors. 

New build conveyancing  follows a similar process to standard conveyancing although there are other aspects to consider such as reservation agreements, building regulations, newbuild warranties and the risk that there could be delays in the construction process. 

Having an experienced conveyancer working for you will help to ensure the whole process goes as smoothly as possible.

Why is conveyancing different for new builds?

Differences between new build and existing property conveyancing

New build conveyancing differs from the usual residential conveyancing process in several key ways. When buying a new build you often have additional steps and actions to deal with such as verifying planning permissions, checking the home is compliant with building regulations and negotiating contracts and completion deadlines. 

Your conveyancer will also need to ensure that the developers obligations such as snagging or completing unfinished parts of the property build are clearly defined and enforceable. 

New build conveyancing also usually requires working with the developers of the property to secure building warranties and guarantees. 

Common challenges in new build conveyancing

The main challenge you may face when buying a new build property are potential delays in construction, which can affect mortgage offers and completion dates. 

You could have issues with complex contracts which fail to give clarity on the developers obligations. It may also be difficult to define the property boundaries and title plans, especially if the development is not yet fully completed.  

Legal considerations that are unique to new builds

There are several legal aspects of buying a new build that you wouldn’t find within the conveyancing process for an existing property. Your conveyancer will be able to help you navigate these to ensure a smooth transaction. 

Your conveyancer will review your purchase contract carefully as these typically favour the developer. The main details to check include completion timelines, deposit requirements, and any potential penalties for delays. 

You want to ensure that the property developer has the right planning permissions and warranties, such as the NHBC or equivalent, these will cover you for certain structural defects that may form during a specified time period. 

Understanding the reservation agreement

When buying a new build home you will often have to agree to a reservation agreement with the developer and pay a non-refundable reservation fee. Reservation fees are usually around £500 to £2000 depending on the property and are set by the developer. This agreement and fee reserves the property for a specified time period for the buyer. 

The reservation agreement will lay out details about the property itself, the purchase price (and how long this price will be valid for), length of reservation period and any conditions that the buyer must meet before the property can be sold to them. 

Should the sale go ahead the reservation fee will be deducted from the deposit the buyer pays when contracts are exchanged.

Things to consider when buying a new build property

What happens if there are delays in construction of your new build home?

One problem you may face when buying a new build is if you are buying an off-plan property that has not yet been built – you could end up facing delays in construction. These can cause significant issues for both the buyer and the developer. 

Usually within your reservation agreement or sale contract there will be a specified ‘long stop date’, this is the latest date by which the property can be completed. If the delays go past the long stop date buyers have the right to pull out of buying the property and have their deposit refunded. 

However, if the delay happens before this date it can still lead to uncertainty for the buyer and lead to issues such as delaying your move date, and the potential for additional costs for accommodation if you need to stay somewhere else in the interim. 

Developers could also face financial penalties if their new build construction is significantly delayed. 

It is important your conveyancer has thoroughly gone over any contracts to make sure there is an understanding regarding any compensation or penalties that may apply and to consider possible impacts a delay could have on your mortgage offer, which could expire should the delay be too long. 

Costs involved in new build conveyancing

Conveyancing costs when buying a new build will be similar to that of an existing property. As well as your conveyancing fees for the legal work your solicitor will do, there will be the usual charges for disbursements such as local authority searches, Land Registry fees and Stamp Duty Land Tax (SDLT) if applicable. 

Due to the additional complexities of a new build sale, if you are not using a fixed-fee conveyancer your legal costs may end up higher than expected if you run into any issues such as negotiations on the contract or delays in construction. 

You will also need to take into consideration the initial reservation fee that you will need to pay to the developer to secure your property prior to exchange of contracts and completion. 

Regulations involved with new build homes

Consumer code for home builders – what you need to know

The Consumer Code for Home Builders (CCHB) is a set of requirements that was established to protect the rights of homebuyers who are buying new build homes in the UK. It was launched to ensure that developers provide truthful marketing, transparent information, fair treatment and reliable service throughout the home buying process. 

The CCHB applies to over 10,000 developers that are covered by the main home warranty providers in the UK and establishes how buyers should be treated from the moment they put down a reservation fee to two years post-completion on the property. 

By setting these regulations buyers can have peace of mind that they will have the information needed to make informed decisions on the property they are buying, be able to inspect the property before completion and have the support they need to address any issues they may face. 

If any problems do arise buyers are able to use the free Code Independent Dispute Resolution Scheme to address the issue. 

Understanding new home warranties

When buying a new build home you will be provided with a building or structural warranty. These usually last for 10 years with the time period beginning at completion. These warranties are basically insurance policies that will protect buyers in the case of any defects or structural issues that arise due to workmanship or materials used in the build that were not discovered at completion. 

These warranties are usually made up of two main periods: the initial two year defects insurance period, where the builder is responsible for fixing almost all problems. This is followed by the structural insurance period where the builder is only responsible for major issues with the structure of the home such as the foundations, external render, roofs, chimneys and load-bearing parts of the structure. 

The majority of new home warranties are provided by the National House-Building Council (NHBC). Other warranty providers include Local Authority Building Control (LABC), Premier Guarantee, Buildsafe and Checkmate. 

What happens after you have completed your new build?

After completion of a new build home, the buyer will be able to conduct a final inspection of the property. This is done to identify any defects, issues or unfinished work. This process is known as ‘snagging’ and it is important to make sure that a thorough check of the home is carried out so any concerns can be addressed by the builder as quickly as possible. 

Once the buyer is satisfied they will receive the keys and the legal transfer of ownership will be completed. Following this it will be the buyer’s responsibility to contact utility providers, update addresses for important services and documents and finally arrange moving into the home.