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

Arefer

Hjulian said:

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.

Your solicitor is right in the current circumstances. There are quite a few heightened possible risks to completion now such as illness, job loss, mortgage offer expiring and not being extended/renewed due to a change in the lender's valuation, LTV requirements, underwriting criteria, etc. December is a long way off to be in limbo and at the mercy of the developer, and there might be even further delays. I'll personally like to keep my options open.

Mickygg

Even I wouldn’t exchange right now, and I bought shrugging off Brexit (literally right as we voted to leave I decided to buy the following month despite the doom and gloom picture being forecast for the housing market). That proved to be the right call.

although I don’t believe we will see a huge fall in prices (that’s just a guess, no more) I agree with what others are saying where there won’t be much of a q forming to buy houses right now, it’s a little hard to view properties right now for a start. 

I would look at different scenarios, if house prices reduced by say 5%, 10%, 15% or 20% even and look at affordability in each of those cases where you would need to pull together a bigger deposit. If it’s too much of a stretch even at 10% I really wouldn’t risk it and proceed.

No one knows what will happen over coming months to the housing market, but there is one thing that’s certain and that where there is huge uncertainty there is also huge risk. Only you can decide whether it’s worth the risk.

GDB2222

I struggle to see what is in it for the OP to exchange now? I can see what’s in it for the developers, but there’s only downside risk for the OP with no obvious potential gains.

” however we really do not want to lose the house because we love it!”  I get that, but will you still love it if it’s worth £500k instead of the £700k you’ll be paying for it? After all, it’s a new build, so there’s 10-15% depreciation as soon as you move in and turn it into secondhand, and it’s possible prices generally could fall significantly on top of that. 

I always think “we love it” sounds rather like a child in a toy shop looking at a doll, rather than responsible adults about to embark on one of the largest financial transactions of their lives. This is a time to be ruled by your head, not your heart.