Residential Property: FAQs for Buying A New Build Home

Our Residential Property Team is fully aware that buying a new home is one of the most exciting and important, yet potentially one of the most stressful, events in your life. We therefore work hard to make sure that every transaction is as stress-free and efficient as possible. To help answer some of your initial questions about the process of buying a new build property, we've put together some of our most frequently asked questions along with answers from our Residential Property Team.

When should I instruct a solicitor?
Once the Developer’s sales office confirm your offer has been accepted and you have paid the reservation fee for the plot.

What will you need from me once I instruct you?
Once you instruct us, we will need your full names, contact details, current address, purchase address, and the Property sale price. You will then need to complete our onboarding process and provide your ID and proof/source of funding docs, and pay your search monies.

What is the first stage of the conveyancing process?
We will receive paperwork about the Property, review such and raise questions, known as enquiries, with the Developer’s solicitor. We also submit requests for the searches (Drainage & Water, Environmental, Local Authority). Once we receive replies to our enquiries, we will then review them. The type and number of enquiries we raise may depend on how far along the Property is in the build process.

How involved will I need to be in the process?
Once we have your initial details & identification, there may be a period where we don’t require much from you. During this time, we will be making enquiries and waiting for responses from the Developer’s solicitor. We will request searches and advise you on the results of these. We will also be waiting to receive your mortgage offer (if applicable) – once received, we will report to you on the terms of your mortgage. Once we are happy all enquiries have been satisfied, we will write up what is called a Property Report explaining the individual elements of the Property you are purchasing and flag to you anything you need to be aware of. This will be sent to you with the contract and transfer for the Property.
Once you are happy with everything, you will sign the contract and transfer for the Property, as well as our Property Report, and confirm you are happy to proceed with the purchase.

What is exchange / completion?

Before you exchange
We will ask you for your buildings insurance and 10% deposit monies and signed documents in order to proceed to exchange.

When you pay the reserve fee at the beginning, from this date the Developer will issue 28 working days for exchange to take place, and so we will work to this timeline as best as we can.
On exchange, we set what is called a ‘longstop date’ and exchange ‘on notice’ as the Property will likely still need to be finished on exchange, and therefore this date is when the developer must have finished works to the Property (i.e. the Property is fully built and has been signed off by Building Control). This, therefore, could be 3 weeks or 3 months, etc., from the date we exchange, depending on the stage of the development. We will receive confirmation of the New Build Warranty provider, often provided by a company called NHBC, which confirms the Property’s sign off, and this will be provided once the Property is complete, and completion can take place.
After exchange

We will confirm to you that we have exchanged contracts on your behalf and provide you with a completion statement which confirms the balance outstanding to complete the purchase – this will show the total of our fees, stamp duty (if applicable), and purchase monies due after payment of the deposit.

What happens on completion day?
On the day of completion, we receive your mortgage advance from your lender, send your purchase monies to your developer’s solicitor, and once they confirm receipt of the monies, they will confirm to us that completion has taken place and they will release the keys with the Developer’s sales office.
At this point, we will confirm completion has taken place, and you can collect the keys.
We will pay any stamp duty due on the day of completion and submit an application for registration of you as the new owner of the Property.

• When you collect the keys at the sales office, the Developer will usually walk through the Property with you and perform a demonstration, to show you how the key features of the Property work, handover any relevant certificates, and ask you to identify any snagging issues which are immediately obvious.
• Depending on the terms of your Contract and the Developer’s own policy, you are then likely to have a period of time in which to identify any additional snagging issues or defects with the Property, for the Developer to resolve.

First-time Buyer New Build Questions

How much Stamp Duty do I have to pay?
If you are a FTB, you will not have to pay stamp duty on the purchase of your first home up to the value of £300,000. After this, 5% will apply to the £300,001 to £500,000 purchase price bracket. If you are purchasing over £500,000, you cannot claim the FTB relief.

When will I know when I will be able to move into the Property?
When we exchange on the contracts, completion will be on notice. The Developer, therefore, will have to serve notice to you either 2 weeks or 10 days prior to the date the Property will be finished by, whether this be the long stop date or earlier. When notice is received, this is when you have a confirmed completion date.

The difference between the actual deposit and the amount they are putting into the Property.
You will have an amount you are paying towards the Property, which bridges the mortgage amount you are receiving and the purchase price. This could be 10% of the Property’s value, or 50%, for example. While you may consider this your deposit, for conveyancing purposes, the deposit is 10% of the purchase price, which we require in our bank account to be able to exchange. This is also different from the reservation fee, which you pay to the developer in order to secure the plot.

When do I need to secure my mortgage?
It is helpful to have a mortgage agreement in principle set up when you first consider purchasing a Property. While you are going through the search process you will be able to confidently put an offer on a Property knowing you will be able to get the lending for this. Once you have had an offer accepted, you need to inform your Broker of this, and that you have instructed Leathes Prior as the firm of Solicitors to act on your behalf, in order that the lender can issue a formal mortgage offer.

I have a gifted deposit, what do I need to provide for this / when does it need to be gifted?
We will need the contact details of the person(s) you are receiving the gifted deposit from.
We will contact them to obtain their verification of ID, their source of wealth and funding to check the monies are coming from a safe source and they have the funds to send to you. We will also send them a gifted deposit declaration for them to confirm by gifting you the money they will not have an interest in your Property.

Ensure they have proof of funding.
We require to see proof of funding for the money you are paying towards the house.

• If this is by way of salary savings, we require 6 months’ worth of bank statements to show accumulation of the funds.
• If it is by way of a previous sale, we require a copy of the completion statement showing the value of your sale proceeds.
• If it is inheritance, we need a copy of the completion statement for the estate proceeds to verify the money’s source, etc.

Get quotes for building insurance.
Once exchange has taken place, you will need to place the buildings insurance for the Property on risk. If you are obtaining a mortgage, you will need to provide your buildings insurance schedule to us before we can exchange, so we can confirm to your Lender that it complies with their requirements. Therefore, it is helpful to obtain quotes for buildings insurance at the start of the conveyancing process, so you have it ready when it is needed.Realistic with timeframes.
As you are purchasing a new build, time frames will be more specific as often they require exchange within 28 days of reservation, however depending on the build stage it could be many weeks or months before your property is complete and you’re moving in. Some developers are also more lenient on the 28 days’ timeframe if circumstances require this.

To get in touch with the Leathes Prior Residential Property Team for a quote, email us via info@leathesprior.co.uk or call the Team on 01603 610911.