New builds - Exchange, complete and stamp duty

[mr tommo]

Hi all,

Currently looking to buy a new build. The estate is 75% complete, our plot is available to reserve now for £500 and they want the exchange of contracts within 28 days, and the house won't be ready to move in until September.

I'm trying to understand when we need to have the funds available as we don't have it all right now but can save up quickly. This plot has just come up out of the blue, we can save pretty quickly and don't want to miss out on this one.

If I understand this correctly, from putting down our £500 deposit we have 28 days to sort the contracts. To complete this stage our full deposit would be required (5% on help to buy).

Next up is completion, what happens here and when is this likely to be?

When would we pay solicitors fees and stamp duty?

 

[sigma]

You pay the fees when you complete, which I think will be close to when you move in:

http://www.in-deed.net/buying-new-build-house-your-guide-purchasing-new-build-property

https://www.moneyadviceservice.org....when-buying-property-england-wales--n-ireland

Surely your mortgage advisor/lender has taken you through all of this?

 

[Skillmister]

On exchange you need whatever the agreed deposit in the contract is (usually 10% but can be less and is often 5%). Bear in mind that whilst the developer might say they need exchange of contracts within 28 days this very rarely happens and I can't recall this ever being a problem. They don't tend to be in the business of sacking people off at 28 days and hoarding reservation deposits

For completion you will need the remaining funds (purchase price less deposit), stamp duty and land registry fees and most likely solicitor's costs all at the same time (a colleague of mine doesn't get his costs until after completion but I and most others get it all at once beforehand, it's just easier). If the property isn't ready until September then completion won't be until September. But obviously, once exchanged you are legally committed to purchase regardless of whether you have your funds in time! The completion date is likely to be "on notice" which means it could be any time, for instance if they finish your property sooner than expected. So your mortgage really needs to be ready and everything boxed off by the time you exchange with the only outstanding matter being your solicitor requesting funds which he'll do once he gets notice of the completion date.

 

[sparkymark75]

Are you in a position to proceed? Do you have a property to sell? If you're not in a position to proceed the builder probably won't entertain you until you are.

I reserved a new build at the end of January and still haven't concluded missives yet (same as exchange contracts). While they say 28 days, it's not rigidly enforced by some builders. I'm due to complete at the end of June!

Also remember that most mortgage offers expire after 6 months so best to either delay your mortgage application or go with a lender that has a longer expiry time period for new builds.

 

[mr tommo]

Thanks for that, much better than the links I'd managed to find.

Not really, we're just at the mortgage in principle stage but I seem to have had some pretty poor 'advice' from the sales person on the estate who told me that everything will be paid on exchange of contracts, hence the confusion.

EDIT :

Awesome thanks guys! I did think 28 days was impossible.

Yes I have my memorandum of sale coming tomorrow, and a mortgage in principle too so I've been told this is enough to reserve the plot!
Completion all of those fees/stamp duty being paid in August/September would be absolutely perfect.

Have any of you managed to negotiate a discount/flooring/stamp duty on a new build? I've noticed some less desireable plots with free flooring but they don't seem to be having much trouble selling at the moment

 

[sparkymark75]

It's slightly different for me as I'm in Scotland and we don't pay a 10% deposit on conclusion of missives. I've paid the same £500 reservation fee and on conclusion of missives, pay a further £1500. I then pay the balance on completion along with any taxes and fees.

 

[Windle]

Thanks for that, much better than the links I'd managed to find.

Not really, we're just at the mortgage in principle stage but I seem to have had some pretty poor 'advice' from the sales person on the estate who told me that everything will be paid on exchange of contracts, hence the confusion.

EDIT :

Awesome thanks guys! I did think 28 days was impossible.

Yes I have my memorandum of sale coming tomorrow, and a mortgage in principle too so I've been told this is enough to reserve the plot!
Completion all of those fees/stamp duty being paid in August/September would be absolutely perfect.

Have any of you managed to negotiate a discount/flooring/stamp duty on a new build? I've noticed some less desireable plots with free flooring but they don't seem to be having much trouble selling at the moment

Unlikely you'll get a discount but you should be pushing to get things included in sale such as flooring, light fittings, turf etc.

 

[sparkymark75]

They don't like to discount the selling price as it affects the price of the other properties they have to sell.

I got an upgraded kitchen and free flooring throughout for mine.

You'll have to watch if you are using HTB as I'm not sure it allows incentives. Best to check with your broker what's acceptable. E.g. Free flooring might be okay but the builder paying your stamp duty might not be.

 

[Dynix]

Awesome thanks guys! I did think 28 days was impossible.

Yes I have my memorandum of sale coming tomorrow, and a mortgage in principle too so I've been told this is enough to reserve the plot!
Completion all of those fees/stamp duty being paid in August/September would be absolutely perfect.

Have any of you managed to negotiate a discount/flooring/stamp duty on a new build? I've noticed some less desireable plots with free flooring but they don't seem to be having much trouble selling at the moment

Exchanging in 28 days isn't impossible - we did it in under 4 weeks last April (first time buyers, new build). I managed to secure a discounted price, upgraded kitchen with appliances and flooring in the first plot we reserved but ended up negotiating them giving us a plot someone else had already reserved and fully upgraded and got them to drop the price as well...