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Original poster

New build chain nightmare - what would you do?

42 replies

Al991 · 14/06/2023 06:11

A couple of months ago we had offer accepted on dream home. Perfect area, bigger than we would usually get, perfect condition, recently remodelled - everything we have dreamed for lowish price and much better than anything else in area we want to be.

Catch is seller is buying a new build which is under construction. Build estimate is August - October, currently predicted end of September. Our mortgage offer expires mid November.

I have tried and failed so far - with a lot of stress and hours on the phone - to negotiate a long stop date that would allow us to legally exit the contract if we haven’t completed by the time our mortgage offer is about to expire. So far nothing I’ve tried has worked because the developers say no.

There might be other options (??) happy to hear any suggestions! Chain break would work but only if they agree to it, which is doubtful since sales are linked.

I am assuming at some point we will have to exchange prior to the build being completed due to pressure on seller from property developers.

So the options may come down to

  • Walk away
  • Take the risk on exchanging contracts knowing the build could extend past our mortgage offer. There are multiple things that could go wrong in my opinion including a) interest rates getting so high that it costs us £100s per month more than what we’d repay now, which is already a lot b) I will be on maternity leave so there could be complications getting a mortgage granted in the first place, especially with new dependent. If we can’t get a mortgage we’d have to pull out and lose our deposit plus pay compensation which would probably leave us penniless. I think the interest rates are what concern me the most though as they’re most likely to screw things up.

I can easily see this getting to the point where the decision rests with us - give up dream home, even knowing there’s every chance the build could be completed on time and all would be fine OR take a risk on potentially paying huge mortgage or worse!

I am so miserable over this. I know decision rests with me just wondering if anyone else has done this and what they did or what they would do… is there ever a situation where taking the risk is better?

OP posts:
Notanotherone5 · 14/06/2023 06:21

To be honest that would be a simple decision for me - there is absolutely no way I would take that risk

lljkk · 14/06/2023 06:25

walk away. There is no dream house, this isn't it.

Thistooshallpsss · 14/06/2023 06:27

It is for the seller to break the chain and move into rented not you. They will lose their new house if they don’t exchange so they need to take the hit I would play hardball and insist on a completion date that you can live with or be prepared to walk away.

Peekingovertheparapet · 14/06/2023 06:28

But if you exchange that’s good news. You can’t exchange without setting a completion date. And if it takes too long you just walk away, or renegotiate price to take into account mortgage changes.

MrsElsa · 14/06/2023 06:30

They need to move into a rental while they wait for their new build. So your action is to say you must complete by X date or you walk away.

greenacrylicpaint · 14/06/2023 06:31

walk away.

your deal is with the sellers and not their seller.
make it very clear to your sellers (officially via your solicitors)

your sellers have to deal with it. if they won't/can't you need to walk.

HarrietStyles · 14/06/2023 06:32

We were in a similar situation several years back. We wanted the house so badly that we ended up going to drastic measures! The new build at the top of the chain kept getting delayed and our buyers at the bottom were pushing or would walk away. So we all agreed to go ahead with exchange and complete. We sold our house and moved into a temporary rental for six months. We then owned the house we were purchasing but agreed that the people we were buying it from could stay living there and rent it from us until their new build was ready. It was all done legally through our solicitors and rental agreement drawn up. It was a pain in the ass moving into a rental and then again 6 months later (I had a toddler and was pregnant at first move, then toddler and newborn for the second move!) but it was totally worth it not to loose the house we wanted.

CatsOnTheChair · 14/06/2023 06:34

You need to set an completion date, or a long stop date, or walk away.
There will be other houses - the nightmare of legally needing to buy a house you can no longer get a mortgage on isn't really worth thinking about.

Original poster
Al991 · 14/06/2023 06:35

Peekingovertheparapet · 14/06/2023 06:28

But if you exchange that’s good news. You can’t exchange without setting a completion date. And if it takes too long you just walk away, or renegotiate price to take into account mortgage changes.

Sadly not true as we would be exchanging on notice if I can’t set a date

OP posts:
Original poster
Al991 · 14/06/2023 06:38

Thank you all. Needed to hear this.

Its so difficult as house is v near us so I’ll have to watch new family move in etc and I WILL find out if it all worked out on time 🙄

But you’re all correct - I need the date!!! I think next step will be pursuing a chain break.

We initially asked for long stop date which would allow us to exit contract but were told no as developers won’t give same to seller (so they can’t walk away leaving them with no buyer if we do etc).

I think next option we will have to pursue is them moving into rental and setting a date for that. Or walking away.

Anyone an expert in this and know of any other options I am all ears haha

OP posts:
JaukiVexnoydi · 14/06/2023 06:39

Rather than a clause that terminates the contract if there's a delay, how about a clause that makes your vendors responsible (which they then get written into their contract with the builders too so the buulders have the ulrimate responsibility) for the additional expenses you will incur if you can't complete before November.

Legally exiting the contract isn't actually what you want is it - it's not like you would then have time to find a different house before your deadline. You can already "lehally" exit in any case by forfeiting your deposit to compensate the rest of the chain for breaking it. What you want is for the builders to take your deadline seriously and that only happens if there's a serious financial penalty for them if they don't.

If they won't agree to any liability if they fail to complete by November then you know that they are expecting there's a significant chance that it won't be done by then. In which case the true cost of the new house is actually the purchase price plus the costs you would incur if this all got delayed to January, and you have to figure out if it's worth that to you.

Original poster
Al991 · 14/06/2023 06:42

HarrietStyles · 14/06/2023 06:32

We were in a similar situation several years back. We wanted the house so badly that we ended up going to drastic measures! The new build at the top of the chain kept getting delayed and our buyers at the bottom were pushing or would walk away. So we all agreed to go ahead with exchange and complete. We sold our house and moved into a temporary rental for six months. We then owned the house we were purchasing but agreed that the people we were buying it from could stay living there and rent it from us until their new build was ready. It was all done legally through our solicitors and rental agreement drawn up. It was a pain in the ass moving into a rental and then again 6 months later (I had a toddler and was pregnant at first move, then toddler and newborn for the second move!) but it was totally worth it not to loose the house we wanted.

@HarrietStyles them renting from us was one of the options being considered. I’ve sent you a PM about it I hope that’s ok! It sounds v complicated having them rent from us, but we wouldn’t necessarily mind them doing so until their new build is done as we are chain free.

OP posts:
pornyshroudofturin · 14/06/2023 06:42

I know it's frustrating OP, but this isn't your probleM to fix, and you shouldn't be trying to find solutions. If nothing else, it shows allow eager you are and will make your vendor realise you are unlikely to walk away.

Hard as it is, I'd instruct my solicitor to put it back on them, tell them to come up with a realistic timetable for exchange and completion, within your mortgage period, or you will walk. What they do post completion is their issue.

pilates · 14/06/2023 06:43

Yes your vendors need to shoulder the responsibility and move into temporary accommodation. I would start looking now for another property. You never know there could be something better out there. You have enough time before your mortgage offer expires.

TheLemon · 14/06/2023 06:46

We had this but I was the buyer of the new build and our buyer's mortgage potentially expired before completion if the build was delayed.

Eventually I wrote them a post-dated cheque for the cost of the mortgage arrangement fee, and left it with the estate agent, to be cashed only if the new build ran over (which it didn't). Could this be a solution?

Original poster
Al991 · 14/06/2023 06:51

TheLemon · 14/06/2023 06:46

We had this but I was the buyer of the new build and our buyer's mortgage potentially expired before completion if the build was delayed.

Eventually I wrote them a post-dated cheque for the cost of the mortgage arrangement fee, and left it with the estate agent, to be cashed only if the new build ran over (which it didn't). Could this be a solution?

Think this would work fine if it weren’t for rising interest rates! But to cover those it’d have to be a pretty big cheque haha.

OP posts:
wormshuffled · 14/06/2023 06:53

Would depend on the new build for me. If it's an estate you should be able to do research on how long other houses are taking/what other buyers are experiencing with their proposed completion date verses the actual date.

If it is a lone new build that is a gamble. Ask for an open dialogue with the seller in this case. It would be a shame to lose your dream home because you didn't want to be a pain and ask.

Original poster
Al991 · 14/06/2023 06:54

pilates · 14/06/2023 06:43

Yes your vendors need to shoulder the responsibility and move into temporary accommodation. I would start looking now for another property. You never know there could be something better out there. You have enough time before your mortgage offer expires.

I appreciate this and hearing the same from others.

I will not exchange on notice. I knew deep down I couldn’t, it’s just so hard isn’t it?

As for looking at other properties, think I will keep renting for a while if this falls through to be honest. The anxiety has ruined me and I don’t think I can cope with another chain just yet. Having said that, I have been trying to convince DP to view some properties to help us get some perspective!

OP posts:
mafsfan · 14/06/2023 07:02

Seller needs to rent to complete as soon as the chain is ready - this is really really common for people buying new builds.

Make sure your solicitor and the estate agent are being forceful with them.

greenacrylicpaint · 14/06/2023 07:04

Eventually I wrote them a post-dated cheque for the cost of the mortgage arrangement fee, and left it with the estate agent, to be cashed only if the new build ran over (which it didn't). Could this be a solution?

with the expected rise of mortgage rates I would not agree to this.

Peekingovertheparapet · 14/06/2023 07:08

Ahhh my bad. Fundamentally misunderstood. No you should definitely not bind yourself to a contract with so much inherent risk and your solicitor should be advising you not to anyway.

mafsfan · 14/06/2023 07:11

Also find something else to view with that estate agent to make the point that you're not messing around and they need to get on to your seller.

Mummybud · 14/06/2023 07:17

You absolutely need to make this your seller’s problem. Instead of trying to find a solution, just ask your solicitor and estate agent to relay the message that you will not be able to push completion beyond 31 October. The end. If they don’t want to lose their buyer they need to come up with a solution (which - to be clear - should be that they go into a short term rental). House purchasing is emotive, but this is a business transaction. Those are your terms, stick to them.

Mummybud · 14/06/2023 07:18

mafsfan · 14/06/2023 07:11

Also find something else to view with that estate agent to make the point that you're not messing around and they need to get on to your seller.

This is good advice and will spook the estate agent.

ThoseClementineShoes · 14/06/2023 07:24

I think it’s really reasonable to say your mortgage offer expires in November, you need to complete by then and can’t exchange without a completion date.

This is a really common situation with New Builds. Friends of ours ended up going into a series of AirBnBs with their young children for this exact reason - buyers mortgage would expire and delays on their build.

The sellers can do this - go into temporary accommodation. You can also offer to rent your place to them and do this through the solicitor. They should think about this seriously in the current climate.