Covid-19 - new house build (not built yet) and exchanging contracts

Hjulian

Hi

We are at the stage where we have paid a £1000 reservation fee, got a mortgage offer however that is due to run out this month. We have only just received the mining report and the solicitor is advising us not to exchange with the current situation. The housing developers are wanting us to exchange, however at the moment they are giving an anticipated completion date of Dec (was initially June!!) but this isn't certain due to Coronavirus. Our worry (and the solicitor) is that house prices may drop with all of this (depending how long it goes on) and our mortgage lender may revalue the house at less - and if we have already exchanged we will be liable to pay the price in the contract and make up the shortfall that the mortgage lender won't now pay - we are already paying £70,000 for a deposit (they want us to pay 10% at exchange) - then if we pull out because we cannot make the rest of the cash, we have forfeited our deposit! and may be liable to fees etc.

The solicitor is advising an exchange and completion simultaneously (on the day of moving in) so no prior warning - however we really do not want to lose the house because we love it!

Any advice???

davidmcn

If you end up not being able to afford the house then you'll lose it anyway - and if you had exchanged, you'll lose a lot more than the opportunity to buy the house. I doubt the builders have a queue of other buyers willing to take your place at the same price, do they?

Hjulian

We can afford the house at the moment, but if it if the mortgage lenders decide to revalue and in 6 months time its a lot cheaper, they would want us to pay the shortfall which could be thousands.

jonnym8083

Our solicitor has put a rider in place that if we exchange and if as a result of covid19 we can no longer afford the property eg job loss or pay cuts we can terminate the contract and receive full deposit back 

davidmcn

jonnym8083 said:

Our solicitor has put a rider in place that if we exchange and if as a result of covid19 we can no longer afford the property eg job loss or pay cuts we can terminate the contract and receive full deposit back 

Has that been accepted?

jonnym8083

The solicitor actually wrote to us and all it’s clients to advise it would be going in. We didn’t request this but great security for us as we can proceed and if worst happens in coming months we have a get out but only if due to covid19 but that would be the only reason we wouldn’t proceed if we lost a job etc 

mobileron

Your Solicitor says no,why ask other people.

davidmcn

jonnym8083 said:

The solicitor actually wrote to us and all it’s clients to advise it would be going in. We didn’t request this but great security for us as we can proceed and if worst happens in coming months we have a get out but only if due to covid19 but that would be the only reason we wouldn’t proceed if we lost a job etc 

I meant has the seller agreed to the principle of it being in the contract?

jonnym8083

It’s a new build property. The solicitor mentioned the developer has their own rider to cover us too but we have opted for the one on behalf of the solicitor. That’s all the info I have at the moment. They said it would be included in the exchange paper work. I would just hold out if they didn’t agree to get a clearer picture of everything. I don’t foresee job loss as both key worker but for private companies. Tbf you could lose your job at any point no one ever knows but would be nice to have that security during this unprecedented times with the rider. Can update once know more 

jaybeetoo

Listen to your solicitor.  The developer does not have a queue of people waiting to buy their houses.  You'd be mad to exchange at the moment.  You don't even know if the developer will survive.

Hjulian

So if we exchange our deposit is covered under new build insurance so if the developer went under we would get our money back, its if the house prices change and then the mortgage lender decide to revalue as house prices have dropped and won't give us as much on the mortgage or say it is worth less, we would then not get our deposit etc back and may be liable to fees, damages etc. imm a key worker so we can afford the mortgage our worry is if houses prices drop and we've not been given a completion date.