Differences in a New Build Contract
Unlike standard property purchases, contracts for new builds are drafted by developers’ solicitors and are often weighted in the developer’s favour. Understanding key terms before signing is essential to avoid financial or legal pitfalls.
One of the most important provisions is the long-stop date, which is the final deadline for completion. If the developer fails to meet this date, the buyer will be entitled to withdraw and recover their deposit. Whilst contracts may include an estimated completion date, this is usually non-binding. Buyers must ensure the long-stop date aligns with their mortgage offer, as delays could mean reapplying under less favourable terms.
Clarity around the property specification is equally important. Contracts should include detailed plans, drawings, and descriptions of materials and finishes. Vague wording can lead to disputes, especially if developers retain the right to make “minor” changes without a buyer’s consent. Buyers should ensure any permitted changes are of equal or better quality and that key features like boundaries, parking, and landscaping are clearly defined.
Financial considerations go beyond the purchase price. Extras such as flooring, garden turfing, and utility connections may not be included and can add significant costs. Any incentives offered by the developer must be written into the contract, as verbal promises are not legally binding. Buyers should also review service charges or estate management fees, particularly for leasehold properties or developments with shared spaces, and understand how these may increase over time. Legal reforms are improving transparency in this area, but the system is still evolving.
The nature of ownership—freehold or leasehold—must be confirmed, along with any obligations tied to communal areas. Restrictive covenants, which limit how a property can be used or altered, should also be carefully reviewed. Additionally, buyers should check whether roads and infrastructure will be publicly adopted or remain privately maintained at their expense.
New build homes typically come with a 10-year structural warranty, and developers are usually responsible for fixing defects within the first two years. Buyers should ensure there is a clear process for reporting issues and, where possible, secure the right to carry out a pre-completion ‘snagging’ inspection.
Finally, the reservation agreement, which often requires an upfront fee, should not be overlooked. Cooling-off periods may apply, but terms vary, and buyers need to understand the conditions under which the fee may be retained.
Given the complexity of new build contracts, instructing a solicitor early in the process is critical to protecting your interests. Whilst purchasing a property is an exciting moment in one’s life, it is important to ensure the legalities behind the process are covered from start to finish to ensure there are no issues once you have moved in. Mullis & Peake LLP are here to assist you in the legal complexities of a new build purchase to ensure your transaction progresses as smoothly as possible from start to finish.
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