New build early exchange?
Discussion
We are buying a new build property that won’t be ready until Spring (March to May ) 2026. The developers (small to medium size) are looking for early exchange ie next month. I have been informed searches only last six months so is it too early to do? The foundations have not even been laid yet and they will be sitting on £50k at exchange for best part of up to 10 months!
We paid a deposit of £5k so I say we are very committed any advice?
We paid a deposit of £5k so I say we are very committed any advice?
Downward said:
Some nice interest earned for them,
What will they offer to compensate your lost Interest ?
Got some nice extras thrown in on reserve but I would push for more.What will they offer to compensate your lost Interest ?
But it’s more about the early exchange ie the foundations have not been put down yet and searches only last 6 months. A couple of properties have already exchanged that are due to complete similar time frame, but it all seems rather quick compared to the last 2 new builds we purchased.
Mr Squarekins said:
If something happened and they folded, I assume your £50k is gone though?
Exchange and deposit held in escrow. I've had it when folk want to deposit early, really really really want the house but it's not finished yet. Even as the developer I'm not always for it, if life changes for them and they want out it can cause all kinds of s
t. Mainly because their solicitor will always advise against it and that tends to sew some seeds of doubt in their minds.Problem is, almost any terms that will benefit the buyer can technically benefit the developer.
I'd probably need to see the paperwork to say where you need to push back and perhaps add clauses to protect yourself. If it's a standard "build to these drawings" then it's only once choices (kitchen/bathrooms/finishings) where the developer has anything to worry about.
Unless he's financed up (not unusual) and needs an early commitment...
PRO5T said:
Mr Squarekins said:
If something happened and they folded, I assume your £50k is gone though?
Exchange and deposit held in escrow. I've had it when folk want to deposit early, really really really want the house but it's not finished yet. Even as the developer I'm not always for it, if life changes for them and they want out it can cause all kinds of s
t. Mainly because their solicitor will always advise against it and that tends to sew some seeds of doubt in their minds.Problem is, almost any terms that will benefit the buyer can technically benefit the developer.
I'd probably need to see the paperwork to say where you need to push back and perhaps add clauses to protect yourself. If it's a standard "build to these drawings" then it's only once choices (kitchen/bathrooms/finishings) where the developer has anything to worry about.
Unless he's financed up (not unusual) and needs an early commitment...
Deposit needs to be held by solicitors as “stakeholder” that way it’s refundable and the developer can’t spend it. If contracts say deposit is held as “agents” do not sign as it means the developer can use the money.
If you don’t exchange they can sell to someone else as they have no security.
I would negotiate a smaller deposit if it’s being held that long, you could agree to increase it after second fix.
If you don’t exchange they can sell to someone else as they have no security.
I would negotiate a smaller deposit if it’s being held that long, you could agree to increase it after second fix.
Thanks all and thank you blueg33 , still concerned about such an early exchange after being told only last 6 months before completion or is this only a worry if there is a mortgage? We are cash buyers so theoretically early exchange not a problem if above is put in place, mind you they had £5k as a deposit which is steep enough at an early stage and shows our commitment
GT4P said:
Thanks all and thank you blueg33 , still concerned about such an early exchange after being told only last 6 months before completion or is this only a worry if there is a mortgage? We are cash buyers so theoretically early exchange not a problem if above is put in place, mind you they had £5k as a deposit which is steep enough at an early stage and shows our commitment
No problem. It’s not unusual (apart from the size of the deposit where they are taking the mickey)I would try and pin them down to a programme with liquidated damages if they are not on time, but that will be a tough negotiation.
Are they building using a main contractor or their own subcontractors? If a main country LD’s are easier as the contractor will have them.
Other things to think about l about are size and stability of the business, amount of infrastructure needed before the house is habitable and whether they are on with that.
Without naming the company is a largish developer in Devon and Cornwall area and the estate we are buying on is 80 properties and they have another 4/5 estates on the go. I agree the deposit was a bit of a p*ss take as with previous new builds we have only had to hand over £500.
The length of time to complete is not an issue if it over runs for us. My wife seems to think the sales chap said the exchange deposit is held by the solicitor but need to check as the developer had our £5k as a reservation fee.
The length of time to complete is not an issue if it over runs for us. My wife seems to think the sales chap said the exchange deposit is held by the solicitor but need to check as the developer had our £5k as a reservation fee.
Daughter (who is a solicitor) of friends of ours had this with a new Redrow house. She paid 10% on exchange many months before completion (I don’t think building had started) and didn’t seem fazed by it.
What did get a bit stty was completion was delayed by a couple of months. She’d sold her previous house and was in rental but she was luckily able to extend (she could have moved in with her parents if necessary).
The builder wouldn’t do cash compensation for that but did do things like flooring, built-in wardrobes and hard landscaping, but not without making a palava of it.
What did get a bit s
tty was completion was delayed by a couple of months. She’d sold her previous house and was in rental but she was luckily able to extend (she could have moved in with her parents if necessary). The builder wouldn’t do cash compensation for that but did do things like flooring, built-in wardrobes and hard landscaping, but not without making a palava of it.
GT4P said:
Without naming the company is a largish developer in Devon and Cornwall area and the estate we are buying on is 80 properties and they have another 4/5 estates on the go. I agree the deposit was a bit of a p*ss take as with previous new builds we have only had to hand over £500.
The length of time to complete is not an issue if it over runs for us. My wife seems to think the sales chap said the exchange deposit is held by the solicitor but need to check as the developer had our £5k as a reservation fee.
If the developer begins with a C they are fine, good company building decency quality. If they begin with a B and rhyme with honey I would be a bit more cautious. The length of time to complete is not an issue if it over runs for us. My wife seems to think the sales chap said the exchange deposit is held by the solicitor but need to check as the developer had our £5k as a reservation fee.
Make sure there's a long-stop date, ideally as early as possible (maybe 30 April 2026) - I've seen situations where buyers exchange contracts with no long stop date or a very extended one and the house isn't built for years but they're still obliged to buy when the developer finally gets round to it.
Edited by Jobbo on Friday 25th July 12:42
You'd have to wonder about the motivation of the developer.
It would worry me that they are getting desperate for some reason.
As said, an awful lot can happen in the life and in the world over that reasonably long horizon.
It would scare me shotless! (But then I've spent 40 years managing risk as a job, so I imagine the exocet is coming around every corner
)
It would worry me that they are getting desperate for some reason.
As said, an awful lot can happen in the life and in the world over that reasonably long horizon.
It would scare me shotless! (But then I've spent 40 years managing risk as a job, so I imagine the exocet is coming around every corner
)2 sMoKiN bArReLs said:
You'd have to wonder about the motivation of the developer.
It would worry me that they are getting desperate for some reason.
As said, an awful lot can happen in the life and in the world over that reasonably long horizon.
It would scare me shotless! (But then I've spent 40 years managing risk as a job, so I imagine the exocet is coming around every corner)
It’s normal if you want the better plots on the site. It would worry me that they are getting desperate for some reason.
As said, an awful lot can happen in the life and in the world over that reasonably long horizon.
It would scare me shotless! (But then I've spent 40 years managing risk as a job, so I imagine the exocet is coming around every corner
)blueg33 said:
If the developer begins with a C they are fine, good company building decency quality. If they begin with a B and rhyme with honey I would be a bit more cautious.
It’s a B not sure about rhyming with honey though.Rhymes more with a budget airline that flew to the states in the 1970s
Furthermore rewind 6-7 years ago and I would have never bought a new build but this will be our third and would not think twice now, but you do have to go in eyes wide open. I have seen £300k houses finished better than say a different developer building £1m plus.
Some large builders are better than others and some sites within one company are better than others.
We are currently in a lower priced detached property but I made sure we got upgraded kitchen, floors etc and oak finish doors and not the egg box white ones so our finish is better than some of the houses costing nearly double.
Also I am very fussy and on it with the snags.
The developer we are buying with is not as good finish as what we are in but it’s the location and plot that wins, I will just have to be on their case when it comes to snags!
Some large builders are better than others and some sites within one company are better than others.
We are currently in a lower priced detached property but I made sure we got upgraded kitchen, floors etc and oak finish doors and not the egg box white ones so our finish is better than some of the houses costing nearly double.
Also I am very fussy and on it with the snags.
The developer we are buying with is not as good finish as what we are in but it’s the location and plot that wins, I will just have to be on their case when it comes to snags!
Edited by GT4P on Friday 25th July 13:22
GT4P said:
blueg33 said:
If the developer begins with a C they are fine, good company building decency quality. If they begin with a B and rhyme with honey I would be a bit more cautious.
It s a B not sure about rhyming with honey though.Rhymes more with a budget airline that flew to the states in the 1970s
Try and reduce the deposit, increasing it as they complete stages. Agree a specific longstop date after which you have the ability to walk away (but don't given them that ability). Ideally you need a lawyer who can speak their language, nit just any old conveyancer. The risks to you will need explaining to them.
If that have a lot of interest in that plot, you may get nowhere.
2 sMoKiN bArReLs said:
You'd have to wonder about the motivation of the developer.
It would worry me that they are getting desperate for some reason.
As said, an awful lot can happen in the life and in the world over that reasonably long horizon.
It would scare me shotless! (But then I've spent 40 years managing risk as a job, so I imagine the exocet is coming around every corner)
It’s normal if you want the better plots on the site. It would worry me that they are getting desperate for some reason.
As said, an awful lot can happen in the life and in the world over that reasonably long horizon.
It would scare me shotless! (But then I've spent 40 years managing risk as a job, so I imagine the exocet is coming around every corner
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