Deposit on new build?

[anonymous-user]

Seems new build developers have started to realise their asking prices are pie in the sky and are willing to talk proper figures


If i was required to stick a £500 deposit down to secure a plot that won't be built for 6 months what's the "safest" way to pay? Do credit cards still have insurance for this kind of thing or is that for retail purchases only?It's not a huge amount of ££ i know but i'd rather spend it on beer than lose it!!(sseing as i guess there is a big chance of one big players folding this year??)

[bigTee]

Dave_ST220 said:

Seems new build developers have started to realise their asking prices are pie in the sky and are willing to talk proper figures


If i was required to stick a £500 deposit down to secure a plot that won't be built for 6 months what's the "safest" way to pay? Do credit cards still have insurance for this kind of thing or is that for retail purchases only?It's not a huge amount of ££ i know but i'd rather spend it on beer than lose it!!(sseing as i guess there is a big chance of one big players folding this year??)

Aren’t you still required to complete within a month as soon as you have paid your deposit?

I know I did even though the house wasn’t ready for 6 months.

[madala]

Are you sure they are going to build in six months? All new build as far as I can see is at a standstill.

I think you would be able to put it on a credit card.

[scotal]

bigTee said:

Aren’t you still required to complete within a month as soon as you have paid your deposit?

I know I did even though the house wasn’t ready for 6 months.

You are required to exchange within 28days, so you would be contractually bound to buy the house when it was finished. You can't complete, because there's nothing to complete on.

[anonymous-user]

They will build it once the plot is sold(so they say). She hasn't said anything about completion in 4 weeks even if it won't be built for 6 months(how on earth would that work? How can you complete on something that isn't even built to foundation level?).

[anonymous-user]

scotal said:

bigTee said:

Aren’t you still required to complete within a month as soon as you have paid your deposit?

I know I did even though the house wasn’t ready for 6 months.

You are required to exchange within 28days, so you would be contractually bound to buy the house when it was finished. You can't complete, because there's nothing to complete on.

Does that mean the house would be ours even if the sale on ours fell through(they'd have to wait for us to sell again??). How does it work from the mortgage side of things? The bank have agreed to lend(no problems there).

[scotal]

Dave_ST220 said:

Does that mean the house would be ours even if the sale on ours fell through(they'd have to wait for us to sell again??). How does it work from the mortgage side of things? The bank have agreed to lend(no problems there).

It would mean that when the lender told you they were ready to complete you would have to complete, or forfeit a 10% deposit. The fact that you can't sell your house is of little consequence to the developer.


(and in the event you failed to complete, lost your deposit, and the house was sold for less than you offered to buy it for, the developer could come after you for the difference between the deposit and the selling price.)

Edited by scotal on Tuesday 20th January 10:39

[bigTee]

scotal said:

bigTee said:

Aren’t you still required to complete within a month as soon as you have paid your deposit?

I know I did even though the house wasn’t ready for 6 months.

You are required to exchange within 28days, so you would be contractually bound to buy the house when it was finished. You can't complete, because there's nothing to complete on.

sorry, that's what i meant...

[oldbanger]

scotal said:

Dave_ST220 said:

Does that mean the house would be ours even if the sale on ours fell through(they'd have to wait for us to sell again??). How does it work from the mortgage side of things? The bank have agreed to lend(no problems there).

It would mean that when the lender told you they were ready to complete you would have to complete, or forfeit a 10% deposit. The fact that you can't sell your house is of little consequence to the developer.

Yep, this is exactly how it works - we lost a deposit in 2001 when we lost our buyers and the chain collapsed.

[anonymous-user]

scotal said:

Dave_ST220 said:

Does that mean the house would be ours even if the sale on ours fell through(they'd have to wait for us to sell again??). How does it work from the mortgage side of things? The bank have agreed to lend(no problems there).

It would mean that when the lender told you they were ready to complete you would have to complete, or forfeit a 10% deposit. The fact that you can't sell your house is of little consequence to the developer.

Even in this falling market? If i can thrash out a deal now then they are unlikely to get someone to pay what i will now in 6-7 months time?? IIRC she said the deposit was £500, are we saying the deposit to buy the plot is £500 then they'd want 10%(although i'm sure she said 5%) after 4 weeks? So on a purchase price of say £250K i'm risking a total of £1750? (£500 & 5%)? Thanks.

[anonymous-user]

scotal said:

Dave_ST220 said:

Does that mean the house would be ours even if the sale on ours fell through(they'd have to wait for us to sell again??). How does it work from the mortgage side of things? The bank have agreed to lend(no problems there).

It would mean that when the lender told you they were ready to complete you would have to complete, or forfeit a 10% deposit. The fact that you can't sell your house is of little consequence to the developer.


(and in the event you failed to complete, lost your deposit, and the house was sold for less than you offered to buy it for, the developer could come after you for the difference between the deposit and the selling price.)

Edited by scotal on Tuesday 20th January 10:39

I'm not liking the sound of this! So basically get if for a great price or walk away as if we can't sell ours on time i lose a stack of cash for nothing. Many thanks for your help-been very educating!!

[Davi]

Dave_ST220 said:

scotal said:

Dave_ST220 said:

Does that mean the house would be ours even if the sale on ours fell through(they'd have to wait for us to sell again??). How does it work from the mortgage side of things? The bank have agreed to lend(no problems there).

It would mean that when the lender told you they were ready to complete you would have to complete, or forfeit a 10% deposit. The fact that you can't sell your house is of little consequence to the developer.

Even in this falling market? If i can thrash out a deal now then they are unlikely to get someone to pay what i will now in 6-7 months time?? IIRC she said the deposit was £500, are we saying the deposit to buy the plot is £500 then they'd want 10%(although i'm sure she said 5%) after 4 weeks? So on a purchase price of say £250K i'm risking a total of £1750? (£500 & 5%)? Thanks.

You need to ask them exactly what their requirements are as it varies.

BTW, just a word of warning - the bank may well have issued an offer, but we've seen a fair amount of lenders pulling the plug on developments late in the day or even after a project has started. Having an offer does not by any means constitute "no problems" in the current market.

[scotal]

Dave_ST220 said:

scotal said:

Dave_ST220 said:

Does that mean the house would be ours even if the sale on ours fell through(they'd have to wait for us to sell again??). How does it work from the mortgage side of things? The bank have agreed to lend(no problems there).

It would mean that when the lender told you they were ready to complete you would have to complete, or forfeit a 10% deposit. The fact that you can't sell your house is of little consequence to the developer.

Even in this falling market? If i can thrash out a deal now then they are unlikely to get someone to pay what i will now in 6-7 months time?? IIRC she said the deposit was £500, are we saying the deposit to buy the plot is £500 then they'd want 10%(although i'm sure she said 5%) after 4 weeks? So on a purchase price of say £250K i'm risking a total of £1750? (£500 & 5%)? Thanks.

Yep, even in this falling market, the developer writes the contract remember.

For the actual figures you'd need to check that with the developer. 5% of £250k is £12,500 not £1250 for your guide.

ETA You also need to remember that the contract is open ended from the developers point of view, so if you have an expected 6 moth completion date this will almost certainly slip, but could easily be delayed by months. I had one complete in November 2008 where the offer was produced in June 2007.

Edited by scotal on Tuesday 20th January 10:51

[anonymous-user]

Davi said:

Dave_ST220 said:

scotal said:

Dave_ST220 said:

Does that mean the house would be ours even if the sale on ours fell through(they'd have to wait for us to sell again??). How does it work from the mortgage side of things? The bank have agreed to lend(no problems there).

It would mean that when the lender told you they were ready to complete you would have to complete, or forfeit a 10% deposit. The fact that you can't sell your house is of little consequence to the developer.

Even in this falling market? If i can thrash out a deal now then they are unlikely to get someone to pay what i will now in 6-7 months time?? IIRC she said the deposit was £500, are we saying the deposit to buy the plot is £500 then they'd want 10%(although i'm sure she said 5%) after 4 weeks? So on a purchase price of say £250K i'm risking a total of £1750? (£500 & 5%)? Thanks.

You need to ask them exactly what their requirements are as it varies.

BTW, just a word of warning - the bank may well have issued an offer, but we've seen a fair amount of lenders pulling the plug on developments late in the day or even after a project has started. Having an offer does not by any means constitute "no problems" in the current market.

Thanks, indeed this all does need clarifying as it will affect our offer. I just wish the sales person was a bit more forthcoming with info!! Hard work this house buying lark

[anonymous-user]

scotal said:

Dave_ST220 said:

scotal said:

Dave_ST220 said:

Does that mean the house would be ours even if the sale on ours fell through(they'd have to wait for us to sell again??). How does it work from the mortgage side of things? The bank have agreed to lend(no problems there).

It would mean that when the lender told you they were ready to complete you would have to complete, or forfeit a 10% deposit. The fact that you can't sell your house is of little consequence to the developer.

Even in this falling market? If i can thrash out a deal now then they are unlikely to get someone to pay what i will now in 6-7 months time?? IIRC she said the deposit was £500, are we saying the deposit to buy the plot is £500 then they'd want 10%(although i'm sure she said 5%) after 4 weeks? So on a purchase price of say £250K i'm risking a total of £1750? (£500 & 5%)? Thanks.

Yep, even in this falling market, the developer writes the contract remember.

For the actual figures you'd need to check that with the developer. 5% of £250k is £12,500 not £1250 for your guide.

ETA You also need to remember that the contract is open ended from the developers point of view, so if you have an expected 6 moth completion date this will almost certainly slip, but could easily be delayed by months. I had one complete in November 2008 where the offer was produced in June 2007.

Edited by scotal on Tuesday 20th January 10:51

lol, yes, typo on my figures!! I'm beginning to think there is just too much risk here, as you say i have no doubt the completion time will slip leaving me with my arse in the breeze!!

[scotal]

Dave_ST220 said:

Thanks, indeed this all does need clarifying as it will affect our offer. I just wish the sales person was a bit more forthcoming with info!! Hard work this house buying lark

Caveat Emptor. You and more importantly your lawyer need to double check the docs. Run through it with the lawyer so YOU understand what you are buying.

[Davi]

Dave_ST220 said:

Thanks, indeed this all does need clarifying as it will affect our offer. I just wish the sales person was a bit more forthcoming with info!! Hard work this house buying lark

Strangely they don't usually seem keen to make the downsides too obvious

Personally if looking at a new build I'd go in with a request for a full written proposal of what is required of each party and when, giving times, stages and figures before doing anything at all.

[DJC]

I wouldnt even contemplate buying something now that was just a plot and not actually built.

Walk away, you can and will find better.

And this is from someone who just bought a new build a week before Xmas, so Im not in Noel camp of doom and gloom.

[Davi]

DJC said:

I wouldnt even contemplate buying something now that was just a plot and not actually built.

I'd have to agree with that. Although Scotal is much more clued up on domestic (I only know the market from the investment side) seeing it from the developers perspective I'd be running in the opposite direction!

[anonymous-user]

Davi said:

Dave_ST220 said:

Thanks, indeed this all does need clarifying as it will affect our offer. I just wish the sales person was a bit more forthcoming with info!! Hard work this house buying lark

Strangely they don't usually seem keen to make the downsides too obvious

Personally if looking at a new build I'd go in with a request for a full written proposal of what is required of each party and when, giving times, stages and figures before doing anything at all.

Not just talking downsides, getting an options list out of them has proven nigh on impossible(the only reason for buying now Vs when it's built-to specify fittings etc!). Deffo want it all in writing, they can't surely expect buyers to agree to a price based on 6 month completion for them to take no hit at all if this slips by say 3 months. No wonder things aren't selling!