new build first-time buyers

New build conveyancing for first-time buyers

A step-by-step guide

Purchasing a new build property can be a whirlwind of emotions, least of all if you are first-time buyers. From mortgages and buyer initiatives to conveyancing and stamp duty, there’s a lot to consider. But don’t panic, we’ve put together a list of a key steps below:

1. Your mortgage

Obtaining the right mortgage is vital. You may need to do quite a bit of research to determine the best lender for you. You may find it useful to seek guidance from a specialist new homes mortgage adviser as they will assist you when finding a suitable mortgage.

Consider obtaining an Agreement in Principle at the earliest opportunity as this will allow you to budget effectively and purchase a property you can afford.

2.Buyer initiatives

There are a several schemes available which are designed to assist you to get on the property ladder. These include:

Shared ownership

This allows you to purchase a share of your dream home from a Housing Association and pay rent on the rest. You must, however, meet the eligibility criteria, so research is essential before considering this option.

Help to Buy equity loan

Help to Buy equity loans are set up to assist first-time buyers to buy their first new build home. An equity loan allows you to pay a deposit of 5% of the purchase price, with the Government providing a loan of up to 20% of the purchase price to assist with the purchase of the property. The Help to Buy equity loan is interest free for the first five years; and thereafter interest will be charged on a monthly basis. From year six, it is an “interest only” loan. This means that your monthly payments only cover the interest and do not reduce the capital loan.

You can only use a Help to Buy Equity Loan to purchase a new build home.

Until recently, to benefit from an equity loan, the builder would need to finish your new home by the end of December 2020. As a result of delays to building because of the Covid-19 pandemic, the Government has extended this to include homes built up until 28 February 2021. You will need to complete the purchase by 31 March 2021.

Lifetime ISA

This type of ISA is available to anyone aged between 18 and 40 purchasing their first home in the UK. These are offered at most banks and allow first-time buyers to save money to contribute to the purchase of your home whether new build or an older property. You can contribute any amount to your ISA at any time or pay one lump sum of up to £4,000. Then, at the end of each year, the Government will contribute up to a £1,000 bonus to use towards your purchase.

3. Instructing a solicitor

The next important step is to instruct the right solicitor. Your solicitor will conduct all the legal work on your behalf and act as an agent between you and the seller.

Our experienced conveyancing team are happy to offer you a quotation whether you are purchasing a new build or second-hand property. We have a wealth of experience in dealing with all property transactions and will ensure that you are allocated to the solicitor with expertise to handle your purchase.

4. Exchange of contracts

This is the most significant step in the conveyancing process; and it is the point where your sale or purchase becomes legally binding. Once you have exchanged contracts you have made a legal commitment to purchase the property.

If you are purchasing a new build property, there is usually an exchange deadline to work towards. The deadline will be noted on the Reservation Form that you complete at the point of reserving your property.

Exchange of contracts will not take place until you and the contract are completely prepared, and any enquiries are resolved. We will advise you whether it is a condition of your mortgage to have appropriate buildings insurance in place either at the point of exchange of contracts or before legal completion takes place.

5. Stamp duty

There is currently a stamp duty holiday, which is due to end on 31 March 2021. This means that home buyers do not have to pay any stamp duty on properties costing up to £500,000. The rate of stamp duty for properties over £500,000 has been significantly reduced.

We understand that from 1 April 2021, stamp duty will go back to its pre-Covid rates. This means that first time buyers get a reduction on the stamp duty payable on properties up to £500,000. Properties costing less than £300,000 attract no stamp duty for first time buyers, with 5% payable on the price between £300,000 and £500,000. If the property costs more than £500,000, first-time buyers will pay the same rate of stamp duty as previous homeowners. Stamp duty has to be paid within 14 days of legal completion of a property.

You can calculate how much stamp duty you could be paying here.

6. Legal completion

Congratulations, you are now officially a homeowner! Legal completion can take place at the same time as exchange of contracts but can also be some time after, particularly if you are purchasing a new build.

Patience is key when purchasing any home, as overall it can be a lengthy process. However the most important thing to remember is to trust the whole process as your solicitor only has your best interests in mind. Get an instant conveyancing quote online, or call us on 0800 988 7756.

moving home

Moving home during the Coronavirus pandemic

Moving home under normal circumstances can be one of the most stressful and hectic times. However, the current Coronavirus pandemic makes moving home much harder. We, understandably, receive several questions about moving home during the pandemic each day. To provide some much-needed clarification, I will provide the answers to some of the most frequently asked questions.

I have exchanged contracts, what will happen if we go into lockdown?

Exchange of contracts is a legally binding transaction. Once exchange has taken place, the buyer and seller are both committed to the transaction and completion is to take place on the date agreed in the contract. Solicitors may include provisions in the contacts to manage any risks of a lockdown. This is known as a ‘Covid Clause’.

The current Standard Conditions of Sale state that in the event a party to the contract defaults on completion then the willing party are able to serve a Notice to Complete. This allows the defaulting party 10 days to complete with penalty interest paid (or deducted). The defaulting party must complete within this time frame. Failure to complete could mean the buyer will lose their deposit; the defaulting party could pay damages; and the other party could contract could be withdrawn, unless the non-defaulting party takes a ‘good faith’ view.

Do I still have to pay stamp duty?

The Government the government introduced a stamp duty “holiday” to boost the property market. The current threshold for stamp duty is £500,000, which means that if you purchase a property for less than this amount then there will be no stamp duty to pay. This applies until 1 April 2021, thereafter the threshold will be £125,000 for residential properties.

You can find out how much stamp duty you will have to pay using the online calculator.

What if my mortgage offer has expired?

On 26 March 2020, mortgage lenders began offering an extension to existing mortgage offers of up to three months. The extended offer will keep the original terms of the existing offer and simply change the expiry date of the current offer.

There are however still some risks that the offer may be withdrawn if your financial circumstances change, for example a job loss, change to income or drastic materialistic changes to the property. If this happens, the lender reserves the right with draw their offer.

How are ID and verification checks carried out?

During lockdown there was some relaxation to the way in which ID checks were carried out and certified in our office. We carried out ID checks over live video link, to ensure the safety of clients and staff. However, as restrictions have eased, we carry out ID checks within the office. Please remember that you must always wear a face covering unless exemptions apply.

Of course, restrictions and Government advice are changing all the time. Should circumstances change, we will advise you on any new procedures for ID checks.

Will the transaction take any longer?

Although buying and selling properties can now continue in some kind of normal way, there is still a lot of uncertainty with regards to the length of time taken to complete the transaction. The length of time may be longer than usual and there may be some delays. We will work to ensure the transaction runs as smooth as possible, however we may experience delays from third parties. For example, it may take longer than usual to obtain search results, responses from lenders and delays from other third parties.

We understand that moving home at the moment may seem extremely stressful. However, do not let this put you off. Your conveyancer will help you every step along the way. Rest assured we are all working as best we can, after all we’re all in this together.

If you would like to speak to one of our conveyancers, please call us on 0800 988 7756. Alternatively, you can obtain an instant conveyancing quote online.