Contractual Considerations When Buying a New Build Home

When it comes to buying a home there are so many variables to consider and that, to put it lightly, can make the process even more of a headache. That’s why so many people (particularly first-time buyers) are starting to acknowledge the appeal of new build homes, with all mod cons ready to go from the start and no surprises to greet you on moving day.

However, even with a new build there are certain legal and contractual considerations and obligations to consider. With that in mind, today we’ll be taking you through everything from understanding contracts and warranties, to negotiations, due diligence, and financing. Basically, all the intimidating grown up stuff!

Introduction to New Build homes

Before delving into all the potentially confusing legalities, it’s essential to understand what constitutes a “new build” home. These properties are typically recently constructed, often by developers or builders, and must have never been lived in to qualify as new builds. The advantages of buying new homes, other than the obvious “newness” of everything, is that they typically include all the latest features, are as energy efficient as you’re likely to get and represent a clean slate for making a house into your own home. 

However, there are potential drawbacks to consider, such as potentially longer wait times for homes to be finished to spec and the absence of established communities. Many developments are also located ‘in the middle of nowhere’ so will probably be of little use to somebody that doesn’t drive.

Understanding Contracts

A well-drafted contract outlines the terms and conditions of the transaction, including the sale price, closing date, and contingencies. Solicitors play a vital role here in reviewing and amending contracts to protect the buyer’s interests while sticking within established UK guidelines. 

Remember when going through the contract to read the fine print (or get your solicitor to read it for you) as there will probably be stipulations about amendments or customisations in there somewhere that might not be relevant now but could be in a few years when you want to start making some changes.

Types of Warranties

New build homes typically come with several warranties, the most important of which will be the builder’s warranty, which covers workmanship and materials, and the structural warranty, which provides protection against structural defects. 

It’s essential to understand the coverage and duration of these warranties and how they differ from homeowner’s insurance, which typically covers damages caused by unforeseen events like fires or natural disasters. Again, this might not seem important right now, but you’ll be glad you took the time to read the fine print if the worst should happen.

Everything Else

Financing and Mortgage Considerations – Understanding mortgage contingencies and their implications might seem complicated but, trust us, it’s vital as these contingencies can provide a way out of the contract if things go south.

Negotiating with Builders – Negotiating with builders and developers can be a complex process but always remember that documentation is key during all negotiations to ensure that all agreed-upon terms are legally binding.

Due Diligence and Inspections – Before closing on a new build home, due diligence is crucial. Property inspections can identify potential issues or red flags that need addressing by the builder. Some builders may offer a walk-through inspection, but we’d always advise hiring a third-party inspector with no skin in the game to be used as a basis for negotiations with the builder, if necessary.