Author Topic: Possibility to extend the 28 day deadline to exchange contracts?  (Read 5405 times)

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itsjimmyp

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My partner and I have reserved a new-build home on a Persimmon site in the East Midlands and were told of the 28 day deadline to exchange. Has anyone had much luck requesting extensions of these?

Unfortunately my partner is furloughed at the minute and the mortgage brokers have said there are no lenders who will consider this, so it's either we lose our plot (but get the full refund of our reservation fee) or hopefully request an extension until he is back at work. Our deadline to exchange was the 5th July which is coincidentally the date my partner's employer have said they plan to resume trading, could this be used as a little bit of leverage?

Thanks in advance!


Jessie Dog

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Re: Possibility to extend the 28 day deadline to exchange contracts?
« Reply #1 on: June 05, 2020, 10:28:57 am »
Hello,

Firstly I hope you find this information useful and will put your mind at rest as I know how frustrating buying a new build property is.

I bought off plan and early-bird reserved my plot.
I reserved in September 2019 and exchange contracts at the start of November 2019. I still have not completed on the purchase due to constant delays and the onset of the Covid 19 crisis. I am due to complete on the purchase on the 3rd of July 2020.  Fingers crossed that there will be no more further delays.

You will find that meeting the 28 day exchange deadline that all building companies stipulate in their reservation T&C's is near impossible.
The reason they put this in is to weed out the time wasters and window shoppers - people who reserve because they like the house but then find another one they like with a different developer.

You will find that as long as the developer can see your case progressing then they will not be bothered if you go beyond the 28-day limit.
If you choose to reserve but have no intention of buying that house then that is when you will most likely lose your reservation fee.

In the first instance I would of not have reserved a property without contacting your broker and obtain a DIP (decision in principle) from the lender.
Knowing that your other half has been furloughed it may have been wise to to do this to see if you can afford the house on the furloughed salary.
Even though your other half is maybe going back to work in July it is no given that there will not be another lockdown in the future.

In order to reach exchange point there is so much that has to be done in the background. Your solicitor has to perform all the area checks, planning permission and obtain all this information from the council, your mortgage broker has to put in an official application and you have to provide all your payslips, bank statements, proof of deposit etc.
Your lender has to assess your case, carry out a valuation on the property (desktop or physical) and then the underwriter has to assess.
 
In order to exchange you must have a mortgage offer granted. No honourable solicitor or mortgage broker will let you exchange contracts and commit to buying the property without a mortgage offer in place. This will all take a lot longer than 28 days to do so in the current climate.

Do not stress yourself about the 28 day deadline. Again...as long as the developer can see your case progressing then they will be OK if you go past this date.

Communication is key...if you are not using the developers recommended solicitor and mortgage broker then send weekly updates to the developer to let them know how you are getting on.

It took me 2 months from reserving to Exchanging of contracts and that was prior to lockdown and all the restrictions and problems that have come from Covid-19.

In the current climate all parties need to be working with each other to facilitate the purchase. What was once,  is no longer applicable in the current climate. Surveyors, mortgage brokers and lenders all have massive backlogs to work through and what once took a matter of weeks to do, is now taking months. Your developer will be well aware of this and should be accepting the fact that due to current challenges we all face, the requirement to exchange contracts within 28 days is no longer realistic.

If they are not willing to be accommodating to a serious buyer, then I would really re-consider if this developer is for you.

My ongoing experience as mentioned previously is with an off plan and early bird reserved plot. When I reserved the plot, the plot had only the footings in. Before Exchange could even happen the house build had to be at a certain point.

Obviously if your house is already built, everything has been done and ready to be sold by the developer then they will be looking for a quicker turn around on things and may put pressure on to exchange and complete.

As long as you are doing everything possible to facilitate the purchase in a timely manner. I.e providing documents as soon as they are requested, Paying fees as soon as they are requests, requested updates from your mortgage broker, solicitor, house builder then you will be OK.

*The above information is based on my own experience. The views and opinions should not be taken as financial advice. You should contact a registered financial adviser for this.*







Midwest

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Re: Possibility to extend the 28 day deadline to exchange contracts?
« Reply #2 on: June 06, 2020, 07:58:51 am »
When we decided to purchase a new build (Bloor), we paid a deposit and signed an obligation to exchange contracts on a 3 month deadline, the house was already partially built. The timeline moved backwards slightly (I can't remember why), but the new date was whilst we were on holiday. Bloor would not budge on this date, end of June, and I'm told its the end of financial period for them. So we had to exchange whilst away, with our conveyancing solicitor acting on our behalf.

I'm sure there must be some leeway in the current pandemic. I would speak to your solicitor, but as said don't sign up to exchange without a mortgage offer in place.

New Home Expert

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Re: Possibility to extend the 28 day deadline to exchange contracts?
« Reply #3 on: June 06, 2020, 10:16:56 am »
First thing to consider is that this is Persimmon we are speculating about, the least customer focused housebuilder!

That said, the 28-day deadline will be extended, with good reason only if another buyer, perhaps in a better position to proceed is also interested in your plot. In addition, the property could be placed back on the market at a higher price and you would be given the opportunity to re reserve.

It is doubtful that many buyers would be chomping at the bit to buy a new home with job security at an all time low during the crisis and beyond. 

Finally, furloughing isn't permanent. It ends for everyone in October 2020. Mortgage holidays will no longer be available and lenders will be starting re possession processes and process will crash before next spring.  Anyone buying a new home now could find they are in negative equity within a year.

The best thing to do in these uncertain times, is only something that is based on certainty. 
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New Home Expert

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Re: Possibility to extend the 28 day deadline to exchange contracts?
« Reply #4 on: June 06, 2020, 10:20:59 am »

I bought off plan and early-bird reserved my plot.
I reserved in September 2019 and exchange contracts at the start of November 2019. I still have not completed on the purchase due to constant delays and the onset of the Covid 19 crisis. I am due to complete on the purchase on the 3rd of July 2020. 

That is some delay!  It usually takes six months or less to build a new house. Even a small one man housebuilder can manage to do this.
But this is typical of the housebuilding industry, using the current crisis as an excuse to hide their own inability to plan.

So it is deemed acceptable to tie buyers to commit to a new home within 28 days then make them wait nearly a year for their home, even on an early-bird reservation!  Disgraceful!
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Larkie71

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Re: Possibility to extend the 28 day deadline to exchange contracts?
« Reply #5 on: June 15, 2020, 03:03:42 pm »
We reserved a Taylor Wimpey house 27th February 2020 and told we must exchange by 4th April 2020. Everything was running smoothly, then lockdown. Our site re-opened 4th May and the week later our solicitor noticed something on the searches and this took 3 further weeks to sort out. Taylor Wimpey  were pestering us to exchange. Last week finally all was ready to exchange on our side and Taylor Wimpey will not.

Our site no longer has a build plan in place and until they do, no exchanges or completions will happen. I am no expert on this, but I would not feel too pressurised currently.

New Home Expert

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Re: Possibility to extend the 28 day deadline to exchange contracts?
« Reply #6 on: June 18, 2020, 01:25:36 pm »
The exchange of contracts on 28 days or whatever period should be binding on both sides.
Taylor Wimpey want to have their cake and eat it.
Next up, I expect them to raise the price.

My advice, give up and walk away and buy a home you can see and walk around!
New Home Blog - New Home Expert is committed to providing help and advice for people having issues with their new homes and difficulties with house builders as well as helping potential buyers reduce the risk of possible problems if they do buy.