Buying a new build from receivers - any experience/advice?

johnlurkes

Hi all,

I'm a first time buyer in the process of purchasing a leasehold apartment in a new build development. The original developer went into insolvency during the construction period, so the property went back to the lenders who eventually completed the building and are now selling it off through receivers. The building is completely finished and comes with a 10yr Build Zone warranty, EWS1 form and SWECO certificate. I've inspected the property, it seems to be visually in a good state and my lender sent a surveyor for a valuation in this week.

I've done some reading on the additional challenges surrounding the purchase from fixed charge receivers, i.e. them not taking any liability for the building, no replies to enquiries, no warranties, no title guarantee, no replies to TA13 and no representation. 

I was wondering if anyone here has had experience with buying a new build from receivers and potential issues further down the line? My solicitor is concerned about the good running of the estate in the future, which he says other clients have issues with in his experience. I'm not planning on growing old in this flat and have a view of selling it on in a few years time, but would I'm personally more concerned about any major faults, defects or legal issues nobody is aware of or wants to disclose at this stage, so I'm wondering what due diligence I should put in at this stage? My council currently takes >6m for replies to searches, so won't be able to help with some of queries.

Hiring a surveyor for an apartment in a block of flats will probably only tell me so much about potential major flaws of the building, correct? Will an all risks indemnity insurance (in combination with the building warranty) protect me from most major pitfalls? And who would be expected to take this out, the receiver or the purchaser? Advice online seems to suggest the receivers but I don't think they have done this yet and would assume they have no interest in incurring extra costs. My solicitor said he'll look into it but said it might be difficult to impossible to obtain.

Would be great to hear your thoughts on the above. I really like the apartment and would be stoked to get it, but obviously don't want to make the wrong decision here that could financially ruin me for a lifetime.

Thanks,
John

eddddy

You need to read Build Zone warranty details to see what it covers. I suspect it may only cover major structural problems.

Normally, new build developers also provide a 2 year builder's warranty - which covers a much wider range of problems or 'snags'. But it sounds like you're not getting that.

So you'd have to pay to fix any problems in your flat from day 1 (like leaks in the bathroom, faulty hob, sticking windows, badly fitted kitchen, etc), and contribute to the cost of fixing problems in communal areas and/or the structure of the building as well.

It might be worth getting a building surveyor to look at the flat and the building as a whole, to see if there are any 'tell-tale signs' of problems and poor workmanship, but with a newbuild a lot of problems can be hidden behind smart new plasterboard etc.


Indemnity insurance won't give you any protection at all against poor workmanship or poor materials used. Nor will any other insurance. You just have to bear the risk. (Although it might be relevant for the lack of title guarantee.)

And you normally compensate for risk by paying less.


For example, a specific flat from a reputable developer, with full warranties etc, etc, might cost £250k.  But you might expect to pay £235k for a similar flat sold by a receiver without full warranties, etc.

So you have £15k 'in reserve' to cover any unexpected problems.

If you only end-up paying £10k to address unexpected problems, you're happy. If you end up paying £20k, you're less happy.