What is the New Build Purchasing Process?

Once you've found the perfect new build home, the next stage is crucial. From securing your mortgage to exchanging contracts and eventually moving in, there are a number of important steps you need to be aware of.

This guide will focus on what happens after you’ve selected your new build property, helping you navigate the sometimes complex process with confidence and clarity.

Reserving the Property

Once you’ve chosen your new build, the first step is to secure it by paying a reservation fee. This fee, typically between £500 and £2,000, reserves the property for a specified period, usually 28 days.

During this time, the developer agrees not to sell the property to anyone else, giving you time to arrange your mortgage and appoint a solicitor.

What you should know about the reservation fee

• The reservation fee is generally non-refundable if you fail to proceed with the purchase, although some developers may offer flexibility in certain circumstances.

• The fee will be deducted from the final purchase price upon completion.

• It’s essential to get a written reservation agreement, which should include the fee amount, the price of the home, and any terms and conditions. This protects you should there be any disputes later on.

Appointing a Conveyancing Solicitor

The next crucial step is to appoint a conveyancing solicitor. Conveyancing refers to the legal process of transferring ownership of the property from the developer to you.

The solicitor will handle all the legal documentation, ensuring that everything is in order before you exchange contracts and complete the purchase.

Here’s what your conveyancing solicitor will do:

• Review the contract: Your solicitor will scrutinise the contract provided by the developer, ensuring that all terms are clear and fair.
• Examine the property’s title: They will check that the developer has the legal right to sell the property, ensuring the title is free from any legal issues or restrictions.
• Check planning permissions: They will verify that all necessary planning permissions are in place and that the property complies with local regulations.
• Clarify your obligations: The solicitor will inform you about any service charges, ground rents, or future obligations related to the property or estate.

View our New Build Conveyancing services

It’s important to choose a solicitor experienced in new build conveyancing, as it can differ from buying an existing home. Some developers may offer a preferred solicitor, but you’re free to choose your own if you prefer.

Arranging Your Mortgage

You’ve likely already secured a mortgage in principle, but now it’s time to finalise the details. Once your offer on the new build is accepted, your lender will carry out a valuation survey.

This is to confirm the property’s value and ensure that it aligns with the amount they are willing to lend.

Things to consider:

• Off-plan properties: If you’re buying off-plan (before the property is built), your mortgage offer may expire before the property is completed. Be sure to check the validity of your mortgage offer and speak to your lender about potential delays.

• Help to Buy schemes: If you’re using a government scheme such as Help to Buy, ensure your mortgage lender supports this, and confirm any extra paperwork required.

Your mortgage lender will send a formal mortgage offer to both you and your solicitor. At this point, it’s essential to thoroughly check the details and ensure that everything is correct before proceeding.

Related:

What is Residential Conveyancing?

What does a Residential Conveyancer do?

How Long Does the Conveyancing Process Take?

How much does Residential Conveyancing cost?

Guide to Remortgage Conveyancing

The Exchange of Contracts

The exchange of contracts is the moment when the sale becomes legally binding. Once you and the developer have signed the contracts, neither party can pull out without facing penalties.

This step typically happens within 28 days of paying the reservation fee, so it’s crucial to have your mortgage and legal work in order by this point.

Before exchanging contracts, your solicitor will:

• Ensure all terms of the contract are favourable and fair.
• Confirm the title deeds are in order and free from encumbrances.
• Verify the developer’s building warranties, such as the NHBC Buildmark or Premier Guarantee, which cover defects in the property for up to 10 years.
• Request the deposit (usually 10% of the property’s price) from you to transfer to the developer’s solicitor.
• Once all checks are complete and both parties are satisfied, the exchange of contracts takes place. At this point, you’ll pay your deposit, and the purchase becomes legally binding.

What happens if there are delays?

If your new build isn’t ready by the estimated completion date, your solicitor will ensure that the contract includes protection clauses.

For instance, if the property is delayed beyond the “long-stop date” (the final date the developer promises the home will be completed), you may be entitled to compensation or, in extreme cases, the option to pull out of the deal.

Completion and Moving In

Once the property is finished, you will move towards completion day. Completion is the final stage where the property’s ownership is transferred to you, and you receive the keys to your new home.

Here’s what happens on completion day:

• Your solicitor will transfer the remaining balance of the purchase price (minus the deposit you paid at exchange) to the developer’s solicitor.

• Once the funds have been received, the developer will hand over the keys, and you’ll officially be the owner of your new build.

• Snagging inspections: Before completion, you’ll typically have the opportunity to inspect the property and create a snagging list. This list highlights any defects or issues with the home, such as poor finishing, faulty fixtures, or minor damages.

• It’s essential to address these issues before moving in, as the developer is responsible for resolving them within a set timeframe.

• Your warranty provider, such as NHBC or Premier Guarantee, will cover major structural issues for up to 10 years, but the developer is responsible for fixing smaller defects within the first two years.

Post-Completion Considerations

Now that you’ve moved in, there are still a few things to keep in mind as you settle into your new home.

Registering Your Ownership

Your solicitor will register the transfer of ownership with the Land Registry, ensuring that you are the official owner of the property. This process can take a few weeks, and you’ll receive confirmation once it’s complete.

Managing Ongoing Costs

As a new build homeowner, you may have to pay additional costs, such as:

• Service charges: These fees cover the maintenance of communal areas within the estate, such as gardens or parking spaces.
• Ground rent: If the property is leasehold, you may be required to pay ground rent to the freeholder.
• Council tax: Be sure to register for council tax with your local authority, as this will be an ongoing cost once you move in.

Related:

What is a Transfer of Equity?

What is a Notice of Transfer Fee?

What is a Deed of Covenant?

Common Questions About the New Build Buying Process

1. What happens if there are delays in the construction?

Delays are not uncommon in new build projects. To protect yourself, ensure that your contract includes a long-stop date, which sets a final deadline for completion. If the developer fails to meet this deadline, you may be entitled to compensation or have the right to pull out of the purchase.

2. Can I negotiate the price or extras with the developer?

Yes, it’s possible to negotiate on both the price and any extras, such as upgraded fixtures, appliances, or even having your Stamp Duty covered. Developers may be more flexible if the property has been on the market for a while or if they’re keen to complete sales quickly.

3. What is the Help to Buy scheme, and can it be used for new builds?

The Help to Buy scheme is designed to help first-time buyers purchase new-build homes with the help of a government equity loan. The scheme allows you to borrow up to 20% of the property’s value (40% in London), meaning you’ll only need a 5% deposit.

4. What is a snagging list, and why is it important?

A snagging list is a detailed inspection of your new build home, noting any defects or unfinished work. It’s crucial to carry out a snagging inspection before completion to ensure that the developer fixes any issues. Developers are usually responsible for addressing these concerns within the first two years.

Conclusion

The process of buying a new build home can be more straightforward than buying an older property, but it requires careful planning and understanding of the legal and financial aspects.

Once you’ve found your perfect new build, the steps outlined above will help you move through the process with confidence, from reserving the property to moving into your brand-new home.

By being aware of key stages like appointing a solicitor, securing your mortgage, and inspecting your home for defects, you’ll be well-prepared for a smooth and successful purchase.

Whether you're buying off-plan or ready to move in immediately, following this guide ensures you can enjoy your new build with peace of mind.