Question re timings for payments

mrseff_2

Excuse what may seem to be a daft question. Am a FTB buying a new build on HTB. I have paid £500 reservation fee for the plot. It's a brand new development and they can't give any fixed dates regarding exchange / completion etc as they've literally started building only this week - they have for now put in an estimated exchange date of 31st January but will confirm at the beginning of the month. They are saying that at this point I will need to pay the balance of my deposit plus any legal fees. I obviously don't have a problem with this in principle but is there any room for negotiation on this in terms of timings? There's a good chance that the house won't be ready until early summer which means my money could be tied up in someone else's bank account earning them money, rather than in mine. I have 50% of my deposit readily accessible, the other is tied up and I will lose some interest payments when I withdraw. The developer is saying that I have to pay the full amount regardless even if it's a 4 month or so wait until completion. If I have to I will but whilst I can see that this must be the case if there is only a few weeks between the two things but not months... Can anyone advise? Many thanks

davidmcn

They'll want you to exchange as early as possible. If you want to delay, you risk them selling to somebody else who is prepared to commit earlier than you. On the other hand, they'll know nobody can realistically exchange before they've got their mortgage offer, and it sounds like they're not really up to speed either, so perhaps end January is optimistic.

Given how low interest rates are at the moment, I doubt they're very excited about your funds "earning them money", more about ensuring you're tied into the contract.

hazyjo

It's pretty standard to exchange early with a new build. Make sure you use an independent solicitor, not their recommended or associated one. And make sure there's a long stop date!

AdrianC

Exchanging is about committing you to the purchase. You'd walk away from your £500 reservation - you won't walk away from 10% of the purchase price.

That commitment does come with a get-out date, the "long stop" in the contract. If the house isn't ready by that date, then you can get your deposit back and walk away.

As for flexibility on exchange date - read your reservation. It may well be that if you do not exchange when requested, your reservation is forfeit and they can remarket the property.

This is part of the normal process of buying an off-plan new-build. They are building it to your specification, in terms of various fit-and-finish choices, so they want you to commit to the purchase. This is hardly unreasonable. If you want to exchange close to completion, buy a house that's already built.

mrseff_2

Thanks all for your comments - I understand where you're coming from - I'm not trying to avoid paying when I need to pay or as someone suggested for the interest on the amount (that bit was slightly tongue in cheek) - it was more that it's irksome to hand over the cash long long long before I complete - by signing the contract I'm legally bound anyway surely. Hey ho - I'll put notice on my savings account

moneysavinghero

It's a marketplace. If there are plenty of people willing to exchange that early then the developer will ask for exchange that early. If everyone refused to exchange so early, then developers would quickly change track and let people exchange later.