Published 23 Nov 2016
What Does It Mean to Buy a New Build Property
We’ve asked one of our panel Solicitors, Norman H Barnett, to help explain what it means to buy a new build property?:
What does it mean to buy a new build home?
Buying a new build property usually means you are purchasing a property which has not been built, also known as buying "off plan". Alternatively, the property has been built and you will be the first owner of it. When purchasing a new build, there are many things to consider, the main concern can be timescale. Your solicitor and Peabody will guide you through the process and ensure you are updated throughout.
What happens when you find a Shared Ownership property?
You have found the perfect property and development. Firstly, you will need to be selected by Peabody. Peabody will be able to guide you through this process and inform you of the selection criteria (income, area of work and residence). Once, you have been selected, you will need to pay your reservation fee (usually, £500), instruct a mortgage advisor and solicitor.
What does your solicitor do when purchasing a property?
Buying a property is exciting; however, it can also be stressful. Your solicitor is there to assist and help you, taking the pressure away. To start the legal process, Peabody solicitor will send your solicitor a legal pack. The legal pack contains your lease, contract, planning permission, Land Registry ownership information (title deeds) and much more. Your solicitor will have 28 days from the day of receiving the legal pack to exchange contracts. Your solicitor’s job is to review the legal pack in detail and raise any enquiries which are relevant to the development and your property, to Peabody solicitor.
While your solicitor is doing this you will need to focus on obtaining a mortgage offer. Your mortgage advisor will assist you with this. When you have obtained a mortgage offer, it will be sent automatically to your solicitor. The mortgage offer will have to refer to the correct property address, the purchase price and share. It will then be sent to Peabody solicitor for approval. Once your solicitor has received the replies to their enquiries, local search results and mortgage approval; you will be reported to and invited to sign your contract.
What happens during the exchanging of contracts?
After signing your contract, your solicitor will exchange contracts with Peabody solicitor. In order to exchange you will need to pay your deposit to your solicitor (usually, this is £1,000.00). At the point of exchange, you will be legally bound to purchase the property and Peabody will be legally bound to sell the property.
Unlike buying a resale property or a property on the open market, on exchange a completion date will not be set (unless your property is already built). Instead completion will be "On Notice". This means when Peabody take handover of the development, they will instruct their solicitor to serve notice to your solicitor. This will give your solicitor ten working days from the date of the notice to complete your purchase.
When will notice be served?
Unfortunately, this is out of your solicitors control. Your solicitor will work closely with Peabody to ensure you are updated on the progress of the development. However, your solicitor will not be able to confirm when completion will be until the notice has been served. If you are currently renting a property, it is strongly recommended that you do not hand in your notice until a completion date has been set. However, you may wish to discuss your situation with your landlord. Peabody will only take handover of the development when the works have been done to a high standard and the property is fit for occupation. Please note that it is not Peabody who determine this but the local authority/developer. This is to protect your interest and ensures that you will not experience any issues when you move in.
As soon as notice has been served, your solicitor will contact you to set a completion date. When a completion date has been agreed, your solicitor will inform your mortgage lender and send you a completion statement. The completion statement will include the remaining deposit, rent and service charge from the date of completion until the end of the month, one months’ rent and service charge in advance. You will have to ensure you pay the balance before your completion date.
What happens on completion?
On completion, the amount on the completion statement required to complete the property will be sent to Peabody solicitor. Once they have received the funds, your solicitor will contact you to confirm completion. From this point you are the owner of the property. A representative from Peabody will meet you at the property, conduct an indication and give you the keys.
Now that you have the keys, you can relax and enjoy making your new property into a home!