New-build buyers facing huge bills due to delays in completion
Buying a new-build home? Then you could face paying thousands of pounds if it’s not finished on time
June 26, 2019
When you buy a new-build, you dream of setting foot in your shiny new home. But what can you do if it’s not finished on time?
The reality is, there is very little you can do. And waiting for the developers to finish your home could leave you seriously out of pocket, as reported in the Observer this week.
The paper highlighted the case of Liam Taylor, who exchanged on his off-plan house in Deal, Kent, last August on the understanding it would be completed by April. He was told on the day contracts were exchanged this had been pushed back to October this year.
Concerned the delay could mean risking his mortgage offer and with his wife due to give birth, he agreed to swap to a more expensive house, which he was told was due to complete between May and July.
Yet two days after exchanging, he was told it may not be ready until this October. He has since been told it could be late November.
Liam estimates the delay will cost him £10,500 in temporary rental accommodation costs.
What can I do if it happens to me?
Unfortunately, if you’re told there is a delay of several months in getting your home finished, the chances are there’s little you can do but wait.
When you buy a new-build home from a developer, you’ll find the contracts are heavily weighted in their favour. So it’s essential to think through how you would manage if this happens to you.
You won’t be able to pull out and get your deposit back until it looks like it won’t be finished until after the “long stop” date. This is the final date by which the property can be finished. This will be written in the small print. And if it isn’t, make sure you get one agreed before you exchange contracts.
However, the “long stop” can be up to six months later than the legal completion date in the contracts. And the legal completion date may be several months later than the date estimated when contracts are exchanged. Crucially, most mortgage offers are valid for between three and six months.
Some developers cite a “termination date” instead of a long-stop deadline. After this date, customers who still haven’t moved in can cancel their contracts without forfeiting their deposit.
Buying a new build home: Your rights explained
What will happen to my mortgage offer?
If you think your new home won’t be ready within the period of time your mortgage offer is valid for, you may be able to get the lender to extend the offer during the period.
However in most cases your mortgage application will need to be re-assessed by starting your application all over again.
Recognising that many new build projects can be subject to delays, some lenders have special new build mortgages. These have a longer validity period that can be up to three months longer than their usual deadlines.
Checking with a mortgage broker is the best course of action as they will know which products remain valid for longer. They will also be on hand should you need to move quickly to re-apply or find an alternative lender.
So when is the completion date set in stone?
The completion date is only legally binding when the home is ready and a “completion notice” is served. After which buyers have between 7 to 10 days to pay up or face interest charges on the balance.
Anything else to watch out for?
There are other issues when it comes to getting a mortgage on a new build property. Developers often work to demanding timescales and once you have put down a deposit on your new home you may have only 28 days to exchange.
This timeframe can be challenging for mortgage lenders. So make sure you do prepare as much as you can in advance and submit the application as soon as you can.
And mortgage lenders are often a lot stricter on the amount they are willing to lend on the purchase of new-builds.
The loan-to-value ratio for new build mortgages is also often tiered, with lenders prepared to loan you less for a new build flat than a new build house. But this differs according to lenders.
For more advice on buying a new build home read our guide
Leave a comment (8)* Required
Compare conveyancing quotes in a few simple steps
Simply complete our online form to receive instant quotes from quality assured solicitors and licensed conveyancers, ranked by best price, customer satisfaction rating and location.
Looking for fee free mortgage advice?
We’ve teamed up with the UK’s leading fee-free mortgage broker to provide you with expert advice.
✓ UK’s leading fee free mortgage broker
✓ Compare 1000s of mortgages
✓ Fully qualified advisers
Moving house? Compare removals costs
✓ Get instant quotes from up to 5 removal firms that cover your area
✓ All Ombudsman backed
✓ Reviewed by users
✓ Excellent value
I reserved a house for £549,950 with Crest off plan it has been 12 weeks since I put down my deposit (also had a stamp duty of £18,000 paid by builder) and we now have a hold up in our chain which means I can’t complete on 29th October. They have now emailed to say that on that day they will take the property off me that day and remarket it (obviously without the stamp duty paid and for more money so it will be completely beyond my reach)!
Do they not have to serve me with an official notice of completion that’s been issued by the local authority before being able to do that?
I have never purchased a new build and this is my dream home the first I have ever bought as my late husband and I had always renovated properties and on my own I can no longer do this.
Same, with Crest, we exchanged in June and are meant to move in Tuesday, originally told NHBC would be done mid August, still waiting. Unless we chase they give us nothing, we have spent thousands in rental etc., wife is ill, mortgage offer runs out soon and rental too, will have nowhere to live!
Our house was finished in March, we exchanged end of March paid the monies with a view to completion in next 2/wks.
We still haven’t completed, can’t get straight answer from anyone other than they need builders to sign..even though handover was done 2wks ago. MD for Crest won’t reply, our solicitor ‘not allowed’ to contact them,, Housing assoc won’t tell us name of person whose signature were waiting for. Costing us, gone part time and partner off sick on anti depressants! Any help/advice please? Thought you go to local MP, press, Ombudsman??
I bought a new build from a Manchester property developer Dxxxxxd. Long stop date was 31 March 2020. The developer failed to deliver the property and not responding to my payment refund request. The developer also had other development and has resumed the construction work. What should I do?
Totally devasted. We were told that we must sell our property before buying. We did this. We were told to pay our deposit. We did this. We were told we had to pay our lawyers to sign the missives. We did this. We were told our home would be ready March/April then May/June now because of Clovid it’s going to be November. We left our last home in October 2019. We have been living with friends and paying rent since. We now have to move out as their children are coming to stay. Have found another place to stay and now in total this will cost us between £8000 and £10000. Luckily we do not need a mortgage but it’s definitely going to have an impact on our retirement plans. Our builder knows all of this but has not offered us one penny. The least I feel is the garden could be turfed and the fences and gate could be given free of charge.We feel royally ripped off.First new build and certainly not a route I would ever recommend to anyone else. Any suggestions as to how we can get some compensation from our very quiet builders. All we’ve heard is “we must keep our workers safe” who wouldn’t agree with that. The point I’m making is we are the people paying the piper. No thought from TW for us.
Myself and my family are facing a new build completion delay of at least 8 months.
We’re not happy with the contact and information received from the developer.
The compensation offer we’ve received is pitiful.
Who is the current ombudsman in order to refer a complaint?
Never mind delays in completion. We have been in our new build home over a year now with snags remaining. The builder has closed many issues and suggested we go to the NHBC which we have done. Not happy with the ‘service’ provided by the NHBC either. Builder blames the sub contractors who turn up when they feel like it. The quality of work is generally appalling with multiple visits normally needed before the snags become somewhat acceptable. This from a so called luxury five star builder. It’s a disgrace. Been to the MP who referred the matter to the minister for housing. Still no Ombudsman in place to assist. I genuinely think the builder is now actively trying to wind us up. I could write a book on how badly we have been treated especially considering my wife is chronically ill.
Really sorry to hear of this. Unfortunately we do get a lot of complaints about new build and snagging. We have tried to get as much publicity for people as possible in relation to this and we are campaigning hard for better new build https://hoa.org.uk/campaigns/campaign-better-new-build/