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The process with a new build is very similar to a secondhand property. Whereas with a second hand property you would make an offer via an estate agent, with a new build you would go to the site sales office and they would go through the reservation with you.
Once the reservation is complete, they would provide details of the lawyer who’s been instructed, and that’s where we would then come in. We would then receive reservation documents from the developer, and should have been instructed by the clients through that reservation.
After instruction the legal work begins, which means that we send out various forms for the clients to complete about stamp duty, how they want to hold the property and more importantly, how to complete their identification checks. That’s done via an online portal where clients upload and passport and answer some questions to produce an id report for us.
Once the ID is Satisfied, we take an initial payment for searches to be requested. The search requests usually take a couple of days for the search results to come back. When they come back, we prepare three main reports, a legal report which is based on the contract and the transfer deed, a search report, and then separately if the clients are obtaining finance, a mortgage and possibly a Help to Buy report.
Within those reports, clients will need to sign and return various documents. We also have to review the client source of funds, to be satisfied about where the client’s monies are coming from. That is quite a large part of the Conveyancing process. Once that source of funds is approved, we request the deposit and should be able to move to exchange your contracts.
For most new-build properties, the developers impose an exchange deadline at the point of reservation, which is generally twenty eight or forty two days. Each developer’s deadlines do vary, but that deadline is the set timescale that we need to exchange by. This means that we have an awful lot of legal work to do in quite a condensed period. It’s very quick, generally, to get to the point of exchange.
With a secondhand property, you would generally have a fixed completion date when you exchange contracts, and normally complete your purchase within two weeks. With new builds, because a lot of the properties are still being built, there’s no confirmed completion date. When you exchange contracts, completion is ordinarily ten or 14 working days notice from receipt of a notice to complete from the developer. The developers can only serve that notice to complete once the property is fully built, and they’ve obtained the final sign off for the property from a building regulation perspective.
Exchanging contracts on new builds generally takes four to six weeks of the reservation, but from a completion point of view, it can be anything from three to nine months after exchange, it very much depends on the developers build program.
The biggest difference really is probably a hidden element with new-builds in that the contract documents are very extensive. There’s an awful lot to review to enable us to prepare our reports.
Of course once the new-build side is complete and the property is registered at land registry, the title documents are more condensed. The timescales that we work towards are also very much driven by the exchange deadlines that developers impose with new-builds, whereas with secondhand properties, the completion date is mutually agreed between the parties, with no real deadlines unless either has specific timescales that they need to work towards.
Technically it’s a lot more difficult, as contract papers are extensive and you have to know what enquiries may need to be raised with the developer. For example, what may or may not be acceptable to the clients with regards to their mortgage finance, and whether there are any restrictive covenants that would bind them in the future. A lot of lawyers that deal with new-builds, specialise in new-build property Conveyancing.
Key things that we need to look at from a legal perspective, but are also critical for buyers are planning conditions, for example; conditions that buyers will have to comply with in the future. Sometimes in a particular geographical area, there may be restrictions within the planning conditions about having bat boxes that protect endangered bats. Certain properties with these sorts of features buyers would need to be aware of, because they couldn’t remove them from the property.
All developers impose restrictive covenants, which can include things like not being out to park on estate roads, not being able to put television aerials in certain places, and sometimes there’ll be restrictions on what you can do with the front garden.
The restrictive covenants tend to be things that the buyers really need to consider carefully, because there will be things that they have to comply with in the future and that their buyers will also need to know about if they ever sell the property on.
Most developers will have a panel of three to five lawyers that they will recommend the plot buyers use. These law firms usually have a designated new-build department that specialises in this type of application. Alongside the legal matters, not all lawyers are happy to deal with Help to Buy scheme applications.
Most developers will also have Mortgage Advisers and Financial Advisers that they recommend from their preferred panel for new-builds. From a lender’s point of view, it can also be slightly different than when you’re dealing with a secondhand property.
Stamp duty is based on the purchase price of the property, and that will sometimes have an impact on the budget from a buyer’s point of view. Whilst there’s nothing physically that a surveyor can look at, we would always recommend that advice is sought from a surveyor because there are things that a qualified surveyor can advise on that we as legal professionals, can’t give a professional opinion on.
The only other thing to note is that when you buy a leasehold property, there’s lots of other things to be considered, so look at the difference between a leasehold and a freehold property, before you embark on deciding which property is right for you.
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Evolve Law provides first class conveyancing services nationwide.
Evolve Law is regulated by the Council for Licensed Conveyancers (CLC) under Practice License Number 3158 and who are located at We Work, 131 Finsbury Pavement, London, EC2A 1NT
