You paid your reservation fee and exchanged on your new home months ago – but it's still not ready. New build delays are common but the impact can mean undue stress and huge additional costs. Here's what to do to avoid new build delays and your options if it happens to you.
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 and you face new build delays?
How a new build completion delay may affect you
When you buy off plan, you’ll usually have 28 days between reserving a property and needing to exchange contracts. In a normal buying process, the completion date is set in stone when you exchange. But with new builds it’s different in order to take into account potential new build delays.
So in your contract there should be:
- The anticipated legal completion date: the date the developers think they’ll be finished by
- The long stop completion date: the date the developers must be finished by, or the buyer can withdraw and get their deposit back.
However the long stop completion date is often six months after the anticipated legal completion date. So if the developer or estate agent tells you your home should be ready by March, it could be that the long-stop date in the contract – and the date it actually ends up ready – is November.
The developer should be clear about the long stop date but there is also responsibility on your solicitor to advise you about the long stop date.
If you’re not happy with the proposed timescale it’s in your interests to negotiate it. 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. And if a long-stop completion date isn’t in the contract, make sure you get one agreed before you exchange. 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.
How can I avoid new build delays?
When you buy a new-build home from a developer, you’ll find the contracts are heavily weighted in their favour. So when you instruct a solicitor or conveyancer it’s important to choose one that has experience of working on developments like yours so they know the questions to ask. Don’t be pushed into using the developer’s recommended solicitor. Your solicitor should be representing your interests but this could be more difficult if they receive a lot of business from the developer. Read more in our guide on New build conveyancing.
Then, ask your conveyancer to check the long-stop completion date. And ensure the long stop date falls before (or even on the day) your mortgage offer expires. Read on for why this is important.
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What are the consequences of new build delays?
The consequences of new build delays can include:
1. Facing £1000s bills for temporary accommodation
We’ve heard of countless cases where someone has bought a new build in good faith, expecting to move in on the date the developer told them when they bought. Only to be faced with delays of months or even longer and realising there’s little they can do about it as the developer is covered by a long stop date. In this scenario some homebuyers are having to pay thousands of pounds in temporary accommodation costs, not to mention having to put up with significant upheaval.
So it’s essential to think through how you would manage if this happens to you.
2. Your mortgage offer could expire
Crucially, most mortgage offers are valid for between three and six months – although some lenders have longer offer periods for new builds. 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.
But if you face new build delays and need to get a new mortgage, it could cost you more on your mortgage payments each month if you can’t get as good a rate. And you might find it harder to get a mortgage too, for example if your circumstances have changed.
So using a mortgage broker can be particularly useful to guide you through the process if you’re buying a new build.
David Hollingworth from fee-free brokers L&C explains: ‘Having an offer secured that will remain valid for the required timeframe is the best solution but if there are unexpected delays there could be a need to renew the mortgage offer. Rates have been moving up and down so it could have an impact on the rate secured.
‘Any changes in personal circumstances or tightening affordability criteria could also have an impact. But lenders will generally want to help borrowers complete their purchase and your adviser will be there to help work through how best to navigate any issues that are thrown up by a delay or if timelines alter.’
A broker will also be on hand should you need to move quickly to re-apply or find an alternative lender.
However, in cases where buyers have failed to complete because their mortgage offer has expired and they have been unable to get a new mortgage offer, developers have been known to take legal action.
Top tip: One way to avoid this happening to you is to negotiate to ensure the long stop date falls before (or even on the day) the mortgage offer expires. That way you can pull out if you wish with no penalties.
Get fee-free expert advice about new build mortgages, from our partners at London and Country. You can start your search online or speak to them today
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What happens if a new build is not ready by the long stop completion date?
If the property is not ready by the long stop date you can either:
- Cancel the contract and get their deposit back; or
- Continue with the purchase and extend the completion date
Again, if you choose to continue with the purchase and need a mortgage you should check first when your mortgage offer expires.
Can I get new build completion delay compensation?
If you’ve faced delays and these delays have caused inconvenience and cost you money then you’re probably asking ‘Can I get new build completion delay compensation?’ Unfortunately, it’s not clear cut unless it’s written into your contract.
Top tip: Ask that a form of completion delay compensation is written into your contract before you sign.
However, if this isn’t written into your contract and if your new build home is delayed beyond the long stop date and you don’t want to pull out, you can complain to your house builder. And if they don’t offer a satisfactory response you can escalate your complaint. You should be able to find details of the developer’s formal complaints process on their website.
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.
Beware: if you’re renting a property, depending on the notice period you need to give you may end up paying rent and mortgage at the same time.
New build mortgages – what to watch for
There are other issues when it comes to getting a new build mortgage. Developers often work to demanding timescales and once you have put down a deposit on your new home you’ll often 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, it’s a good idea to speak to a mortgage broker as they will know each lender’s criteria. For more advice on buying a new build home read our guide
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What happens if I have problems with my house once I move in?
Snagging problems are common in new build homes, it could be a scratched window or a door that won’t close. Or something more serious or even structural. Given the number of complaints we get from visitors to our website, we advise getting a snagging survey done. A professional inspector is likely to spot more defects than a homeowner. Plus, they will create an independent snagging report, can liaise with your house builder on your behalf and push for the defects to be fixed.
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But here at the HomeOwners Alliance we also think house builders need to do more to get new build homes right first time. That’s why we are campaigning for a snagging retention fee. This would involve homebuyers retaining a set percentage (at least 2.5%) of the cost of their house until faults are fixed. They would only hand over this amount six months after they have moved into their new home and after all snags have been fixed. Find out more about our Snagging Retention – Campaign for Change here.
What is a new build warranty?
A new build home warranty is essentially an insurance policy for newly built homes. It’s taken out by the developer but is in place to protect you, the buyer (and your mortgage lender). These warranties typically cover you for defects that arise due to faults in the design, workmanship or materials that remain undiscovered at the time of practical completion on your new build.
These policies are referred to by many different names, including New Home Warranties, New Build Warranties, Structural Warranties, Latent Defects Insurance and Inherent Defects Insurance.
The best known providers of new home warranties are the National House-Building Council (NHBC) – which covers 70-80% of the new build market, Local Authority Building Control Warranty (LABC) and Premier Guarantee. To get their warranty, builders need to sign up to one of the schemes allowed by their warranty provider.
Both NHBC and LABC offer the choice of two consumer code schemes builders can choose to adopt, the Consumer Code for Home Builders and the New Homes Quality Code. While LABC builders are required to be signed up to The Consumer Code for Home Builders.
Here at the HomeOwners Alliance we campaign to get homeowners and aspiring homeowners a better deal. The current system is letting down too many people, costing them undue stress and huge sums of money. One key issue that needs addressing is the quality of new build homes. As we build more homes, quality shouldn’t be compromised and people should come before profits. This is why we launched a campaign for better quality new build homes.
For more advice on buying a new build home read our guide
April 15, 2024 
