While it is obviously an exciting prospect, purchasing a new build property comes with additional advantages such as offering modern amenities, energy efficiency, and the opportunity to customise your home before moving in.
However, buying a new build comes with legal considerations that differ from purchasing an existing property.
Understanding your contract and the consumer code for home builders
One of the biggest differences in buying a new build home is that you will typically purchase ‘off-plan’ – agreeing to buy the property before it is built.
This means you must carefully review your contract to understand your rights and responsibilities.
The Consumer Code for Home Builders (CCHB) provides important protections for buyers, ensuring that home builders act fairly and provide clear information about completion dates and contract terms.
The Code requires developers to provide:
- A clear reservation agreement setting out fees and timelines.
- Information on structural guarantees and warranties.
- A 14-day cooling-off period for buyers to reconsider their purchase.
The New Homes Quality Code and the New Homes Ombudsman
Since 2022, developers registered with the New Homes Quality Board (NHQB) must comply with the New Homes Quality Code (NHQC), which provides further protection to buyers. This includes ensuring:
- A clear complaints process for any issues with your new home.
- A right to independent dispute resolution through the New Homes Ombudsman Service.
- Transparency over hidden charges, including service charges and estate management fees.
Before committing to a purchase, check whether your developer is registered with the NHQB.
Planning permission and building regulations compliance
All new homes must comply with building regulations, covering structural integrity, fire safety, insulation standards, and energy efficiency.
The developer should provide you with a Building Regulations Completion Certificate before you complete the purchase.
In some cases, additional planning permissions or agreements under Section 106 of the Town and Country Planning Act 1990 (the Act) may affect your property.
These could include affordable housing obligations, local infrastructure contributions, or restrictions on alterations.
We can review these agreements to ensure there are no unexpected obligations.
Leasehold vs freehold
New build houses should generally be freehold, following government intervention to stop unfair leasehold practices.
However, some properties, particularly flats, will be leasehold. If purchasing a leasehold property, check:
- The length of the lease (ideally over 990 years).
- Ground rent provisions (following the Leasehold Reform (Ground Rent) Act 2022 (the Act), ground rents in new leases should be set at zero)
- Any service charges and management fees.
Your solicitor will advise on lease terms and whether they comply with the latest leasehold reforms.
Deposits, completion dates, and delays
New build homes often involve exchanging contracts months before completion.
Your deposit (typically 10 per cent of the purchase price) is protected under your contract, but delays in construction are common.
The completion on notice clause in your contract will outline how long the developer has to complete the property.
If delays occur, you may be entitled to compensation or a refund, depending on the terms.
We can negotiate to include protections against excessive delays.
Mortgage considerations for new build purchases
Lenders often have stricter requirements for mortgages on new builds, particularly for flats.
Many mortgage offers are valid for six months, but some developers take longer to complete homes, requiring you to request an extension.
We can liaise with your lender to ensure your mortgage remains valid.
Snagging issues and your legal rights
It is common for new builds to have snagging issues – minor defects such as unfinished paintwork, faulty fixtures, or heating problems.
Before completing your purchase, arrange a snagging survey and ensure defects are resolved before moving in.
Stamp Duty on first time property purchases
Stamp Duty Land Tax (SDLT) applies to new build purchases, but exemptions exist for first-time buyers:
- First-time buyers pay no SDLT on homes up to £425,000.
- For homes between £425,001 and £625,000, a five per cent rate applies to the portion above £425,000.
- For properties over £625,000, normal SDLT rates apply.
Please be aware that the £425,000 threshold will be reduced to £300,000 as of 1 April 2025, and the five per cent rate will apply to the portion of any value between £300,001 and £500,000.
We can help you calculate the exact SDLT payable and ensure you take advantage of any available reliefs.
If you have been thinking about purchasing a new build property, please contact Saio Kamara at Saio.Kamara@mackrell.com or on 0207 420 4197.
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- Legal considerations when purchasing a new build home - February 19, 2025