New build, Help to Buy - deadline stress!

barnstormer365

Hi there,

I'm about to put down a £500 reservation fee on a new build house which I intend to buy using Help To Buy, with a 5% deposit.

All the marketing has said "Move in this summer" but the agent for the builder is being coy with completion of build dates and is now saying it could be "Quarter 4 this calendar year" so October to December.

Despite this, they still want to exchange in the next month - apparently this is a thing builders/agents do with new builds, why they can't have the money two weeks out from completion like everyone else I don't know but I'll save that for another day before I start using rude words. It seems like a disgraceful way to treat people but I guess that is estate agents for you, at least in my experience (apologies if any of the nice/ethical ones are reading).

My concern is that if I exchange contracts in the next month/two months, there's a risk that (a) they're even later than their "Quarter 4" estimate, and they go beyond December into 2023, which would render my Help To Buy loan obsolete as the scheme ends next year, (b) they take so long that my mortgage offer expires and lenders tighten their criteria later this year due to all the mad cost of living/inflation stuff going on, (c) a revaluation happens later in the year with the country in recession and the price galls, or (d) more than one of the above.

If any of those things happen, my deposit, saved through years of struggle, is toast, as I've exchanged

Are there safeguards I can demand, get-outs I can use, any way I can make the builder/agent not demand exchange a huge six months out? Because if it's a case of basically gambling my deposit on the hope that the build goes ahead on time, I'd rather walk away now with my money in the bank and continue the soul-destroying process of buying existing houses than essentially take my life savings and putting them on a roulette table which seems like the agent is asking me to do.

Thanks and sorry for the essay!

andyf1980

Yes this happened to us. Estimated completion Jan/Feb. Actual completion October. 

Mortgage offer extended but then new application needed as too much time had passed. Ditto HTB. 

We had a long-stop date in our contract which meant we could have got out of it but we ended up completing anyway. 

rickyroma

barnstormer365 said:

Despite this, they still want to exchange in the next month - apparently this is a thing builders/agents do with new builds, why they can't have the money two weeks out from completion like everyone else I don't know but I'll save that for another day before I start using rude words. It seems like a disgraceful way to treat people but I guess that is estate agents for you, at least in my experience (apologies if any of the nice/ethical ones are reading).

Not sure why you mentioned estate agents.. Its more the new build developer who will constantly pushing to exchange as they will be sat at the top of any chain in a better position than anyone below if it all collapses after exchanging. 
If it's the house of your dreams, risking £500 doesn't seem a massive risk considering 

barnstormer365

rickyroma said:

barnstormer365 said:

Despite this, they still want to exchange in the next month - apparently this is a thing builders/agents do with new builds, why they can't have the money two weeks out from completion like everyone else I don't know but I'll save that for another day before I start using rude words. It seems like a disgraceful way to treat people but I guess that is estate agents for you, at least in my experience (apologies if any of the nice/ethical ones are reading).

Not sure why you mentioned estate agents.. Its more the new build developer who will constantly pushing to exchange as they will be sat at the top of any chain in a better position than anyone below if it all collapses after exchanging. 
If it's the house of your dreams, risking £500 doesn't seem a massive risk considering 

I'm dealing with the agent. I'm a first time buyer so I don't know whether it's the agent or the builder pushing for quick completion, but it's the agent talking to me.

It's not the £500 I'm worried about - that's refundable up to exchange anyway. It's my whole deposit which goes.

comeandgo

All seems normal for a new build.  Are there no new builds you can buy that are nearer completion?  

hazyjo

barnstormer365 said:

rickyroma said:

barnstormer365 said:

Despite this, they still want to exchange in the next month - apparently this is a thing builders/agents do with new builds, why they can't have the money two weeks out from completion like everyone else I don't know but I'll save that for another day before I start using rude words. It seems like a disgraceful way to treat people but I guess that is estate agents for you, at least in my experience (apologies if any of the nice/ethical ones are reading).

Not sure why you mentioned estate agents.. Its more the new build developer who will constantly pushing to exchange as they will be sat at the top of any chain in a better position than anyone below if it all collapses after exchanging. 
If it's the house of your dreams, risking £500 doesn't seem a massive risk considering 

I'm dealing with the agent. I'm a first time buyer so I don't know whether it's the agent or the builder pushing for quick completion, but it's the agent talking to me.

It's not the £500 I'm worried about - that's refundable up to exchange anyway. It's my whole deposit which goes.

Which is why the vast majority have a long stop date. Is there one? That is your protection. You need to read up on them and fully understand - it's your get-out clause (saving your 'whole' deposit - not reservation fee). If there's not, I'm guessing you're using the linked/associated solicitor to the developer?

It's very common to expect to exchange very early with new builds. That's a developer thing, not an EA thing.

ironlady2022

It's the normal process for new build and nothing out of the ordinary. It will be the Developer asking for this and the EA pushing it through.

The only protection is what everyone said the long stop date, but this will be no good to you on your HTB if it spills into next year.

Suggest you find a new build that looks semi/fully built. 

barnstormer365

Cheers folks. Will be asking about the long stop, cos if that's beyond December then I'll walk away now. We're pretty limited in terms of areas we can live in for reasons I won't bore you with but yeah, buying much closer to build completion would be ideal, that's what I thought I was doing before the builder came out with all this "quarter 4" stuff.

Noneforit999

Par for the course with new builds.

Several risks for you to consider which you have listed already so there is not much more to add.

We bought a new build 7 years ago and our mortgage offer did run out before completion as there was a 2 month delay but fortunately the lender extended it without issue but its a risk we took. 

The H2B ending before the build completion is something you need to look into properly as this could be a non starter in terms of the risk. 

connors07

My mum is currently in the process of purchasing a new build and applied for a mortgage that has no chance of lasting until the house is built but has been assured it 'just gets extended'. To those have had to do this process did you have to supply all the information again? Like IDs, Bank Statements, is it all from scratch again or do they just extend it as a formality? Rates could massively change between now and then in a negative way.

Thrugelmir

Don't buy a new build if it's too stressful. The process is perfectly normal. To commit time and resources the developer wants to sell the plots first as far as possible. House building is subject to any number of variables.