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.

Yes it's what they need to do, it's the only solution that has the least impact to their "vendor" and buyer, it's what we did, though I appreciate short term lets aren't always easy to find. Massive pain in the arse for a short period of time but it was what we needed to do to keep our sale and purchase, why should the buyer take the hit? Why should you pay rent when your seller doesn't? That's why if you negotiate a long stop completion you should seek financial compensation.

Builders' dates for completing houses are up there with all other fantasy writing. The weather could be terrible, the builder could go bust, the house could prove top have structural problems that need fixing, anything could happen. It seems already to have slipped by a month in a few weeks. You absolutely need an absolute, legally enforceable date for completion before you go to contract. And I wouldn't personally let that gap between be more than two months- one month is about right. It's a good point about insurance- you have to insure from contract, and it may be that an insurer won't even insure on an open-ended contract- I wouldn't. If the vendors want certainty about their sale, they ought to be certain about when they can complete. If they can't be certain, they should sell to you with a fixed time, like a month, to completion, and go into rented.

Bear in mind you will presumably also have to give notice on your rental property. We had a month between exchange and completion to allow us to give notice without too much overlap. It is not advised to give notice on a rental until you have exchanged, you don’t want to end up homeless yourself so I think reasonable to insist on a particular completion date regardless of whether your vendors nee build is ready or not - work out your own timescales for exchange/notice/completion which Is also going to be affected by your mortgage offer expiry.

We are going through this exact situation ourselves. We were ready mid June to exchange then our vendors decided they were buying a new build and wanted us to exchange with notice on completion.

They were initially told that their house would be ready in Sept. we’ve told them it had to be before the end of that month so we could get some stamp duty savings (especially as they forced us to miss the deadline), but our buyers mortgage offer expires on the 01/10.

The vendor kicked up a fuss but has now agreed to a confirmed date at the end of Sept and he will go into an Airbnb temporarily, we’re waiting to exchange at the moment, hopefully it should be next week.

I don’t mind a long exchange as long as it’s a guaranteed completion date. I feel a bit more protected because as it stands as the ones in the middle, either side could simply change their minds and screw us over. At least I feel that once we’ve exchanged we are legally protected plus it gives us time to sort out movers, book in internet installation etc.

But it absolutely sucks that vendors are so reluctant to rent when buying a new build. When we out in our offer in March, we were told that they would rent if they couldn’t find anything to buy and they let us get to the point of being ready to exchange before changing their mind, which wasn’t fair on us or our buyers who have been waiting since February.

When I bought my new house, I exchanged in October and completed in March the following year. The builders want to know they have houses sold ready to complete as soon as they are built. .. so from that perspective it just seems like a long chain. Exchange at least means you have some protection.

@Fluffandbubbles protection yes, but the opposite too - they will be tied in indefinitely!

OP you've been given some great advice. Definitely don't do it, and get a fixed date agreed a reasonable time frame away. If they have to go into rental, that's their problem. And saying something like can't go into rental because would take 2 months to sort out is utterly daft. Airbnb is also another option for them. Yes it's hassle and costly (I'm renting right now to break my chain!) but that's sadly the nature of moving house in this country under the current system. It's not your job to make life easier for them so they can take up or leave it. Best of luck!!

Their problem not yours. Obviously it would be galling to lose the money spent on searches and surveys but it’s entirely their thing to sort and they need to go into rented/Air BNB + storage.

Having just sold for the first time I realise I never appreciated what a strong position I was in when I was a FTB!

they will be tied in indefinitely!

It's not indefinite, it's provisional date plus 3 months usually.

Thank you. Friends IRL are advising I have to agree to it, the developer will re-market, I'll lose the property (which I really do'nt want), there is nothing I can do but agree the exchange. It's refreshing to hear some other opinions voiced on here.

That is your vendors' problem though, not yours. If they don't want their purchase to fall through, they will have to do something to save it. That responsibility isn't yours.

@TinyTroubleMaker it's technically true, but before getting to that point it's worth batting the ball back in your vendor's court as it is their problem first and foremost. If you say no they will very likely lose their onward purchase, they won't be able to find a new buyer and get to exchange point within the time frame the developer will want so I would push the renting point first, if they are adamant they won't rent that's when you say you will only do it with some financial compensation.

Also the market has slowed a bit since the stamp duty cut ended. They’ll be freaked about losing their own buyer and not getting another at the same price. You don’t have that to worry about

Talk to your solicitor about what the long stop date means: will they put a latest date?

How is your rental contract? Can you r tend by a month at a time?

Don't make the mistake of thinking your vendors problems are yours to solve. Take advice from your solicitor, not friends who won't have as much experience. The vendor has the option of putting their stuff into storage and moving into a short term rental - air bnb for example.

If you're desperate for that particular house (and remember - there will always be another house), I'd agree on the condition that they agree a price reduction of say 5%.

Remember - this is their problem to solve. NOT YOURS!

I can rent indefinitely on a monthly basis and have a very good rate for the area, no pressure except it's smaller than the place I want to buy and we're now living with boxes as had got moving with that before given the news. We are renting in a decent area and same school catchment.

Will be batting this back via my solicitor from tomorrow, thank you.

a very good rate for the area

They don't need to know that

You're in a great position in that case. I'd perhaps be tempted to give them a choice - either a % decrease on the price of the house, or a reasonable deadline. You're in the fortunate position that you could take either so I guess you'd win either way? They'd be foolish to not at least seriously consider that as their position sounds much more precarious... at least, if they really want the home they are buying.

This happened to us but we were your seller! Our buyer would only agree to the early exchange if we set a completion date in stone - of course, the completion of our new build was delayed so we had to find alternative accommodation. If I was in your position @TinyTroubleMake I would agree to the exchange but only if you set a completion date. You shouldn't be inconvenienced in this matter - your seller should be!

Next instalment of this.

My solicitor asked the other about completion date. They've replied to say the developer won't set one. The most they will do is let me out of the exchange of the build isn't completed within 6 months of the anticipated date. The anticipated date is November now, so that's middle of next year.

So far buyer has offered nothing and refuses to contemplate moving into rented, is demanding I take it all on.

Having discussed the options with my solicitor, we had decided to go back and present them with 3 options :

1. Go into rented (preferred) and exchange / complete now
2. Set a completion date (no longer possible)
3. Offer financial incentive for agreeing to exchange now, complete later. As I'll need to pay rent, buildings insurance

People IRL are telling me I'm stupid of I do anything bar age the vendor's terms wholesale, as I risk the house being re marketed.

Solicitor and I have discussed the developer doesn't seem that keen to re market, given how much time has already past.

I said I wanted to reflect for a few days, nor make a rash decision. Solicitor is OK with this.

I'm so grateful to all of you on here already for giving your thoughts.

I've also now received the survey. It says the property needs full replacing of mock tudor cladding, including boards, fascia, soffit. I need a quote. Category 3 so in need of urgent attention.

And the EPC is out of date.

Plus various repairs needed to house / garage. Category 2 so do asap.

I've put about £1k in so far all told. I'm getting nervous though. It has in addition crossed my mind that once furlough ends, so not far off now, anything could happen. I'm half packed, loving among boxes in a small 2 bed but won't let that sway me either way.

WWYD?

*agree not age

I'd walk, if it were me. I'm sorry if that's not what you want to hear. But there's no point throwing good money after bad, as the cliché goes.

Honestly OP ignoring the survey issues I think it’s hard line time now. Either they exchange and complete now and they move into rented, or you pull out.

Factoring in the survey result I’d be a bit iffy about touching the place anyway. If you think you can face doing the work (if and only if!) I’d go back to them with the results of the survey, tell them you’d be well within your rights to demand £xxxx off to sort the damage, but you won’t if they exchange and complete now. If they don’t you pull out.

Hopefully they’ll be so nervous about losing the sale and next buyer getting freaked by the survey that they’ll just roll over.

That’s only if you think you can handle the work though, and I don’t know the specifics/costs you’re looking at.

From quick online research I'm estimating £5k for the work, as a ballpark.

Have requested a few quotes.

Having had experience in the family of replacing similar cladding, it's expensive. Just two small gables was a few grand, and that was in a cheap part of the UK and part of a larger job of re-roofing so the scaff was up already. IKt's not usually a big deal structurally- is there more than just the cladding that's a problem? Is it the cement under it as well ? (The one I mentioned wasn't- it just needed some sections of the superficial upper layer of cement removing to do the whole job in plastic, the render itself was 100% sound through all the layers).

I'm sorry to say this, but aside from the cladding, I think the vendors are taking your for total mugs, and I wouldn't just walk, I'd run for the hills. And I say this as someone who waited over 6 months for the house I'm in now due to legal warfare between two vendors and would do it again. But I would never in a thousand years have signed a contract until I had a completion date written on it.

No matter what 'financial incentive' they offer, or get-out clauses they may suggest, it is nothing short of idiotic to sign any contract without a completion date, and that's all there is to it. They are being total CFs. This problem is theirs. There is no reason whatsoever for you to let it become yours. In your place I'd bat it straight back. Hard.
They can rent.

And meantime, I'd look at other properties. In your place, I'd let them know I was doing that, but that might not be the right thing for you, only you can judge.

The survey advises that as it was done from ground level and no deeper exploration was done, they can't report on all of it. The boards, soffit, fascia need re doing all category 3. They can't advise on timber under the eaves, anything under the boards. So, there could be further problems. I'm using most of what I have as deposit, won't be a lot left over and certainly not thousands and thousands for this work.

When I put in the offer, there were multiple properties of this size and price in my area (Midlands). Now not so. Looking on Rightmove, a house for the same price is 3 bed not 2 by now, and less house and garden all round.