Buying a new build property in Northern Ireland

New build properties are extremely popular in Northern Ireland at present. In this article Alison Reid explains the process of buying a new build property.

The first step in purchasing a new build property is to visit the selling estate agent and obtain the brochure for the development. You should then visit the development itself and have a look at the particular site that you are interested in buying. This is sometimes a difficult task as it may be a muddy field! Many developers and builders have offices on site and will happily show you the plans and specifications for the houses that they are building. This will help you determine which is the most suitable site for you to purchase.

Developers usually build in phases and there will be a certain number of houses released in each phase. Competition for new builds is very high at present. Prices for the various house types are usually fixed.

Reservation Agreements and booking deposits

Once you select your site and are successful in booking it, the estate agent will ask you to sign a Reservation Agreement and you will be required to pay a booking deposit to them. This can be up to £1,500, a portion of which is non-refundable if you withdraw from the purchase of the property.

You should be aware that developers impose a tight timescale for entering into the contractual documentation for the purchase and this is usually within an 8 to 10 week period. A 10% deposit, less the booking fee paid to the estate agents, is also payable to your solicitor on signing the contractual documentation. This deposit will be paid over to the developer’s solicitors when you enter into the contract.

Contracts and title

In terms of the contractual documentation, you will be asked to enter into what is known as a Building Agreement and an Agreement for Transfer.

The Building Agreement is the contract between you and the builder and under the terms of this, you are the ‘Employer’. The builder is engaged by you to complete the dwelling house in accordance with the plans and specifications that you have had sight of. They may, however, vary those plans from time to time. They may also use materials that were not in the initial specification if the originals to be used are not available. There are various provisions within the Building Agreement to cover extras or additions that you may wish to add to your property as your dwelling house and there are also provisions in the agreement for the builder to make connections to mains water, sewage, electricity, etc. The builder will be responsible for making up any road to the property to adoption standards and will also be responsible for street lighting.

The builder will also enter into an insurance-backed warranty scheme, and this will provide you with a ten-year warranty in respect of structural defects for the new build property. It is imperative that you are aware of the scheme that is being offered as only certain schemes are accepted by lenders.

There are also provisions within the Building Agreement to cover the event of insolvency of the builder and termination of the agreement if the dwelling is not complete. You should ensure that you are aware of the terms of the agreement in this regard.

The Agreement for Transfer is a document that you and the builder or developer will enter into to state that once the builder has completed the dwelling house in accordance with the Building Agreement, they will transfer the legal title of the property to you on completion.

A form of deed of transfer will also be agreed and your solicitor will provide you with details of this. There will be rights granted to you, rights reserved to the developer and your neighbours and there will be covenants for each house within the development. There may also be a management company for common or green areas within the development and you should be told how much you will be expected to pay annually for services relating to this.

Some builds can take six months or more and developers are keen to get buyers locked into a contract so as they are confident to proceed with the build. They have tight time schedules they need to adhere to for completing each phase. In the current economic climate, that is vitally important to developers to manage their cash flow, employees and any sub-contractors. The cost of materials is at an all-time high and you should be aware of what is being asked of you from the outset in entering into the contractual documentation. It is important that if you are obtaining a mortgage, you have a mortgage offer that will cover this period of time. The mortgage itself will not be drawn down until the build is complete and the keys are ready to be handed over.

Beware of the extras

It is important during the process of purchasing a new build that you are aware of any additional costs that you might be likely to incur as the builder will usually allow a standard form of kitchen, bathroom and sanitaryware, etc. Some properties are ‘turnkey’ finish, and this will also be included in the contract. However, if you deviate from any of the standard selections, you are liable for the costs of those and developers and builders usually like to receive this upfront as it is a cost that they incur themselves immediately from suppliers. Therefore, the price that you have agreed to pay initially for the property may vary once extras and other selections are added in. Any extras and additions are included in a final account which is provided to your solicitor shortly before completion.

What happens on completion day?

Once all funds are paid over to the developer’s solicitors, you will meet the developer’s representative on-site for a formal handover. You will do a full walk around of the property itself and you should check that everything has been completed to the standard you were expecting. If there are any issues, you should complete a snag list with the representative to ensure that anything is remedied. Snags can also continue to be notified to the developer while they are still on-site as you may not realise something isn’t working or the way it should be until you are actually in the property. Your keys will be handed over and you can enjoy your lovely new home!

Your solicitor will deal with completing a Stamp Duty Land Tax return on your behalf and registration of your title at the Land Registry of Northern Ireland.