Buying and selling houses in Scotland involves various types of property and many types of buyers and sellers but when it comes to selling a new home, there is generally a different way of doing things.
Firstly, a potential purchaser is more often than not buying blind in that, they will view a show home which will be similar to one they want to buy but, it will not be that house they purchase at the end of the day. If they like what they see, they will place a reservation, perhaps with the housebuilder's representative on site or online. Demand has been such for new homes recently that queues have been forming on release dates so that the prize plots are swallowed up even before a brick has been laid. The reservation is normally secured with a fee which will act as a part deposit on the new home.
Where sales are not so easy to come by or where the housebuilder wants certain sales to be secured by a certain date, the housebuilder may offer incentives to encourage potential buyers to reserve a new home. There are strict rules about what incentives can be offered such as covering the cost of the buyer's tax or offering to put turf down in the garden and how such incentives must be dealt with. The UK Finance Disclosure of Incentives Form will have to be completed by the housebuilder and passed to their solicitors for sending on to the buyer's solicitors where the buyer is obtaining a mortgage to buy the new home
The housebuilder's contract negotiation swings into force at this point with the issue of the offer to sell, which will contain the terms and conditions for the sale of the property to the buyer. These missives will differ from builder to builder and site to site. With the offer to sell most housebuilders will provide a title pack showing the extent of the development and the conditions which apply to that development.
Almost all housebuilders will require the purchaser to obtain their own searches to check that the title is good and that the builder is in a position to transfer title. These searches will also be needed to make sure that any lender providing a mortgage is satisfied that the new home will form good security. The majority of lenders will also require a buyer to arrange its own survey of the property as, unlike in other house sales, a housebuilder seller does not have to produce a Home Report. However, the housebuilder will have to produce an Energy Performance Certificate for each new home.
Traditionally, the reservations would be posted to the builder's solicitors and the solicitors would deal with the title queries, missives and title transfer reporting occasionally to their housebuilder client on progress. Visibility of what is being done has moved on significantly from the days when paper was king and paper reports would be sent on progress of sales. At Brodies we have the ability to give our housebuilder clients access to our online secure portal which allows them to see the progress of house sales in each development in real time, making a sale more efficient for all involved including the buyer.
There is more involved in getting a new home sale to the point where the buyer can collect the keys and move in.
While the missives are negotiated, the new home will be one of a number being built and completed on site. New homes are ready at different times and so residents arrive before the site is sold out. This takes careful planning from the access and health and safety perspective. Service connections will have to be available for the new buyer to arrange their gas, electricity and telecoms suppliers. The housebuilder will also have to secure approval from the local council building control that the house is fit for habitation. If the plan is to have the local authority maintain the roads in a new development, it will take time before the roads will be made up to standard suitable for the local authority to adopt as a public road. The roads will however in the meantime have to be made up to a stage where the buyers can access their new home.
When the new home is ready for its new occupiers, the sale can go ahead and complete. At the solicitor's end, they will have the housebuilder sign a disposition transferring the title to the buyer and in some cases where the housebuilder has taken funding and granted a security (mortgage) over the development, the solicitors will obtain a deed releasing the new home being sold from the builder's mortgage.
The buyer meanwhile will have been lining up their funds to pay the purchase price for the new home on the agreed date of entry. In exchange for the price, they will be given the keys to their new home. Their solicitors will arrange payment of the land and buildings transaction tax due on the property and present the transfer of title in their favour (disposition) and mortgage deed in favour of their lender (standard security) for registration at Registers of Scotland.
It doesn't always stop there for a new home. New homes take time to settle and sometimes that settlement can result in some snagging issues. The majority of housebuilders will offer a snagging repair service. If more serious defects appear in a new home after the snagging period has expired, the new home may be insured through home insurance and warranty policies such as the NHBC. And then, if the new home owner has any other complaints, they will have the opportunity to make a claim under the Consumer Code for Home Builders or its successor, the New Homes Quality Code.
Despite some headlines about adverse customer experience in a minority of new homes purchases, research has shown that the sale and purchase of new homes throughout the UK has been a good experience for all involved. Many more new homes will be needed if the housing targets are to be met even in part and so it is important to ensure that the new homes sale and purchase process continues to be a positive experience.
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