New build conveyancing explained

Buying a new build home can be very appealing, you’ll have a brand new home to put your mark on. But the new build conveyancing process can be more complex. We look at how it works and what to watch out for.

Angela Kerr Director, Editor

What is new build conveyancing?

New build conveyancing is the legal process of transferring the ownership of a new build property from the seller to the buyer. A conveyancing solicitor will handle this for you.

New build conveyancing is different from when you buy an older house because you’ll often commit to buying the house before building work has finished – or even started.

Why is new build conveyancing more complicated?

New build conveyancing is more complicated than the standard conveyancing process when buying because the potential for something to go wrong is much higher. For example, some potential problems are:

• Non-compliance with planning regulations
• Failure to arrange NHBC inspections
• Incomplete agreements for roads and sewers
• Failure to plan for the future maintenance of common parts of a development

This means that finding a good conveyancing solicitor to oversee the purchase of your new build property is essential.

Looking for a new build conveyancing solicitor? Compare quotes & ratings from quality assured conveyancing solicitors covering your area.

New build conveyancing process: A step by step guide

The conveyancing process usually begins once an offer has been made. Here’s how it works:

1. Do you need to pay a new build reservation fee?

You may need to pay a reservation fee when an offer is made, or a sale is agreed upon, to ‘reserve’ the new build home for a set period (usually 28 days). You’ll typically need to exchange contracts at the end of this period. Reservation fees can cost from £500 to £2,000 or even more on a ‘high end’ property and will be deducted from the final purchase price upon completion.

The New Homes Quality Code specifies that a reservation agreement must include the amount of reservation fee, the property purchase price, the customer’s right to cancel within the reservation period and that there is a 14-day cooling-off period, during which the customer can cancel the agreement and receive a refund of the full reservation fee. Check the reservation agreement carefully before signing.

We are often asked if it’s possible to get a reservation fee refund. There should be a written agreement setting out the terms of the reservation fee, so check this. The reservation fee is often non-refundable if the buyer fails to exchange contracts within the specified time period.

Before paying a reservation fee buyers should ask to see all specification details relating to the build as well as full landscape drawings and electrical plans. You should also visit other sites built by the developer (preferably of a similar design) to ascertain whether these properties meet your standards and requirements. See questions to ask when buying a new build. And don’t  just offer the list price, read our guide Can I make an offer on a new build which has tips on how to negotiate the best price.

2. Instruct your new build conveyancing solicitor

You’ll need to instruct your new build conveyancing solicitor and set them to work as soon as your offer is accepted. If you haven’t already chosen which conveyancer to use, do this without delay as you’re likely to be against the clock to get to exchange.

Remember to shop around for your conveyancing solicitor to find the best deal. It’s not uncommon for the developers’ solicitor and sales team to exert huge pressure on you to complete, particularly coming up to their financial year end, even where there are clear conveyancing problems. If you have a good, independent conveyancing solicitor, they are less likely to bend under pressure from the developer and act in your interests and they will also ensure that the contract is in your favour. Read Do I have to use my developers solicitor when buying a new build? for more information.

Looking for a new build conveyancing solicitor? Compare quotes & ratings from quality assured conveyancing solicitors covering your area.

3. New build conveyancing checks are carried out

There are a number of new build searches which must be undertaken before purchase as part of the new build conveyancing process. Some examples of these searches include:

• Checking that appropriate planning permission has been obtained and that the property has been constructed in full accordance with it, and that roads are properly adopted, and that drains and utilities are properly established, as well as obtain results of other relevant local searches
• Highlighting any restrictive covenants that have been written into the lease or registered against the freehold. These could prohibit any alterations to the property (such as building an extension) without prior (invariably fee based) permission, for example.
• Explaining whether the property is leasehold or freehold, and setting out details of the lease. The sale of new build houses as leasehold has now been banned aside from a few exceptional instances. If you are buying a new build leasehold flat you should be aware of the charges associated with buying a leasehold. It’s also worth noting that even those buying a freehold house may still be subject to new build estate management fees which can be high. Get your conveyancing solicitor to investigate this.
• Long-stop completion date: New build delays are common but they can cause problems if they go on for too long. Your new build conveyancing solicitor should make sure there’s a ‘long-stop’ completion date written into your contract. This means you can walk away and get a full refund if they don’t finish the work by that date. It’s advisable to negotiate that the long-stop date falls before your mortgage offer expires because you could face a hefty financial penalty if it expires and you can’t get another mortgage in time (read on for more on this).

4. New build exchange of contracts

Once your conveyancing solicitor is satisfied that all issues raised have been resolved, your next step is exchange of contracts. This is when you pay your new build deposit which is typically between 10-30% of the total price of the property. New build warranties such as NHBC or Premier Guarantee will normally protect a full deposit against builder insolvency although in some cases it will only cover the first 10%.

You’ll also be asked to sign a contract (usually prepared by the housebuilder) agreeing to buy the property at the current advertised price and to pay off the balance at completion.

Beware: What happens if the value of your new build drops after exchange?

Mortgage offers usually only last for up to 6 months. If your mortgage offer expires before you complete and you can’t get a new mortgage offer because the value of the property has fallen since exchange, this is likely to cause major problems.

If you have to pull out of the purchase, you’ll lose your deposit due to breach of contract. You may also be sued by the developer for the difference between the agreed price and the lower price it subsequently achieves at re-sale, as well as any legal fees incurred.

So ask your new build conveyancing solicitor to establish if the contract price is ‘locked’ at exchange therefore and, if so, what happens if the price rises or falls before completion. Also, make sure the long-stop completion date writted into your contract is before your mortgage offer expires.

Bear in mind, some lenders have special new build mortgages with a longer validity period that can be up to three months longer than their usual deadlines. Specialist new build mortgage brokers will know the products which will remain valid for longer. Mortgage brokers will also be on hand should you need to move quickly to re-apply or find an alternative lender. Read more in our guide New build mortgages explained.

Looking for a new build conveyancing solicitor? Compare quotes & ratings from quality assured conveyancing solicitors covering your area.

5. New build completion process

When you’re buying a new build home off-plan, you cannot set the completion date when you exchange contracts. Instead, you agree to ‘completion on notice’ instead. This means that once the property is finished, the developer will serve notice on the buyer to complete, usually within 10 working days.

6. Book a pre-completion inspection

If you’re buying a new build home from a developer signed up to the New Homes Quality Code, you’ll have the right to have a professional pre-completion snagging inspection of your home on your behalf. We urge you to do this.

A pre-completion inspection should involve an inspection of the property, room by room, and compile a comprehensive snagging list. This could include anything from cosmetic issues, such as paint touch-ups, to more significant structural defects, such as broken roof trusses.

The PCI report should then be shared with you, the buyer, to pass to the conveyancing solicitor dealing with your new build purchase and the builder who is responsible for rectifying the issues before the property is handed over at completion.

Your house builder may offer to carry out a PCI on your behalf for free. But it’s unlikely to be in your best interests.  Instead employ your own independent pre-completion snagging inspector

Pre-completion snagging survey costs start at £320. You can book your Pre-Completion Inspection today with our Snagging Experts at NBI. 

7. Completion: The final new build conveyancing step

The final stage of the new build conveyancing process is completion. This is when you get the keys, building log books and owner’s manuals and a defect reporting procedure is agreed upon. Make sure that you are given copies of all the guarantees relating to the property, including all white goods (such as cookers, fridges and boilers), windows and flat roofs (if they have installers guarantees) and damp proofing and timber.

For more about what you should do as you approach moving into your new build read our guide about moving into your new build home. It covers what you need to arrange in advance, what you should do on the day and in the initial weeks and years afterwards. Your solicitor will also arrange payment of stamp duty and register your ownership at the Land Registry.

Snags and warranties in your new build home

After you’ve moved into your new build house there is still some work for you to do.

Book a snagging survey

Regardless of whether you have a pre-completion inspection or not, it’s a good idea to have a snagging survey done once you have moved in. You can create a snagging list yourself but you’re unlikely to spot the range of things a professional snagging inspector will identify. An independent snagging survey will also add weight to your complaints if you have found your developer to be unresponsive to your calls for action. You can even get a re-inspection to ensure the work has been completed by the developer to the correct standard. Read more about the different snagging surveys and costs.

See our guide for more information on the different types of snagging surveys and costs.

How do new build warranties work?

Your developer is responsible for all remedial work on defects which occur within the first two years of purchase. After that point, your warranty should cover specified structural problems. Most new builds come with a ten-year NHBC warranty which provides a form of insurance against structural defects. Be aware, as the NHBC can take a very long time to resolve outstanding issues and the warranty is more likely to protect builders’ interests than yours. This makes the need for an independent snagging survey either before completion or as soon as you move in all the more important. Read our guides on New build home warranties: What they do and don’t cover and New Build problems: How to fix them.

Frequently Asked Questions