Buying

Exchange on Notice when Buying a New Build Explained

Posted March 14, 2024
Exchange on Notice when Buying a New Build Explained

Buying a new build home differs from buying an existing one. A key part of this process is called “Exchange on Notice,” also known as “Exchange of Contracts on Notice” or “Conditional Exchange.”

In a usual property sale, the exchange of contracts locks both the buyer and seller into the deal. The buyer pays a deposit and agrees on an official swap of ownership, usually weeks later.

But with new builds, you might not know when the house will be ready because it’s still being built. This makes exchanging contracts in the usual way tricky. So, developers use Exchange on Notice instead.

During the exchange and completion stage, your conveyancer will check that everything is legally correct to make the sale official. This step includes confirming how much you’re paying, making sure your mortgage offer is in place, and getting insurance for the building.

How it works

  • Reservation: You first pay a fee to reserve your new home. This can often go towards your deposit later.
  • Exchange on Notice: Next, you exchange contracts before the new build home is complete. But there’s no set completion date yet. Instead, you’ll get a notice (usually 10-14 days) telling you when your home will be ready – this is called “notice to complete.”
  • Notice Period: After getting this notice, you have some time to sort out your final payment and plan for moving in.
  • Completion Day: Once everything’s paid for (often through finalising your mortgage), ownership transfers to you, and you can move in.

Pros and Cons

Pros:

  • It ensures that you’ll buy the home.
  • Let construction continue without strict deadlines.

Cons:

  • The exact move-in date can be uncertain, which makes planning tough if selling another property or ending a rental lease.

In short, Exchange on Notice helps manage buying a new build home that’s not yet finished by setting steps from committing to purchase until moving day. It’s important to get good legal advice so you understand all about the notice period and what happens at completion.