05 January 2003

KEEBLE HAWSON

www.keeblehawson.co.uk

E-MAIL UPDATE

Property - new rules for new properties

PROTECTION FOR BUYERS OF NEW PROPERTIES

The Council of Mortgage Lenders Handbook for England and Wales is to be amended on 1 April 2003 to provide greater protection to buyers of new properties. The aim of the amendments is to prevent buyers from moving into property, which is incomplete and in some cases may be unsafe.

The Handbook is a detailed manual providing solicitors with complete instructions when dealing with mortgages of residential property.

From April 2003, the following procedure will be introduced:

The builders deem the new property completed and apply to the new home warranty provider to attend the property and carry out a final inspection. The new home warranty provider is typically the National House Building Council (NHBC)

At the final inspection, if the property is satisfactorily complete, the NHBC will issue a cover note to the builder

The builder will send the cover note to the buyer's solicitor, who in turn will send it to the lender, as evidence that the property is complete

4. The lender will not release the mortgage funds unless he has received a cover note from the buyer's solicitor together with confirmation that a new home warranty is in place.

This new procedure will only apply to new properties being built or being converted in accordance with the terms of the new home warranty scheme and will only effect contracts exchanged on or after 1 April 2003

The new rules will mean builders will no longer be able to require buyers to complete the purchase of a property in advance of it being ready but they do have very important implications for the drafting of contracts for the sale and purchase of new homes if severe problems are not to be encountered by both buyers and builder.

We act for both residential developers and buyers of new homes and can advise on the likely problems to be encountered as a result of the introduction of these rules.

We will keep you updated on further changes in property law in future e-mails

For more information contact:-
Annette Bond
Telephone number 0114 290 203
www.keeblehawson.co.uk

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