Purchasing a New Build Property
If you wish to buy a property under construction or be the first occupier of a recently built or converted property then there are different considerations from the purchase of a second hand property. The seller should offer background documents and information because standard enquiries will not deal with all the issues likely to be relevant. Also it may be advisable for the developers or builders to be asked to provide warranties in the contract to protect against some of the possible issues that could arise once you occupy and use the property.
Where the Consumer Code for Home Builders applies then it provides requirements for builders and gives some assurances for buyers.
- We will need to establish that the building and any development of which it forms part has been constructed and complies with all terms of any planning permission; and has been constructed to final completion to the satisfaction of the Building Inspector under Building Regulations.
- There may be ongoing planning obligations and costs that need to be clarified especially if charges have not yet been paid. (s106 obligations under a Planning Agreement). The developer may also have a liability to pay a Community Infrastructure Levy (CIL).
- The property may benefit from a new house warranty or certificate where completed to standards agreed with a home warranty provider. NHBC is the most well-known, but there are other warranties that may be available. This will give insurance backed protection from major defects for 10 years and with limitations, for other matters for up to two years after the completion of the development.
- Where property has not yet been constructed then the contract will detail the size and specification of the property and suggest allowances for deviation in measurements of the finished building – sometimes with a price adjustment.
- In some cases you may be invited to engage with the builder in deciding the final finishes, the level of those finishes and type of finishes or in the final decorations.
- Boundaries and plots should be checked on site and compared with any plans.
- There will need to be rights for access to be to go to and from the property through private roads or other parts of an estate or building that is in multiple occupation. There may also be loading and parking restrictions or other access arrangements.
- Roads, open areas and parking will be of importance. There may be estate roads, and the right of use will need to be unrestricted. Searches will be made to establish whether roads are adopted by the public authority for maintenance at public expense. In some cases roadways are intended to remain private and maintenance costs are then a matter for frontagers to bear.
- There may be parking arrangements specified for general visitors or in relation to a particular parking space. Estate regulations may be imposed for these and other matters.
- Additional enquiries should be made where the property is being built in a flood zone or in an area which has been shown by environmental searches to have been (potentially) contaminated land.
- The completion of the property, if it has taken place, should have been authorised by an independent surveyor (such as NHBC) and if completion has not yet taken place then arrangements to ensure that all snagging or incomplete works receive attention will be needed.
- Even when there is an agreed snagging list, you may find that problems arise during the first seasons of occupation. Serious matters may be covered by a third party warranty, but other issues such as shrinkage may require repair or redecoration and so the obligation to repair these should be sought from the builder or developer. This may not be forthcoming.
- In all cases, you are advised to appoint your own surveyor to inspect the property and report to you. It is important for you to know that all services are fully connected and boiler and other appliances are commissioned and tested. There will have been no prior occupier and so testing of appliances is advised.
- The availability and connection of all utilities and other services such as broadband will be a matter of importance. You may need to make contact with all relevant utilities to ensure they are willing to connect and to ascertain any fee payable.
- Completion dates are often open-ended where the date of completing building work is not known. This will be of importance to you if you are coinciding a sale of an existing property.
- It is quite usual for builders to ask for a deposit to be released to them in advance of completion. That is not the standard position and we do not advise you to accept it. Once a deposit has been released to a builder or developer then, if the building is not completed, the deposit will be irrecoverable in the event of liquidation or bankruptcy. The standard position on a sale is that the deposit is held by an independent stakeholder and is not released until completion.
- For most lenders for a property to qualify for a mortgage, it will need to meet certain standards and provide specified minimum facilities. For example, certain forms of construction or building materials are not acceptable and there are restrictions on the height of flats.
- For leasehold property, lenders will also generally require a specific provision to enable leaseholders to enforce the obligations of other tenants contained in other tenant’s leases.
- Incentives – New homes are often sold with discount packages which may be cash backs or allowances for contents and appliances. These must be reported to us and to any lender in full where the buyer is proposing to obtain a mortgage loan.
- Insurance of the property will be important and will vary in each case as to when the risk passes to the buyer. Normally, the risk will not pass to the buyer until completion and you will need to be ready to place the buildings on cover. We will tell you if the position is different in your transaction.
- If the building is on an estate there are often terms covenants and rules that restrict future development, alterations or use of the property. These may affect your plans to alter the property or change the layout of a flat or its gardens, or external appearance -affecting doors and windows.
- The transfer or lease signed by you may contain restrictions to bind future buyers of the property. This is in order to ensure that the estate is effectively regulated and managed so that rules and obligations remain enforceable.