FTB using HTB on a new build - reservation fee down . Is it possible to negotiate FH?

jraf

Hi everyone,

I recently put a reservation on a plot on a new development in my area for around £300k We are first time buyers and we have been instructed by the developers to get things moving pretty quickly in terms of having a mortgage & solicitor in place. I will be meeting to discuss this with them at the weekend but it seems a bit early when the estimation build completion isn't until Dec 17/Jan 18

We were clearly informed that we must complete within 35 days of obtaining "authority to proceed" I think this is what you get when the govt approve you for the HTB equity loan. Please correct me if I'm wrong. However, the developer didn't tell us when we need to "authority to proceed" in place. I don't feel like I fully understand the terms of the reservation - how long is a reservation fee supposed to last for before the developer will start getting nervous?

I don't really want to rush into anything and I think that with a build completion date of the end of this year/early next we have plenty of time to make sensible decisions about our broker/mortgage package and solicitors. I would appreciate anyone in similar situations to myself's advice and experience.

Unfortunately the property was leasehold not freehold but it is a 999 year lease with very low ground rent fees.
Nevertheless I did try to negotiate this before making the plot reservation - no joy! They told us that everyone on the development have and will be purchasing leasehold and it is simply not possible to sell us the freehold. Is this true or just sales BS? I know that some people have succcessfully negotiated the outright purchase of their freehold on leasehold new builds. Can my solicitor/conveyancer assist with this?

Mathias123

With HTB you need to get Authority to Proceed as soon as possible after reservation. You have to send the HTB agent the reservation form and a Property Information Form (PIF). We did the PIF ourselves but if you get a broker they should do it for you.

Before you exchange contracts you then need to get Authority to Exchange from HTB which your Solicitor would do. Do you have to complete or exchcange in 35 days? I don't think you can complete if the property is built (?) so it sounds like you need to exchange in 35 days from paying the reservation fee? For us it was 28 days! We're two months over that but on a popular development the developer might get itchy feet if there is no signs of movement after the 35 days.

Can't comment on the leasehold/freehold bit.

satchef1

Does it matter whether they can or they can't? If you've tried to negotiate the freehold and been told no, that suggests that they won't sell it to you.

Chances are they already have a buyer lined up for all of the freeholds. You'll have to buy yours off that entity for an inflated price 2 years down the line.

Personally, it's the first question I ask when I turn up at a development. Saves wasting everybody's time. I've got no intention of buying a leasehold property at the same price as a freehold. It confuses me as to why anyone would?

saajan_12

jraf wrote: »

We were clearly informed that we must complete within 35 days of obtaining "authority to proceed" I think this is what you get when the govt approve you for the HTB equity loan. Please correct me if I'm wrong. However, the developer didn't tell us when we need to "authority to proceed" in place. I don't feel like I fully understand the terms of the reservation - how long is a reservation fee supposed to last for before the developer will start getting nervous?

I don't really want to rush into anything and I think that with a build completion date of the end of this year/early next we have plenty of time to make sensible decisions about our broker/mortgage package and solicitors.

If you're thinking you have the best part of the building time to get everything in order, you're likely dreaming. The developers will want to get exchange over with early so that they have the deal locked in and their sales efforts can move on, as well as getting some cash flow from the exchange deposit. They often place a deadline, and even if they don't they may give up on you and go with another buyer if you take too long.

What contract did you agree to in relation to the reservation fee? What does the receipt say when you paid the fee? Read it!
That will likely outline how long you have before they move on to another buyer. They may be happy to return your reservation fee if you take too long to get authority to proceed and that eventuality isn't covered by the contract.