New build conveyancing: process and considerations

New build conveyancing is the legal process of buying a newly constructed property, involving checks on planning, warranties, and the exchange of contracts before completion.

When you're thinking of buying a new home, there are so many options available to you, each with their own intriguing possibilities.

Buying a flat, a semi-detached property or a maisonette; purchasing somewhere that is rural, or in the centre of a bustling town; a period property that has little quirks and original fittings; one that's located in a conservation area or is a listed building; a home that's isolated with lots of land that comes with it, or one that has a manageable garden.

It seems that the list is endless and there is bound to be an existing property that fits your requirements.

But what about buying a property that hasn't been built yet, or has only just started construction?

Purchasing a new-build has several advantages over your choices from existing stock - not the least that you might be able to influence the plans and internal layout of the plot before work has begun on building it.

Although it seems a simpler option from all the hassles that come with buying an existing home, there are different legal processes that need to be handled and there are certain cautionary considerations before you take ownership of a new-build property.

The reason why conveyancing for a new-build home is more complex than that for a property that is being sold by the current dweller is that there are greater risks to be managed.

Specifically, there are potentially significant problems that can arise in a new-build that simply don't exist with other properties.

Planning regulations

Your developer and architect will have to conform to the existing planning regulations as set down by the council.

Non-compliance with these requirements will not only delay the day you can move in, but may even result in changes being enforced to meet the requirements.

NHBC inspections

When your developer is constructing the home, you should reasonably expect it to conform with building regulations from foundations to the roofing structure, from fire department requirements to insulation.

If the developer fails to set up the requisite inspections, this will result in you not receiving the warranties on the build itself, but may also require remedial work to be carried out to meet the National House Building Council's demanding requirements before getting it signed off.

Inevitably, any failure to organise such inspections will incur delays before you can take possession.

Roads, drainage and sewerage requirements

As part of the build, your new-build home will need to be accessible via a road, and the sewerage and drainage systems will need to be adequate for the purpose.

As part of the submission for planning the property, and especially if it is part of a number of homes being built, your developer will have had to submit the plans for these.

Failure to get the agreement, or the resultant build being inadequate will add further delay and cost to the project.

Construction plans

When the plans submitted by the developer have been agreed by the responsible council, there are certain requirements that they will insist on (for example, the style of the windows, position of the windows and doors, the construction materials to be used, and so on).

Failure to meet these requirements, where any changes from the original agreement have not been formally ratified, will mean extra work to rectify the problem and additional cost and time for the build.

Common areas maintenance

Where there are several properties being built, say as part of a new estate, there may be some common areas (for example, a communal garden or a children's play area) stipulated as part of the planning agreement.

These, of course, will need to be managed and maintained, which will mean a responsibility to each of the homeowners once they move in. Such agreements need to be ratified and clearly stated as a covenant in the deeds of the new home.

Warranties

When your developer has constructed the property you are planning on buying, there will necessarily be a warranty that's applied to give you the support in the event of a problem arising in the months after you move in, so that they may rectify it without cost to you.

If those warranties are not in place, this will delay you from completing on the purchase.

Built on trust

Buying a new-build home usually means that you are agreeing to buy a home that has not been fully constructed yet, or sometimes not even started in its construction.

That means that you are putting your trust in the developer to complete the build as planned within a certain period of time.

The flow of the process for buying a new-build property follows a similar path to a standard conveyancing but with some of the discussed complexities factored in.

The steps in a new-build conveyancing process are:

Instruct your conveyancing solicitor

The earlier you can involve an experienced conveyancing solicitor in the process, the better.

It's important to line up a solicitor experienced in New Build transactions and working with developers who will guide you through the steps of the conveyancing, ensuring you understand what your legal responsibilities are throughout to make the purchase of your new-build as smooth as possible.

It's also important to choose a solicitor who will be focused on you, your transaction and your needs, like our team at Homeward Legal. Be wary of choosing a solicitor recommended by the developer since they might have a more vested interest in the developer's side of the legal process.

New-build reservation fee

Some developers will insist on a reservation fee to be paid, which acts as a kind of deposit to ensure the new-build and its plot are no longer offered to anyone else. The reservation fee is not the same as the deposit that you'll need to pay at exchange of contracts.

The reservation fee will be paid at the point your offer is accepted by the developer and will initiate the deadlines they require for exchange (which is usually 28 days from agreeing your offer).

At the end of the reservation period, your developer may stipulate that this is the point where you should exchange contracts.

It is important that you get the terms, conditions and details of the reservation in writing, including the amount paid, the length of time of the reservation, as well as what happens in the event of either the developer or you pulling out of the reservation (including whether the reservation fee will be paid back to you).

Critically, you should pass any legal documentation past your solicitor before you pay anything or sign any documents to ensure that you are legally protected.

The reservation fee will be deducted from the final payment at completion.

New-build conveyancing checks

once you have had your offer agreed with your developer, your appointed conveyancing solicitor can start the legal process that will result in the transfer of the new-build's ownership into your name. 

The solicitor will perform a number of searches, which are slightly different in content from those for a standard purchase

Standard searches

As part of the conveyancing process, the solicitor will order the set of searches that are part and parcel of every purchase, covering enquiries from controlling bodies to establish information about the new-build home you are buying: the Local Authority Search, Water and drainage Search and Environmental Search.

Additional searches

In certain circumstances, your solicitor may also advise taking out additional searches to cover coal-mine risk, subsidence, flooding and so on. These will be at an additional cost to the set conveyancing fees.

Planning regulations

To verify that, first, the planning permission has been granted by the planning department of the local council, and, second, that the construction conforms to the specifics of the planning application, that the roadways have been adopted and that drainage and water accesses have been successfully established and proven.

Restricted covenants

The planning application might come with restrictions that apply in perpetuity, such as the construction materials used to build the property, or if changes to the building can be made (such as extensions, addition of solar panels, or construction of permanent outbuildings). Your conveyancing solicitor will seek out the position so that you know what restrictions will apply to you once you have bought the home.

Building regulations

Obtaining confirmation that all the requisite building regulations have been met by the developer, with the relevant paperwork and warranties being supplied.

Type of property

Although building houses for leasehold is now banned under recent governmental legislation, you'll want to know whether the property is subject to being freehold or leasehold, particularly if you are buying a flat, as well as understanding what your involvement in managing the communal areas might be, with any associated ongoing costs that might apply.

Long-stop completion date

Because there will be the increased risk of delays with a new-build (for whatever the reason or cause), your conveyancing solicitor will establish a “long-stop completion date” in the contract. The long-stop completion date is a legal stipulation that, if the home isn't ready for you by the specified date, you can walk away from the purchase with a full refund of any monies paid to date. If you are buying the property with a mortgage loan, it's a good idea to set the “long-stop completion date” to be a date before your mortgage in principle expires so that you can use that on another property without having to reapply for the loan.

Confirm asking price

The key interest for the developer is to get the money for the asking price. Because of how long new-builds can take to be finished, there is a possibility that the value of the property might change before the completion date. You should therefore ask your solicitor to establish what would happen in the event that the value of the property drops or rises from the asking price (in other words, is the price locked in or will it change with the value when you reach the completion date). You can also ask for the contract to specify what happens with the price and its payment. Bear in mind that this is particularly important if you are planning on using a mortgage, since price rises may take the mortgage in principle out of any new price that the developer might set.

Set the deposit

As already highlighted, this deposit is not the same as the reservation fee, and is usually set between 10% and 30% of the asking price of the property. You should look into what happens to the deposit should your developer go out of business, which leads on to the next point.

Building warranties

The developer will organise warranties on the construction of your planned new home and the solicitor will verify that these are all in order and in place. Note that the provisions of the warranty might not cover the refund of the deposit you will pay at exchange should the developer's firm become insolvent and files for bankruptcy, so you'll need to know what happens in this instance.

Completion on notice

In the standard purchase of the home, the completion date is normally set and agreed at the exchange of contracts. Because of the more nebulous nature of buying a home that is in mid-construction, this can't happen. Instead, there is an agreed completion on notice, which stipulates that the completion date will be set upon satisfactory completion of the building work, which is normally within 10 working days.

Preparation of contracts

Your solicitor will prepare the contract detailing the transfer of ownership and all the details necessary for that to happen.

Exchange of contracts

Once your conveyancing solicitor has received all the information from the searches and other enquiries, and they are satisfactory, with all issues ironed out, you are now in a position to exchange contracts.

At this juncture your conveyancing solicitor will pay the agreed deposit amount on your behalf to the developer.

The developer's solicitor will have organised a contract, which will be given to your conveyancing solicitor, which confirms that you are agreeing to buy the property at the agreed asking price and that the residual amount will be paid to the developer as part of the completion process.

Bear in mind that, at the point of contract exchange, you are entering into a legally-binding contract to go ahead with the purchase of the property, which means that, should you default for any reason, you will lose the deposit you have already paid. 

Pre-completion inspection

With a standard home purchase, you would normally ask a chartered surveyor to carry out an inspection on the home, so that you have understanding on the structural integrity of the home and any potentially serious issues that might be there for you to deal with once you take ownership.

Because the construction of a new-build might still be in progress, you'll be unable to go through this process. Instead, you are advised to request a pre-completion inspection once the developer acknowledges the end of the build.

With every construction, there will be things that need to be resolved, whether it's simple issues such as ill-fitting doors, cracking plaster or squeaky floorboards or there are more critical problems, such as unlevel floors, or a bowing roof - it's not unreasonable to expect the developer to rectify any of these problems.

This pre-completion inspection report will be handled by your solicitor on your behalf, making satisfactory rectification a provision before completion can occur.

Completion

If all the contractual requirements have been met by you and the developer, you can now take ownership of the home and its keys, meaning you can move in.

As part of the completion process, make sure you have received all the documentation covering warranties and guarantees for specific items like windows and doors, electric and gas items, timber and damp-proofing and anything else that is relevant.

Your solicitor will also organise the transfer of the remaining amount to the developer's solicitor, payment of the stamp duty to HMRC and, at the same time, contact HM Land Registry to transfer the ownership of the property into your name(s).

Post-completion

You've moved in, done some decorating and are settling in to enjoy your new home. It's always a good idea to order a snagging survey after a period of time. This allows you to identify any problems that you should reasonably expect the developer to fix - it's advisable to get an independent expert to carry out the review on your behalf.

A new build warranty typically provides peace of mind through a ten-year guarantee, usually offered by the National House-Building Council (NHBC), Build-Zone, or similar providers. For the first two years, it covers defects in workmanship or materials, such as issues with plumbing, electrics, or fittings.

From years 3-10, it focuses on major structural defects, including problems with the foundation or roof. It may also include protection for compliance with building regulations and weatherproofing. However, it excludes normal wear and tear or owner-made alterations.

Before exchanging contracts, ensure you review the warranty details to understand what is and isn't covered, as well as the duration of specific protections.

The timeline for new build conveyancing can vary. Developers typically require contracts to be exchanged within 28 days of reserving the property, meaning the legal process needs to start quickly.

After exchange, the completion timeline depends on the build stage. i the home is under construction, completion can take weeks or months, with a "completion on notice" clause specifying the final move-in date. Starting promptly and working with an experienced conveyancer helps keep the process on track.

If you are planning on buying a new-build property, you'll need an experienced conveyancing solicitor, who will work hard on your behalf to make the legal process as smooth as possible, while ensuring the developer meets your expectations.

Homeward Legal doesn't charge any extra when it comes to new build conveyancing.

The experts at Homeward Legal are well-versed in all aspects of the new build conveyancing process, providing a quality service at a fee that is great value for money!

Call  to get your conveyancing quote started, or to discuss your concerns with your plans to purchase or sell your next home.