The risks of a new build completion on notice
(Last Updated: 07/02/2024)
05/10/2022
176
4 min read
What is completion on notice?
When buying a new build off plan, you cannot set an exact completion date when you exchange contracts, as the property isn't finished yet. Instead, you agree to 'completion on notice'.
Once the property has been built and signed off by building control, the developer will then serve notice on the buyer to complete within 10 working days. This is also called an exchange on notice.
The challenge with an exchange on notice is the new build completion date is only estimated, which isn't such an issue if the estimation is up to 3 months. If its closer to 6 months away, it will mean the buyer's mortgage offer will likely have expired before the completion date.
With the completion notice only giving you 10 days to complete, you need to move quickly to:
- obtain a new mortgage offer, if your previous one has run out and can't be extended;
- send over completion money to your solicitor;
- (if renting) hand in your notice, to avoid paying rent and mortgage repayments for too long. Don't do it too early though - or you could be made homeless; and
- organise removals.
New build completion process UK
- 1
Reservation of new build
- 2
Conveyancing to exchange between 28 to 56 days from receipt of contracts. Different plots have different deadlines.
- 3
Completion either straight away if property built or on notice.
- 4
Once development built and signed off, Developer serves notice to complete.
(Notice to complete new build only)
- 5
Completion takes place within 10 working days.
- 6
You have a further 10 working days before the develop can rescind contracts and your forfeit your deposit.
(If you fail to complete)
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What happens if you miss the completion on notice date?
The developer will serve you a notice to complete when the development is ready. This usually sets a completion date just 10 days away. If you fail to complete by the time set, you will receive a second notice to complete. This is a 10 day warning.
Once you receive this second notice to complete, you will be liable to pay for the developer's solicitor's legal fee for the serving of the notice, plus interest on the purchase price, (less any deposit already paid), for the period of your default, up to and including the full 10 days. The rate of interest is set at the Law Society's interest rate which is 4 per cent above Bank of England base rate.
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What happens if you miss the notice to complete date?
After the 10 working days have expired, the developer can rescind the contract and the buyer's 10% deposit is kept by the developer. (If you have only paid a 5% deposit, you will have to pay up the other 5%). The buyer could also be liable for the legal costs of the developer's solicitor. Read more here - What happens when you pull out after Exchange of Contracts?
There are occasions where the developer can grant you an extension to allow you to complete.
Frequently Asked Questions
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Written by:
Andrew Boast
Andrew started his career in 2000 working within conveyancing solicitor firms and grew hands-on knowledge of a wide variety of conveyancing challenges and solutions. After helping in excess of 50,000 clients in his career, he uses all this experience within his article writing for SAM, mainstream media and his self published book How to Buy a House Without Killing Anyone.
Reviewed by:
Caragh Bailey
Caragh is an excellent writer and copy editor of books, news articles and editorials. She has written extensively for SAM for a variety of conveyancing, survey, property law and mortgage-related articles.
