Buying off-plan. Can I insure against non-completion?

pimento

As per the title.

I'm thinking of buying a new build and the only current option on the development is off-plan. I assume they'll want a fast exchange but what happens if we exchange and then I lose my buyer? Is there such a thing as insurance against this?

It feels like a big risk.

davidmcn

By "lose your buyer" do you mean you're contemplating exchanging for your purchase before you've exchanged for your sale? No, nobody's going to insure you for that. And you shouldn't do it, assuming you need the funds from your sale in order to buy.

It's tricky to knit together the transactions when it's a newbuild, you'd be best to sell first, go live somewhere else (or at least be prepared to), and then buy.

pimento

Thanks David. Not sure I love the new build enough to move twice.

The developer mentions exchanging within 28 days but there's no way my buyer can do that.

oystercatcher

I know a couple of families who have sold, gone into rented accommodation and then bought the new build. Seems a lot of hassle to me but it's what they wanted !

ThePants999

Never mind exchanging within 28 days - is your buyer going to be happy to wait an indeterminate amount of time for completion until the new build is ready?

pimento

Almost certainly not.

So is the majority of new house sales to first time buyers then?

davidmcn

pimento wrote: »

So is the majority of new house sales to first time buyers then?

Probably not the majority, but plenty of people buy off-plan without trying to force their buyers to complete on demand - so they sell first and rent (or squeeze in with relatives etc) while they're waiting for construction to happen. Or they buy from builders offering part-exchange.

sal_III

pimento wrote: »

The developer mentions exchanging within 28 days but there's no way my buyer can do that.

They always say that, to pressure you. In reality as long as your mortgage application is moving in the right direction they are happy to wait months. I reserved beginning of April and exchanged end of June.

As mentioned your bigger problem is whether the buyer is happy to wait until you complete on the new build.

You are unlikely to get a firm date from the developer, beyond 1st/2nd half of month X until 1-2 weeks before completion, so you need flexibility.

foxy-stoat

No insurance exists - only what is in the contract when you exchange, which will be nothing. You need to be in rented or living with family/friends and have your stuff in storage if you want to buy off plan - for a stressless as possible move.

pimento

I don't think part-exchange will work as we're downsizing considerably. We won't need a mortgage either.

We have a buyer (STC) and are relocating four and a half hours away so we're going down at the weekend to view some likely properties. We've been in the showhome for the new ones but they won't be ready until January 2020 (by their estimation) and we have an elderly cat so we'd really rather not rent in the meantime.

Hopefully we'll find something we like already built.

saajan_12

There's really not a magic solution.. either
* buy, then sell your house (if you can afford both at the same time); or
* sell, the buy a new build (if you can move somewhere in between)
* find a buyer who will wait until your new build completes and LEGALLY tie both together ie same date exchange and completion fixed to same date or completion on notice for both..

The 3rd option is likely only to be if your buyer is the developer ie part exchange, but you can ask your buyer (i'd expect this is unlikely so I'd ask before everyone spends time / money on searches etc