Help to Buy Funding Issue

AaronDH

Hello,


I am currently buying a new-build property from Larkfleet. We paid a reservation fee in September for an off plan property due to be completed in May. We were told we'd exchange in October and then complete in May.


Initially our solicitors weren't particularly quick but we had everything signed and done by November. We even sent the deposit over to our solicitors. Due to the way the contracts are written, we have to exchange within six months of completion so we were then told December.



We have been waiting since then to exchange. I have now been told that the builder has a funding issue with the Help to Buy Equity Loan scheme. Essentially they cannot exchange until they have the H2B funding in place but they won't have it in place until the next financial year (beginning in April). Therefore we won't be exchanging until April with an estimated completion date of end of May.


I have gotten our deposit back from our solicitors (no point it sitting in their account making interest).



I live round the corner from the property and can see it's being built (ground work done, slab poured for house and garage, first floor of timber frame erected) and unless bad weather happens it should be done by May.



Should I be worried at this point? Does what I'm being told sound right (essentially that exchange and completion has to take place in the same financial year). Perhaps I'm over-thinking this but couldn't the builder decide to hike the price in five months time? If they did this we'd lose our reservation fee, monies we've paid for customisations and our mortgage fee, plus I assume I'd still be liable for some legal fees.


Thoughts please!

ThePants999

I don't understand the issue, so can't comment on whether it's normal. But as long as the developer's happy, I wouldn't worry. You've paid a reservation fee, which significantly limits the risk to you of not exchanging - really, the risk is almost all the developer's. That's why developers normally push you to exchange very quickly after reserving.

Under the Consumer Code for Home Builders, which anyone accepting HTB EL should follow, the price is fixed at reservation.

Is your mortgage offer OK for that long?

AaronDH

ThePants999 wrote: »

I don't understand the issue, so can't comment on whether it's normal. But as long as the developer's happy, I wouldn't worry. You've paid a reservation fee, which significantly limits the risk to you of not exchanging - really, the risk is almost all the developer's. That's why developers normally push you to exchange very quickly after reserving.

Under the Consumer Code for Home Builders, which anyone accepting HTB EL should follow, the price is fixed at reservation.

Is your mortgage offer OK for that long?

Thanks for your reply. We've been handed a copy of the Consumer Code for Home Builders by them so I assume they're following that.


The mortgage offer is good until June. Of course we've burnt six months of the five year fixed deal but the broker has offered to re-check at the time of completion in the (unlikely) event there is something cheaper available then.

kingstreet

Most builders (incl the three we regularly deal with) already have their 2019/2020 allocations sorted with Homes England.

We have been submitting PIFs and getting ATPs on case with May/June 2019 completions for a couple of months.

Ask your area HTB Agent for their opinion.

AaronDH

kingstreet wrote: »

Most builders (incl the three we regularly deal with) already have their 2019/2020 allocations sorted with Homes England.

We have been submitting PIFs and getting ATPs on case with May/June 2019 completions for a couple of months.

Ask your area HTB Agent for their opinion.

Thanks for this.


Having now spoken to the local HTB agent, I think the issue is that they applied for HTB funding for the plot on the basis that it would complete this financial year. Of course we knew all along it would be next year. As such they need to re-apply on their side for the next financial year (April -> ).


Nothing that HTB Midlands or the solicitors have said is alarming me so I think I'll just have to be patient!