Buying a new build home follows the same basic legal steps as any purchase, but the timetable and the paperwork are different. Developers set tight deadlines, you may exchange before the home is finished, and there are extra things to check, from the build warranty to estate charges. This guide explains how the process works in England and Wales and where buyers most often get caught out.
Reserving a new build and the reservation fee
When you choose a plot, the developer will usually ask you to sign a reservation agreement and pay a reservation fee. This takes the home off the market for a set period while the legal work and your mortgage are arranged. The fee is normally deducted from the price at completion.
A reservation is not a binding contract to buy, but it does have terms. Read it carefully before you sign, and check:
- How long the reservation lasts and the date by which you must exchange contracts.
- Whether any of the fee is refundable if you or the developer pull out, and what costs can be deducted.
- The price, and what is included, such as flooring, appliances or upgrades.
- Any estate or service charges, and whether the home is freehold or leasehold.
Instruct us the day you reserve
Developers commonly expect exchange within around 28 days of reservation, sometimes less. That is a short time to review the contract pack, raise enquiries and get a mortgage offer. Send us the reservation agreement and the developer’s solicitor details as soon as you sign, so we can start straight away.
New Homes Quality Code and the New Homes Ombudsman
Most developers in England and Wales sign up to a consumer code that sets standards for how they sell homes and deal with problems. Which code applies depends on how the developer is registered.
- New Homes Quality Code
- Developers registered with the New Homes Quality Board follow this code. It covers fair sales practices, the reservation agreement, a cooling-off period after reservation, pre-completion inspections and after-sales service. Unresolved complaints can go to the New Homes Ombudsman.
- Consumer Code for Home Builders
- An older code still used by some developers. It sets similar standards for information and fair treatment, with its own dispute resolution scheme.
Ask the developer which code it follows, and keep a copy. It tells you what you can expect and where to go if something goes wrong.
The codes do not replace your own checks. Before you reserve, look at the developer’s track record, visit a finished phase if you can, and talk to people who already live on the estate about build quality and after-sales service.
Plans, specification and the contract pack
A new build contract pack is usually larger than for an existing home, because the plot is often being carved out of the developer’s land for the first time. We check that you will get everything you need to own, use and sell the property.
- Plans and boundaries
- The plan in the transfer must match the plot you reserved. We check the boundaries, parking spaces, garden and any shared areas, and you should check them on site too.
- Specification
- What the developer is promising to build, and whether it can make changes. Keep copies of any brochures and plans you were given.
- Rights and covenants
- Access, drainage and services, plus restrictions on things like extensions, parking caravans or running a business.
- Roads and sewers
- Whether roads and sewers will be adopted by the council and water company, and whether the developer has agreements and bonds in place to finish them. Unadopted roads can mean you pay towards their upkeep.
- Planning and building control
- That planning permission is in place, and that building control sign-off will follow at completion.
We also carry out the usual searches, including local authority, drainage and water, and environmental searches. On a new development, the local authority search can show the planning permission and any conditions, and the drainage search can confirm whether sewers are still awaiting adoption.
New build warranties: NHBC, Premier Guarantee and LABC
Most new homes come with a warranty from a provider such as NHBC, Premier Guarantee or LABC Warranty. Cover typically lasts 10 years from completion. In the first two years, the builder is usually responsible for putting right defects that breach the warranty’s technical standards. After that, the insurance mainly covers specified structural defects.
Most lenders will only lend on a new build with a recognised warranty or, in some cases, a professional consultant’s certificate. We check what cover is in place and that the cover note or certificate will be issued at completion. A warranty does not cover everything, so read the policy and note what is excluded.
Estate management charges and rent charges
On many new estates, the roads, green spaces, play areas or drainage features are not adopted by the council. Instead they are owned by a management company, and every homeowner pays a yearly charge towards their upkeep. This applies to freehold houses as well as flats, and it often comes as a surprise.
- The charge can rise over time, and you may have limited control over how it is set.
- You may be required to become a member or shareholder of the management company.
- Some arrangements use a rent charge. If it is unpaid, the rent charge owner may have strong legal remedies, so lenders look at these carefully.
- When you sell, your buyer will need information from the management company, which can add cost and time.
We explain exactly what you will be paying for, who sets the charge and what happens if it is not paid. The law in this area has been changing, and we will tell you where things stand when you buy.
Ask before you reserve
Ask the developer for the estimated annual estate charge and the name of the management company before you reserve. Factor the cost into your budget alongside your mortgage.
Leasehold new builds and ground rent
New build flats are almost always sold leasehold. Under the Leasehold Reform (Ground Rent) Act 2022, most new long residential leases granted since 30 June 2022 can only charge a peppercorn ground rent, which in practice means nothing. We check that the lease complies and look at its length, the service charge, the management arrangements and any restrictions.
New build houses are now usually sold freehold. If you are offered a leasehold house, ask why and take advice before you reserve. Read more about buying a leasehold property.
Exchange, the long-stop date and completion on notice
With a new build, you often exchange contracts before the home is finished. There is no fixed completion date at exchange. Instead, the developer serves notice when the home is ready, and you must complete within the period set in the contract, often around 10 working days.
- Reserve and instruct us. Sign the reservation agreement, pay the fee and send us the details the same day.
- Mortgage and legal checks. Apply for your mortgage while we review the contract pack, searches and warranty, and raise enquiries with the developer’s solicitor.
- Exchange contracts. You pay the deposit and the contract becomes binding. Many developers ask for 10%, though some accept less.
- Notice to complete. When the home is built and signed off, the developer serves notice. We request your mortgage funds.
- Inspect and complete. You inspect the home, then we complete. The keys are usually handed over by the developer’s site team.
The contract will include a long-stop date. If the home is not finished by then, you can usually withdraw and get your deposit back. Check it carefully, because a long-stop date that is too far away gives you little protection.
Watch your mortgage offer expiry date
Mortgage offers last for a limited time. If the build is delayed, your offer could expire before completion. Lenders sometimes offer longer validity for new builds or agree extensions, but not always. Speak to your lender or broker early if the build date slips.
Snagging and pre-completion inspections
Snags are defects or unfinished work, from scuffed paintwork to poorly fitted doors or missing sealant. They are common in new homes, and finding them early makes them easier to get fixed.
- Ask whether you can inspect the home before completion, either yourself or with a professional snagging inspector. The New Homes Quality Code supports pre-completion inspections.
- Put your snagging list to the developer in writing and keep copies.
- Report further defects within the builder’s period of responsibility under the warranty, usually the first two years.
If the developer does not deal with your complaint, you can usually escalate it through the developer’s consumer code, the New Homes Ombudsman or your warranty provider’s resolution service, depending on the issue and when it arose. Keep a record of every report, photo and reply, as you will need it if a dispute goes further.
Developer incentives and telling your lender
Developers sometimes offer incentives, such as paying legal fees, contributing to your deposit, cashback, or including flooring and appliances. These must be disclosed to your lender. The developer completes a UK Finance Disclosure of Incentives form, and we check it matches what you have been offered.
Some incentives can reduce the amount a lender will lend, or affect the price used to work out Stamp Duty Land Tax. Tell us and your broker about every incentive at the start. The Help to Buy equity loan scheme has closed to new applicants, so you will need another route if you were relying on it.
We act on new build purchases across England and Wales and work to developers’ deadlines. See how we handle new build conveyancing, read our general guide to buying a home, or get a quote.
Common questions
It depends on the reservation agreement and the consumer code your developer follows. Some or all of the fee may be refunded if you pull out, but the developer may be able to deduct its costs. Developers following the New Homes Quality Code must also offer a cooling-off period after reservation. Check the terms carefully before you pay.
Developers want certainty that their homes are sold, so reservation agreements commonly require exchange within around 28 days. If you miss the deadline, the developer may be able to cancel your reservation and offer the home to someone else. Instructing a solicitor the day you reserve, and applying for your mortgage straight away, gives you the best chance of meeting it.
A warranty from a provider such as NHBC, Premier Guarantee or LABC Warranty typically lasts 10 years. In the first two years the builder is usually responsible for fixing defects that breach the warranty standards. For the remaining years, the cover mainly protects against specified structural defects. It does not cover everything, so read the policy and its exclusions.
It is a yearly charge paid by homeowners on an estate where shared areas, such as roads, green spaces or drainage features, are owned and maintained by a management company rather than the council. It applies to freehold houses as well as flats. Ask the developer for the expected cost before you reserve and include it in your budget.
There is usually no fixed completion date, so the developer serves notice when the home is ready. If building runs late, your mortgage offer could expire, so talk to your lender or broker early. The contract should include a long-stop date, after which you can usually withdraw and recover your deposit if the home is still not finished.
Many buyers find it worthwhile. A professional snagging inspector checks the home for defects and unfinished work and gives you a written list to send to the developer. Ideally the inspection happens before completion, while the developer still has an incentive to put things right, but it can also be done in the early months after you move in.
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This guide is general information, not legal advice for your situation. Have a question? Read our FAQs or ask us.
