Insurances, buying a house off plan.

[andyinluton]

I apologise for this being nothing at all about Calis or camping, but am hoping there's some knowledge out their about house purchasing.

Daughter is about to exchange contracts on a new build property.
Completion isn't going to be for probably another 12months.
If she fails to complete, the contract has the usual terms about forfeiting the deposit & also states the developer may pursue her for further costs etc.

Daughter is now stressing about what would happen should she be made redundant & then not be able to get a mortgage in those 12 months. Does any one know of any insurance product that would cover this scenario.

Its easy enough to get cover for income protection after completion, & bank of mum & dad in that situation could cover the bills anyway.

Due to Lifetime ISAS being cashed in to pay part of her deposit & also being stamp duty exempt due to being a first time buyer, its not as simple us parents taking out a mortgage on her behalf.

Currently there isn't a mortgage company that will keep their offer open for the 12months & even if there was an offer would be withdrawn if there was a redundancy.

 

[Ch1pbutty]

I apologise for this being nothing at all about Calis or camping, but am hoping there's some knowledge out their about house purchasing.

Daughter is about to exchange contracts on a new build property.
Completion isn't going to be for probably another 12months.
If she fails to complete, the contract has the usual terms about forfeiting the deposit & also states the developer may pursue her for further costs etc.

Daughter is now stressing about what would happen should she be made redundant & then not be able to get a mortgage in those 12 months. Does any one know of any insurance product that would cover this scenario.

Its easy enough to get cover for income protection after completion, & bank of mum & dad in that situation could cover the bills anyway.

Due to Lifetime ISAS being cashed in to pay part of her deposit & also being stamp duty exempt due to being a first time buyer, its not as simple us parents taking out a mortgage on her behalf.

Currently there isn't a mortgage company that will keep their offer open for the 12months & even if there was an offer would be withdrawn if there was a redundancy.

I'm not an expert, but…

If mortgage is pulled, she would lose deposit and builder might also chase for loss if actual sales price is below agreed price with your daughter. Depends how the contract with the builder is worded - solicitor will be able to advise.

But redundancy is unlikely to be instant, depends on how long you have been there, type of business etc, redundancy package. Was the business taken over, then TUPE will apply etc;

Exchanged Contracts - Now being made redundant

Advice please.

forums.moneysavingexpert.com

And if the builder goes bust:

Purchasing a New Build Property “Off Plan”: What are the Risks? - Thompson Smith and Puxon

The TSP Residential Property team explain the potential risks that you could encounter when buying a new build property "off-plan".

www.tsplegal.com

 

[andyinluton]

Solicitor has advised as to the risk, but unable to offer a solution.

Builder going bust we’ve got covered.

It’s insurance for the first scenario that we are looking for if such a thing exists.

Deposit is £40k at exchange so a substantial amount to loose.

 

[Ch1pbutty]

Solicitor has advised as to the risk, but unable to offer a solution.

Builder going bust we’ve got covered.

It’s insurance for the first scenario that we are looking for if such a thing exists.

Deposit is £40k at exchange so a substantial amount to loose.

If she hasn't already exchanged, would sit on the cash as alot can happen in 12 months, and she might well get a better deal without the stress.

Lots of new properties are being built, more planning being approved, but not many selling due to high interest rates. Prices still seem to dropping unless in a very desirable area then it's a bit different.

 

[dspuk]

I would tend to agree with @Ch1pbutty - there are so many new build estates about, including the one we live on and the sales have slowed to a stop. You could walk up today with an offer and a deposit and move into dozens of properties as fast as they could get you in.

If there challenge is that her job security is a little iffy, to the point she could not get a mortgage offer 6 months before completion I'd say she should sit on her money.

I can't say I would know of any insurer who would insure her 40K in case she had to cancel the deal.

12 months off plan in todays environment is quite challenging. Of course they will be biting her hand off.

 

[andyinluton]

It is a desirable area, whole development sold out in just over a month. Next phase won’t be until 2026

It’s perfect location for her, price is relatively cheap for what it is.

She wants to move out & the mortgage costs will be less than she can rent for so it makes economic sense.

There is no suggestion of redundancy just a solicitor pointing out the risks.

 

[Perfectos]

Can you agree to vary the contract ?

Presume the contract is the usual one sided BS.

red pen the parts you don’t like , send it back for comment accordingly ?

Builders won’t want to loose a sale ATM, Sites are being slowed up, sales are slooow and mortgage availability for some is an issue !
Forward sales figure are important to Developers.

you have nothing to loose by asking. If nothing else it will delay the process For a while.

edit

Home Buyers Protection Insurance Policy

Worried about gazumping? A Home Buyers Protection Insurance Policy can give you the reassurance you need: call 0333 344 3234

www.samconveyancing.co.uk

 

[andyinluton]

No chance. It’s a standard house purchase contract. It works both ways.

Houses priced right are still moving quickly - there is actually a shortage of availability for first time buyers.
Bigger houses where a chain is needed are slower.

I am pretty close to what’s going on market wise.
We are selling our house & buying a new build.
Son has exchanged this week, completing in a month.
Daughter buying her house.

I’m building out a development in Lewisham of 9 units, one in Enfield with 5 & have another 3 sites in planning so am in discussions almost constantly with either agents or funders.

Interest rates on 5 year fixed Mortgage deals are now as much as 3% less than they were 6 months ago & that has brought back a certain amount of confidence to buyers. Meanwhile builders slowed down last summer & there isn’t actually a huge amount of new build available.

 

[The Merle]

No chance. It’s a standard house purchase contract. It works both ways.

Houses priced right are still moving quickly - there is actually a shortage of availability for first time buyers.
Bigger houses where a chain is needed are slower.

I am pretty close to what’s going on market wise.
We are selling our house & buying a new build.
Son has exchanged this week, completing in a month.
Daughter buying her house.

I’m building out a development in Lewisham of 9 units, one in Enfield with 5 & have another 3 sites in planning so am in discussions almost constantly with either agents or funders.

Interest rates on 5 year fixed Mortgage deals are now as much as 3% less than they were 6 months ago & that has brought back a certain amount of confidence to buyers. Meanwhile builders slowed down last summer & there isn’t actually a huge amount of new build available.

Sounds like it will have be dad insurance.
If it’s the house she wants and all the others are under offer, in the very unlikely event anything happens can you step in and help.
Step in with a buy to let or help with higher deposit to give more mortgage options.
There’s a risk with most things in life.

 

[andyinluton]

Sounds like it will have be dad insurance.
If it’s the house she wants and all the others are under offer, in the very unlikely event anything happens can you step in and help.
Step in with a buy to let or help with higher deposit to give more mortgage options.
There’s a risk with most things in life.

The conditions of using the Lifetime ISA are that you cant use it for a BTL.
A higher deposit won't help, she's saved nearly 40% already, if you are unemployed no one will lend.

If I tried to get a mortgage on her behalf, we loose the ability to use the ISA, pay stamp duty (as I won't be a first time buyer) and pay the extra stamp duty as a buyer of a second home. So in this case loss of £15k that cant be used from the ISA & extra £20k of stamp duty.

 

[The Merle]

The conditions of using the Lifetime ISA are that you cant use it for a BTL.
A higher deposit won't help, she's saved nearly 40% already, if you are unemployed no one will lend.

If I tried to get a mortgage on her behalf, we loose the ability to use the ISA, pay stamp duty (as I won't be a first time buyer) and pay the extra stamp duty as a buyer of a second home. So in this case loss of £15k that cant be used from the ISA & extra £20k of stamp duty.

Nightmare.
If it was my daughter then I would try and get her to steer clear of new builds as don’t like the way they are chucked up using the cheapest materials and labour.

If she has her heart set on it then it’s a risk she will have to take unless the builder is happy to put a clause in contract.
Is there a high risk of her becoming unemployed or struggling for a new job
If she has a really good work record and has to change/get new job then mortgage company should still lend.
In the end it’s there choice we can only advice and hope they get sing right in life.

 

[andyinluton]

Nightmare.
If it was my daughter then I would try and get her to steer clear of new builds as don’t like the way they are chucked up using the cheapest materials and labour.

If she has her heart set on it then it’s a risk she will have to take unless the builder is happy to put a clause in contract.
Is there a high risk of her becoming unemployed or struggling for a new job
If she has a really good work record and has to change/get new job then mortgage company should still lend.
In the end it’s there choice we can only advice and hope they get sing right in life.

Ive had 1980s. 1950s 1920s houses the quality of building has actually got better the newer they are.

1920s the single skin of brickwork as an external wall meant that there was zero insulation. The single glazed crittal windows didnt help either.

Our current 1950s with every upgrade possible to the insulation is impossible to heat economically Ok there's a lot of rooms but we can easily do over £1k a month on gas & electric & still feel cold.

Even in the last 5 years the standard of insulation required is massively improved. Hers is Brickwork, 100mm cavity with 50mm PIR insulation, 140 blockwork, then plasterboard. Roof has 400mm insulation, windows are triple glazed. With that lot I reckon lighting a single tea light should keep the place warm.

I will be keeping an eye on it being built & happy to produce a proper snagging list before completion.

 

[The Merle]

Ive had 1980s. 1950s 1920s houses the quality of building has actually got better the newer they are.

1920s the single skin of brickwork as an external wall meant that there was zero insulation. The single glazed crittal windows didnt help either.

Our current 1950s with every upgrade possible to the insulation is impossible to heat economically Ok there's a lot of rooms but we can easily do over £1k a month on gas & electric & still feel cold.

Even in the last 5 years the standard of insulation required is massively improved. Hers is Brickwork, 100mm cavity with 50mm PIR insulation, 140 blockwork, then plasterboard. Roof has 400mm insulation, windows are triple glazed. With that lot I reckon lighting a single tea light should keep the place warm.

I will be keeping an eye on it being built & happy to produce a proper snagging list before completion.

I hate chipboard floors, stud walls, cheap fast grown timber joist/stairs and not a massive fan of speedfit piping, light switches/sockets at required height.
Plus I’ll rather spend time renovating a place for my daughter.

If we all liked the same thing world would be boring.
Sorry going off topic.

I hope she managed to get the place ok as sounds like she really wants it.
Annoying that all the risk on purchaser as I can imagine the builder could sell it in a year once built for a lot more. I guess that’s why off plan is cheaper.

Ps: Yep super cheap to heat totally agree, will prob have a posh heat pump.

 

[andyinluton]

I hate chipboard floors, stud walls, cheap fast grown timber joist/stairs and not a massive fan of speedfit piping, light switches/sockets at required height.
Plus I’ll rather spend time renovating a place for my daughter.

If we all liked the same thing world would be boring.
Sorry going off topic.

I hope she managed to get the place ok as sounds like she really wants it.
Annoying that all the risk on purchaser as I can imagine the builder could sell it in a year once built for a lot more. I guess that’s why off plan is cheaper.

Ps: Yep super cheap to heat totally agree, will prob have a posh heat pump.

Trad gas boiler - made sure of that, also beam & block floors not timber. If I was building it myself the only thing I would have specified differently would be to put electric elements in the towel rails in the bathrooms for summer use in addition to them being on the heating circuit.

Whilst I wouldn't mind renovating somewhere, Ive done too many & currently spend my days either sorting building disputes for others or running development jobs. I really don't want to spend my weekends doing it as well.

She is only 23 & buying on her own, works very long hours & just wouldn't have time to do any work & would struggle with the invariable mess. The new build gets her the kitchen design & bathroom tiles etc that she wants on day one. it's just a case of choosing furniture.

One of the attractions is that her twin brother has just exchanged on another new house 6 doors away although his completion date is only 8 weeks away.

 

[Camperfamily]

I don’t know of such a product, but you could view the £40k deposit as a premium for the right/ obligation to buy the house at a certain price (deducting the £40k deposit already paid).

Is it possible to sell/ novate this right to someone else who would be able and willing to complete the purchase?

If possible, that could potentially minimise the loss and - if there’s sufficient demand - maybe even return a profit. Would need this to be a checked by relevant qualified solicitor/ accountant.

 

[ash]

Was going to suggest the same regarding sale contract having the right to sell on. That would help mitigate the risk. If the properties are as desirable as indicated then flipping it on ought to be do-able and she might even turn a profit. Sounds like the redundancy risk is more theoretical than anything.

 

[andyinluton]

Thanks for the comments.

She has exchanged, there's no need to have a right to sell on, apparently as long as your solicitor is a proper one who knows what they are doing, you can exchange as a seller before you actually own the place & do a concurrent buy & sell when it comes to completion.

It's all hypothetical worst case scenario anyway. An insurance that covered it would have just put her mind at rest.

 

[Perfectos]

Thanks for the comments.

She has exchanged, there's no need to have a right to sell on, apparently as long as your solicitor is a proper one who knows what they are doing, you can exchange as a seller before you actually own the place & do a concurrent buy & sell when it comes to completion.

It's all hypothetical worst case scenario anyway. An insurance that covered it would have just put her mind at rest.

Did the link in post #7 not provide the cover ?

 

[andyinluton]

Did the link in post #7 not provide the cover ?

No I enquired & it’s a low level of cover to reimburse things like solicitors fees, costs of surveys etc designed to cover the costs incurred before exchange if a purchase falls through.

Thanks for the suggestion though. It’s the closest to what we were looking for.

 

[pjm-84]

Even in the last 5 years the standard of insulation required is massively improved. Hers is Brickwork, 100mm cavity with 50mm PIR insulation, 140 blockwork, then plasterboard. Roof has 400mm insulation, windows are triple glazed. With that lot I reckon lighting a single tea light should keep the place warm.

Would expect to see a little more these days ... i.e post 2021/22 changes to Approved Document Part L

 

[pjm-84]

I hate chipboard floors, stud walls, cheap fast grown timber joist/stairs and not a massive fan of speedfit piping, light switches/sockets at required height.

You're not the only one....

 

[andyinluton]

Would expect to see a little more these days ... i.e post 2021/22 changes to Approved Document Part L

The decent PIR insulation costs more than the bricks but lets you keep the wall down to a reasonable thickness - it’s more like £50/m2 for a 50mm insulation that performs more like 200mm of the old rockwool batts.
It’s got to the point where it’s better to go for an expensive thin insulation otherwise we would have 600mm thick external walls. When houses are small you can’t afford to loose that amount of space off a wall.

 

[pjm-84]

Some more expensive than that.....Architecture is my profession (38yrs and counting) but I avoid residential for all the reasons that became apparent a few years back.

 

[The Merle]

Trad gas boiler - made sure of that, also beam & block floors not timber. If I was building it myself the only thing I would have specified differently would be to put electric elements in the towel rails in the bathrooms for summer use in addition to them being on the heating circuit.

Whilst I wouldn't mind renovating somewhere, Ive done too many & currently spend my days either sorting building disputes for others or running development jobs. I really don't want to spend my weekends doing it as well.

She is only 23 & buying on her own, works very long hours & just wouldn't have time to do any work & would struggle with the invariable mess. The new build gets her the kitchen design & bathroom tiles etc that she wants on day one. it's just a case of choosing furniture.

One of the attractions is that her twin brother has just exchanged on another new house 6 doors away although his completion date is only 8 weeks away.

What car did you go for in the end for her?

 

[larrylamb]

Would expect to see a little more these days ... i.e post 2021/22 changes to Approved Document Part L

Off topic sorry Andy.
We have just had an extension done to our 115 yr old house. We wanted to keep 100mm cavity so used brick external leaf with 90mm pir insulation, 100mm thermal block inner leaf with 37.5mm insulated plasterboard dabbed. This achieved the new spec of 0.18W per m. squared K.
We also exceeded the min floor regs by using 150mm pir.
High attention to detail re installation required but new area requires so little heating compared to the original building.