offering a new build off plan

AnotherJoe

This sounds different to the normal situation as outlined in post 8 by eddddy. In those cases you exchange within 28 days, and at that stage you are locked in. And in that case as said by davidmcn, the lender will value it off plan, before deciding how much to lend before you exchange.


So thats when you could renegotiate. Your £1k may or may not be at risk at that point if you want a lower price in the event of a lower valuation and they wont budge and decide to walk. With hindsight you want a clause that says something like "reservation fee to be refunded if lenders valuer states value is below £249,950" but ill bet you it doesn't.

You cannot renegotiate after exchange.
So you really do need to understand what process the builder is planning to follow.

mj2014

Okay, so I was probably just being impatient as the developers sent over confirmation of receipt of my deposit and a reservation ‘form’ It does say the reservation is nonrefundable, which I’m okay with, I kind of thought that was the case when I sent it over. What I don’t understand now is do we actually have to exchange contracts in 28 days? It doesn’t say anything about that in the reservation form. It just states the type of house, which plot, my details, and their details and that the deposit has been paid to reserve the property.

The house hasn’t even been started yet....part of the reason we went for the house is because it would give us time to do all this administrative stuff at a slow pace. I asked about things like customising the kitchen, and the developer said no problem and I could sit down with their kitchen planner and they’d quote us the difference for any extras. What if I have no idea what extras I want in the kitchen or what bathroom tiles I want in the next 28 days (that may sound ridiculous, but we’ve just got a lot going on right now and I am very indecisiive!). Don’t all those small details have to go into the contract? Or is it more general than that? I was okay handing over a small deposit without the house being built...but I’d really like to see it a bit more complete before handing over our actual entire house deposit and signing a contract...

The EA just asked me to appoint a solicitor to fill in their details at my earliest convenience. No one has been pushing us to get it all done quickly...maybe the developer is happy to be flexible?

AnotherJoe

The 28 days comes from major builders and their normal practice. It would seem yours doesn't have this or they would surely have stated it by now ?
. You need to contact them and find out what they expect. Which I would would have thought would be detailed in the reservation details but it seems not.

mj2014

Ohhh okay. Perhaps because he is a small developer he's less urgent about getting these sorted in such a specific time frame. No one has mentioned 28 days, and the estate agent told me it's not really pressing, just to let them know when we've appointed a solicitor.

I started to get the ball rolling anyway and have set up an appointment this week to apply for the mortgage.

I keep second guessing our decision...and going back and forth between being satisfied and looking forward to setting our house up and being paranoid we've bought in the wrong area. From these boards I guess it's normal to feel this way as a FTB. I don't think we could have settled on any property without playing out all the what ifs in my head over and over...so better to take the leap I guess!

airandwater

Knowing whether you are over or underpaying on a new build can be difficult if the data about existing houses isn't on the public land registry. From my experience the sell price is available 4-5 months after completion.

When we bought our new build similar houses had residents but no sale information was public. Luckily the market started calming down and we were able to get the final plot of our house spec at the lowest price. It's detached, plot size both in front and at the back of the house is biggest, best location on the street, has windows on the side of the house and a log burner.

We paid £35k less than than someone who bought a semi detached version with back to back gardens.

I would put it down to luck in timing rather than outright shrewdness.

In the end, your willingness to negotiate should be balanced against house much you want the plot, availability or similar houses and the risk of losing it to someone else.

AnotherJoe

BTW, how long for this house to be built? Most mortgage offers are for 6 months max. If they havent started building yet, is the plan for it to be completed in that time?

mj2014

Hi Airandwater,

Your house sounds really nice. £35k is a huge difference! I hope we're not overpaying by that amount! We visited a Barratt homes development a while ago and hated it which put me off new builds for a bit. But this development had a much different feel and is only 21 houses with no plans to add any more. There are 4 types of house on the development, a small semi detached 2 bed, a slightly bigger semidetached 3 bed, a 4 bed detached (3 doubles, 1 single, single garage) and a larger 4 bed detached with 4 double bedrooms and double garage. We got the 4 bed detached with the 3 doubles and 1 single room which will also have a woodburner (they are my favorite!) and a nice bay window.

There are only 5 of our house type and ours was the last of this type. I hope we are paying similar to others, but like you said no way to know and I'm not a good negotiator. We lost out on this house before (but different plot) so I thought just go with it and get it before its sold again. The developer said the sale fell through because the buyers wanted it completed faster and needed a house sooner. We're told this plot is the largest for this house type, but it's hard to tell as not all the fences have been put in and the back garden will be terraced on two levels and they haven't finished leveling all the land behind. From their site plans it just looks about the same size as the others, but who knows. Maybe they just told us that to sell it.

AnotherJoe, that is a really good point about mortgage offers only lasting 6 months. We're told it should be completed by April, but will depend on weather this winter as they had some set backs last year. So it may end up being more than 6 months. I will bring this up with the lender when I see him. Thanks!

mj2014

Been to see the mortgage lender today. Well, I learned a lot let’s say! I thought I had been calculating our expected mortgage payment based on the house price correctly, but turns out I was overestimating it and the interest rate for fixing for 5 years is like 1.5 percent less than I thought it would be. So most would take that as good news, but of course now I feel like I’ve been doing everything all wrong. Now I have come away feeling like more expensive houses which I thought were too much of a stretch are actually more comfortably affordable than I realised.

I think I have exhausted the will of friends and family to discuss house buying any more for the time being....so I’ve come back to this useful board! Basically the house we have reserved is in a small, decent enough village called Catterick about 5 miles outside of Richmond in North Yorkshire.

The houses with the same number of bedrooms tend to be more expensive in Richmond and many of the homes are older. We can just about put up curtains, but have no knowledge of other DIY stuff, so I was very hesitant to buy anything needing work. However, after perusing these boards enough, it seems to come up time and time again that location is the most important factor and anything on the inside of the house can be changed in time. If money and refurbishment was out of the picture, I think I’d prefer to live in the town. The positives to living in the village are basically cost, more garden space, and about 10 minutes off my commute (which will go from 45 to 35 minutes). We do have 2 dogs that would probably appreciate a slightly larger garden as well.

I guess what I’m looking for from here are opinions and reasons why of going ahead with this new build purchase in Catterick versus pulling out (losing £1000 reservation fee) and getting something of similar size, but that may need some work, in Richmond. We are in no rush to move, pay very cheap rent, and could afford to lose £1000 if it meant securing a property in a better location. Is there going to be really much lifestyle difference in living 5 miles outside the town as opposed to in it? Our AIP is £311 and we have about £40k for our deposit.

Thanks in advance for the advice!