Just when you think all the juice had been extracted from buyers, another scandal pops up.
“Contracts for new-build homes and the industry-led code of practice that informs them are heavily weighted in favour of the developer. The Consumer Rights Act does not include new builds, giving buyers less protection than high-street shoppers, and each year hundreds of purchasers are left in limbo when a home is not finished in time. They can’t pull out and reclaim their deposit until building works look likely to exceed what’s known as the “long-stop” date – the final date by which a property can be finished, which is often buried in the small print.
This can be up to six months later than the legal completion date cited in the contracts, and the legal completion date is often months later than the estimates given when contracts are exchanged. Most mortgage offers are only valid for three months.
While purchasers are legally bound to the developer’s timetable for the exchange and completion of contracts and face substantial penalties if they delay, developers allow themselves generous leeway.
A completion date only becomes legally binding when the home is ready and a “completion notice” is served, after which purchasers have seven to 10 days to pay up or else face interest charges on the balance.
Nor are developers obliged to pay compensation for delays, unless the developer exceeds the “long-stop” date. Purchasers who have to proceed with the sale of their old home after exchanging contracts, or to rearrange a mortgage when their offer expires, can be left heavily out of pocket. …”