What to Check in a New Build Contract
Buying a new build property is an exciting prospect. The appeal of a brand-new home, untouched by previous owners and often built to modern energy efficiency standards, is entirely understandable. But beneath the show-home finish lies a legal process that carries real risk if approached without care.
Unlike a standard resale purchase, new build contracts are typically drafted by the developer’s solicitors and, unsurprisingly, they tend to favour the developer. Completion timelines, specification details, and financial obligations can all be defined in ways that protect the builder rather than the buyer. Understanding what to look for before you sign is essential. Here is a guide to the key areas your solicitor should examine carefully.
The Long-Stop Date and Completion Timelines
Of all the clauses in a new build contract, the long-stop date is arguably the most important. This is the absolute deadline by which the developer must complete the build. If the developer fails to meet it, you should have the legal right to terminate the contract and recover your deposit in full.
Contracts will usually include an “estimated” completion date, but this is rarely binding. It is the long-stop date that provides genuine protection. Make sure it is realistic and, crucially, that it falls before your mortgage offer expires. Mortgage offers typically last between three and six months. If the build overruns beyond that point, you may be forced to reapply for a mortgage, potentially on less favourable terms.
Check also whether the contract entitles you to any compensation if completion is delayed. Many standard developer contracts offer nothing on this point, so it is worth negotiating before exchange.
Specification and What You Are Actually Buying
The contract should include detailed plans, approved drawings, floor plans, and a site map showing precisely where your plot sits within the development. Vague descriptions of finishes and fittings are a common source of dispute, so the contract should specify materials, appliances, and finishes in full detail.
Pay close attention to any clauses that allow the developer to make “minor” changes to the specification without your consent. How “minor” is defined matters considerably. The contract should state that any substitutions must be of equivalent or better quality, and your solicitor should push back on any wording that gives the developer unchecked discretion.
Check that plot boundaries, parking spaces, driveways, and fencing are clearly defined. These can shift as the wider estate develops, and a clear contractual description avoids disputes later.
Costs, Deposits, and Financial Matters
The headline price is not always the full picture. Clarify whether flooring, turfing of the garden, light fittings, and utility connections are included in the price, or whether they come as chargeable extras. These costs can accumulate quickly and catch buyers off guard.
If the developer is offering incentives, such as contributing to your stamp duty or legal fees, ensure these are explicitly recorded in the contract. A verbal assurance from a sales agent carries no legal weight.
Where the purchase involves a leasehold title, or where the development has communal estate areas, check the level of any service charges or estate management fees. Understand how these are calculated and, importantly, how they can increase. Under the Leasehold and Freehold Reform Act 2024, which received Royal Assent in May 2024, leaseholders now have greater rights to scrutinise and challenge service charges, and the Act also contains provisions that will ban the creation of new leasehold houses in most circumstances, though these provisions are subject to commencement regulations and are not yet fully in force. If a developer is proposing to sell a new house on a leasehold basis, your solicitor should scrutinise this carefully in light of the direction of travel in the law.
On the question of ground rent, the Leasehold Reform (Ground Rent) Act 2022 capped ground rent at a peppercorn on new residential long leases in England and Wales, and the 2024 Act and the 2024 Act is expected to build further on this, with additional ground rent restrictions forming part of its provisions, though full implementation remains subject to secondary legislation.
If a developer includes any provision for a financial ground rent, is unlikely to be acceptable in most standard residential purchases. It is worth noting that the government is continuing to introduce secondary legislation through 2025 and 2026 to bring the full range of the 2024 Act's provisions into force, and further reform is anticipated, so the legislative landscape for leasehold property is evolving. Your solicitor will be best placed to advise on the current position at the time of your purchase.
Ensure your deposit is protected by an appropriate insurance scheme. If the developer becomes insolvent before completion, deposit protection could be the difference between recovering your money and losing it entirely.
Legal Title, Tenure, and Restrictive Covenants
Confirm whether the property is being sold freehold or leasehold. While most new build houses are now sold freehold, following sustained pressure on the industry to end the leasehold house model, some developments retain estate management arrangements under which a management company controls communal areas and charges homeowners accordingly. Understand what obligations arise from this arrangement before you commit.
Review any restrictive covenants carefully. These are legal obligations that run with the land and bind you and all future owners. Common examples include restrictions on extending the property, altering its appearance, or using it for business purposes. They should not come as a surprise after completion.
Check whether the estate roads and communal infrastructure will be adopted by the local authority once the development is complete. If they are not, you could find yourself contributing indefinitely to private maintenance costs. The contract should state clearly that the developer will bring roads and services up to adoptable standard.
Warranties, Snagging and Defects
New build properties should come with a 10-year structural warranty from a recognised provider. The most widely known is the NHBC Buildmark warranty, though alternatives such as Premier Guarantee and LABC (Local Authority Building Control) warranties are also accepted by most mortgage lenders. Verify that the warranty is in place and that it is transferable to a future buyer should you decide to sell.
During the first two years, the developer is typically responsible for rectifying defects and snags. The contract should be clear about the mechanism for reporting and resolving issues within this period. Do not assume this protection exists automatically; check the wording.
There is no automatic statutory right to carry out a pre-completion snagging inspection, but your solicitor should seek to include this as an express contractual right or confirm that the developer is bound by a consumer code that provides for it. An independent snagging surveyor can identify defects before you take ownership, giving you a formal record that is far easier to act upon than a list compiled after the fact.
The Reservation Agreement
Before the main contract is issued, most developers require a reservation fee to secure the plot. The reservation agreement is a separate document, but its terms deserve careful attention.
Where the developer is a member of a recognised consumer code, such as the New Homes Quality Code, a 14-day cooling-off period is typically provided, during which you can withdraw and receive a full refund of the reservation fee. However, this is not a universal statutory right, and the position will depend on the terms of the reservation agreement and whether the developer is bound by such a code. Your solicitor should check this before you commit any money.
Beyond that period, the position becomes less straightforward. The reservation agreement will usually set out what happens to the fee if you fail to exchange contracts within the specified timeframe, typically around 28 days. Understand the financial consequences before committing any money and take advice from your solicitor before signing.
Taking the Right Advice
New build contracts are complex documents, and the stakes are high. The developer’s solicitors will have drafted the contract with their client’s interests in mind. You need someone acting in yours.
Always instruct an independent solicitor with experience in new build transactions, rather than one recommended by the developer. Get in touch with your solicitor as early in the process as possible, ideally before you sign anything at the reservation stage. Early legal advice can save considerable difficulty, and expense, further down the line.