FTB exchange versus completion question

[TinyTroubleMaker]

FTB here, I've now got as far as survey and searches done. Half packed my current house, which is proving difficult with kids at home during the holidays but half way there.

Now the vendor's estate agent has got in touch to say the new build they are moving to, won't be ready until October so that's the earliest we can move. I get the impression they knew this so quite annoyed.

The estate agent is pushing for us to exchange now, which is 2 months before we can move. Is that normal? What is the risk to me if I do this? Is there a benefit? Any advice? I have never done this before so unsure whether it's something that I should agree to.

I wouldn't exchange so long before completion. You run the risk of not being able to complete if you have a change of circumstances or if the bank pulls their mortgage offer.

No I wouldnt exchange this far out. What they appear to be doing is hooking you in so that if the new build (inevetably) delays, you cannot back out without consequence.

Exchange of conracts is best saved to 2weeks or less to the move in date.

Also, once you exchange contracts, you are legally bound to purchase or face fines. This means in theory you ought to take buildings insurance out on your future home in the interim, as even if it collapses into an unknown sink hole, you are contractually tied.

Ok so that was a dramatic example of what could happen, but it's worth thinking on.

I insured my new home for the two days between exchange and completion.

We ended up exchanging in October and completing in January as the woman at the top of the chain decided last minute she actually wanted to purchase a house. It was annoying but in the grand scheme of things made little difference and gave us a bit more time to order furniture etc as that can take like 10-14 weeks for sofas and beds etc.

It depends on whether you're willing to wait or want to risk demanding they complete in a month or whatever and risk losing the purchase.

Just make sure you get house insurance in the meantime as more time for something to go wrong in the house as they may not repair stuff as quickly.

Also check how long your mortgage offer is good for and if it's likely your circumstances could change in that time.

No it’s not normal. A month max. You have to pay for house insurance and if something should happen then you are stuck with it. Say you won’t do more than for weeks out - two even better.
Alternatively, you could suggest that if they really want things to move now, the sellers could complete and move in with family or rent.
Also get packers to pack for you!!

We had a month between exchange and completion. It was absolutely fine. No new builds involved though.

We've had a month between exchange and completion because someone in the chain wanted to give a month's notice on rented property. Is the buyer of the new property being pressured by the builder to exchange by any chance?

Yes I think the developer is asking for it

It's standard for new build developers, they will usually want to exchange within 4-6 weeks of reservation with a long stop completion. This was not negotiable for us as buyers of the new build (which is why we chose to go into rented so not to mess around our own buyer).

What might happen if I refuse to exchange now and only agree to do it with 2-4 weeks to go? I suppose they could find another buyer? - though in this case it's unlikely.

So assuming the developer is as unmovable as ours, the developer won't budge, so it would mean your buyer will have to rent to keep their reservation or they risk losing their onward purchase (if you aren't willing to wait). The power would be much more in your hands really, I'd be tempted to ask for some financial remuneration if they want to keep you as a buyer as they clearly knew they were buying a new build (and thus the exchange deadline) long before now, if the delay would cost you money you could say you will delay but will want X in rental costs etc for example.

The benefit to a quick exchange is it guaranteeing the purchase so takes that stress away, but I will guarantee it'll be a 3 month long stop completion that would enable them to be delayed if the build gets held up, they usually give themselves up to 3 months for flexibility.

Have you checked when your mortgage offer expires?

OK so today they have said actually the new build won't be ready until November, so that's 3 full months. Even without delays.

My conveyancing solicitor replied to say they weren't told anything about this, and have written to the vendor's solicitor to request information.

The vendor's estate agent have also said the vendor can't possibly move into a rental at that would take 2 months to set up. I don't understand that bit.

My mortgage offer is only valid to December. I'm currently in a small rental, surrounded by boxes and feeling pretty cross.

Yes it really isn't acceptable, and bear in mind November is the aim but that's still a few months away for delays to happen. I'd be tempted to call their bluff on renting, doesn't take 2 months to set up a rental. I'd certainly be looking for a reduction in price to factor in the rental costs you'd have until November if you agree to proceed.

Our sellers were pushing for a 3 month delay between exchange and completion, we didn't agree but if we had our solicitors would have gone through all the risks with us then ask us to sign a waiver to say we understood said risks. That alone was enough to make me not want to do it!

Today my solicitor heard back from the vendor's solicitor. They say the developer threatens to re-market the property if we don't agree to the exchange now.

The property the vendor is buying is a large 4 bed.

If anyone here has experience with new builds, how likely is that? If a developer has a confirmed buyer, how likely is it they would re-market because someone further down the chain hasn't exchanged?

No way on gods earth would I let the vendors new house builders pressure me into anything.

There is always pressure to exchange with new builds with the threat of the developer pulling out. I think it comes more from the selling agents who want to secure the sale.

Nevertheless, if you are ready to proceed with the purchase, and you really want the property then maybe agree to i) a completion date of, say, 15 November 2021 or earlier (then at least you have an end date to work towards) ii) ask for the contract to be amended so the risk of the property remains with the sellers iii) perhaps offer a 5% deposit so your money isn't tied up all that time.

The benefit is you secure the purchase at the price agreed. The risk is that prices could fall and your circumstances could change. The seller takes a risk too. Good luck

Thank you mackers you are suggesting options there that I have no knowledge of so will ask my solicitor to talk me through how those amendments might work.

@TinyTroubleMaker they absolutely will pull out and remarket, I've seen it happen multiple times, even right before exchange when all paperwork is done. It's ridiculous, you'll think no way they'll do it, but they do, happened to someone on here last year I was going through the process with, nearly happened to us, did happen to our neighbours.

You could try to get a set completion date like the pp says, but I will almost guarantee they won't give it to you, they will protect themselves with the cushion of a long stop completion date with buffer eg Nov-Jan (they won't care about mortgage expiry dates).

Developers are bullies to work with, I love my house immensely but to have a new build in the chain is a huge stress, and not something I was willing to burden our buyer with which is why we went into rented even though it was for a really short time (4 weeks! But we couldn't know for sure).

It's also worth checking your mortgage offer - some can be extended if completion takes longer so December isn't necessarily the definate cut off.

Sorry you're going through this OP. So frustrating that developers do this!

The vendors are trying to make their problem your problem. This is for them to resolve. I'd agree to exchange and complete now / max of a month's time, but not exchange to complete months down the line. Obviously this depends on you having other options to fall back on if they say no (but are they desperate to keep their purchase?).

Absolutely do not be bullied by shitty developers and vendors. 1 week between exchange and completion is the norm, 2 weeks max!

Your vendor can go into rented. Not your problem.

When you exchange in on a ready-built house, the completion date is set as part of the contract, the vendor legally has to give vacant possession on that date (as long as the ££ goes through), or face paying you financial compensation.

What they are asking you to do is enter the contract to buy, pay your deposit, and then wait….. indefinitely.

If the developers were confident of finishing by a certain date, they would put it un a contract. The fact that they won’t tells you that this could go on for months. There are labour and materials shortages in the building trade plus pingdemic issues.

There is no way I would enter into an open ended completion date.

People’s experiences of a long gap between exchange and completion are not relevant if the completion date was set as part of the contract. If the date can be set, early exchange is good: the vendors can’t back out (without penalties).

So the vendors have passed on the developers ultimatum; pass one back. You will exchange on a contract that has a completion date of (whatever you would accept: mid Oct for example) or you walk away.

Then the vendors can decide about rental. The EA will want to hold the sale so may we’ll magic then something up from their rentals department

I think in your situation your buyer should exchange and complete within a reasonable time (1 month max) and then move into a rental until the new build is ready. Holiday rentals should be available from October and take minutes to arrange. Lots of people are doing this at the moment. The issue with exchange plus large gap to completion is that once you exchange contracts you are legally obliged to continue with the purchase or you lose your deposit. If something happens in the 2-3 month gap, like you lose a job, or your mortgage offer gets withdrawn, and you can’t complete your sellers would probably still be able to keep the deposit. This is why people want to exchange first (then you can book removals and pack), short gap of around 1-2 weeks, then complete (when the rest of the money gets paid over)- it gives enough time to do the essentials but not enough for something seriously bad to happen!

And yes, I would just say no, mid October (or other date you want) or you walk away. They are not going to find someone else who is prepared to do this very easily and probably not at all.

Yes I don't see how they 'can't' go into a rental. That would solve the whole thing. Obviously it's a hassle isn't it.