How New Build Contracts Differ from Resale Contracts
| Feature | Standard Resale Contract | Typical New Build Contract |
|---|---|---|
| Drafting basis | Law Society Standard Conditions of Sale (5th edition) — balanced between buyer and seller | Developer's bespoke contract — often uses the Standard Conditions as a base but with extensive amendments favouring the developer |
| Negotiation | Both solicitors negotiate terms freely | Developer's solicitor rarely agrees to amendments — 'take it or leave it' approach is standard |
| Completion date | Fixed date agreed between parties | Often flexible — developer gives notice (10–14 days) when property is ready. Buyer must be ready to complete at short notice |
| Deposit | Usually 10% on exchange, held by seller's solicitor as stakeholder | Reservation fee (£500–£2,000) plus exchange deposit (5–10%). Developer may insist on deposit release rather than stakeholder |
| Specification | You buy what you see | You buy based on plans and specifications that the developer may reserve the right to change |
| Length | Typically 10–20 pages | Often 30–60+ pages including special conditions, plans, specifications, and management provisions |
| Consumer protection | Limited — caveat emptor (buyer beware) | Consumer Code for Home Builders applies, plus warranty protection |
Part 1: The Reservation Agreement
The reservation agreement is the first document you sign, usually at the sales office. It is NOT the same as exchanging contracts — it is a preliminary commitment that holds the property for you while the legal process begins.
What the Reservation Agreement Should Contain
| Clause | What to Check | Red Flag |
|---|---|---|
| Reservation fee amount | Typically £500–£2,000. Should state the exact amount clearly | Fees above £2,000 without justification. Some premium developments charge more, but this should be proportionate |
| Refund terms | When and how the fee is refunded if the sale does not proceed. Consumer Code requires this to be clear | 'Non-refundable in all circumstances' — the Consumer Code says the fee should be refundable if the developer withdraws or changes the terms materially |
| Reservation period | How long the reservation lasts — typically 28 days, sometimes 21 or 42 | Very short periods (14 days) that pressure you into exchanging before your solicitor has completed due diligence |
| What is reserved | Plot number, house type, any agreed extras, upgrades, or incentives | Vague descriptions. Everything agreed verbally must be in writing — if it is not in the reservation agreement, it does not exist |
| Price | The purchase price and what it includes | No price stated, or price stated 'subject to change' — the price should be fixed at reservation |
| Incentives | All agreed incentives (stamp duty contribution, flooring, appliances, deposit contribution) should be listed | Verbal promises not documented. If the sales adviser offered you free flooring, it must be in the reservation agreement or it is not binding |
| Exclusivity | Confirmation the developer will not sell the plot to someone else during the reservation period | No exclusivity clause — means the developer could theoretically sell to a higher bidder |
Consumer Code Requirements for Reservations
The Consumer Code for Home Builders (2024 edition) sets minimum standards:
| Requirement | What It Means |
|---|---|
| Pre-purchase information | Developer must provide key information about the property, including tenure, management arrangements, and any restrictions, before you reserve |
| No undue pressure | You must be given adequate time to consider the reservation and seek professional advice |
| Clear refund terms | The reservation agreement must state clearly what happens to your fee if the sale does not complete, including who decides and on what grounds |
| Independent legal advice | Developer must recommend you seek independent legal advice — not just suggest using their recommended solicitor |
Part 2: The Exchange Contract — Clause by Clause
The exchange contract is the legally binding agreement. Once signed and exchanged, both parties are committed. Here is what each section typically contains and what to watch for.
Particulars of Sale
| Item | What to Check |
|---|---|
| Property description | Plot number and address should match exactly. For off-plan, the description references plans attached to the contract |
| Title number | The developer's master title number. Your individual title will be carved out from this after completion |
| Purchase price | Must match the agreed price. Check whether VAT applies (rare for residential but check) |
| Deposit amount | Usually 10% of purchase price. Some developers accept 5%. Check whether the reservation fee is deducted from this |
| Tenure | Freehold or leasehold. If leasehold, the lease term and ground rent should be specified (ground rent must be peppercorn for new leases post-June 2022) |
| Completion date or mechanism | Either a fixed date or a notice mechanism (developer gives X days' notice). The notice period is critical — check you have enough time to arrange mortgage drawdown and moving |
The Deposit Clause
| Term | Good for Buyer | Bad for Buyer |
|---|---|---|
| Stakeholder | Deposit held by the developer's solicitor in a separate client account. If the developer goes bust, your deposit is protected | — |
| Agent for the seller | — | Deposit released to the developer immediately. If the developer becomes insolvent before completion, your deposit is at risk — you would be an unsecured creditor |
| Deposit Guarantee Scheme | NHBC, Premier Guarantee, or LABC may provide deposit protection (typically up to £100,000) | Check whether the warranty provider's deposit protection actually applies and what the limit is |
| Forfeiture clause | Standard — if you fail to complete, the developer can forfeit your deposit | Some contracts allow forfeiture AND additional damages claims against you. Your solicitor should review the scope |
The Specification Clause
This defines what you are buying — the 'specification' of the property including materials, finishes, fixtures, and layout.
| What to Check | Why It Matters |
|---|---|
| Attached specification document | There should be a detailed specification listing materials, fixtures, finishes, and fittings. Read it carefully — this is what you are contractually entitled to receive |
| Developer's right to vary | Most contracts include a clause allowing the developer to substitute materials or make 'minor variations' without your consent. Check how broadly 'minor' is defined |
| 'Equivalent or better' wording | Substitutions should be of 'equivalent or better' quality. If the contract says 'at the developer's discretion' without quality protection, this is a red flag |
| Layout changes | Can the developer change the internal layout? Some contracts reserve this right. If so, how significant can changes be? |
| External areas | Gardens, driveways, fencing, landscaping — check these are specified. 'Subject to final design' gives the developer wide latitude |
| Extras and upgrades | Any extras you have paid for (upgraded kitchen, additional sockets, specific tiles) must be listed in the contract or a formal addendum. Verbal agreements are not enforceable |
The Completion Clause
| Clause Type | How It Works | What to Watch For |
|---|---|---|
| Fixed completion date | A specific date is set for completion — you and the developer both know exactly when | Rare for new builds unless the property is already finished. If offered, this is the best option for the buyer |
| Notice of completion | Developer gives you notice (typically 10–14 days or 10 working days) that the property is ready. You must complete within that period | Short notice periods (5 working days) that do not give you enough time to arrange mortgage drawdown, which typically takes 5–7 working days itself |
| Estimated completion date | Developer provides a target date that is not binding. Actual completion may be earlier or later | No contractual consequences if the developer misses the estimated date. Check what the longstop date says (see below) |
The Longstop Date
The longstop date is the ultimate deadline for the developer to complete the property. It is one of the most important clauses in any new build contract.
| Aspect | Detail |
|---|---|
| What it is | The final date by which the property must be completed and ready for handover. If the developer fails to meet this date, you can withdraw and recover your deposit |
| Typical length | 6–24 months after the expected completion date, depending on the developer and the stage of construction when you exchange |
| Your rights if triggered | You can rescind (cancel) the contract and the developer must refund your deposit in full. You may also have a claim for compensation depending on the contract terms |
| Developer's rights | Some contracts allow the developer to extend the longstop date in certain circumstances (e.g., force majeure, planning delays). Check how broad these extension rights are |
| Red flags | Very long longstop periods (36+ months), wide developer extension rights, or clauses that make it difficult for you to actually exercise your right to withdraw |
The Sunset Clause
A sunset clause allows one or both parties to cancel the contract if completion has not occurred by a specified date.
| Type | Effect | Who Benefits |
|---|---|---|
| Buyer sunset clause | You can cancel and recover your deposit if the property is not completed by the sunset date | Buyer — this is essentially the longstop date by another name |
| Developer sunset clause | The developer can cancel the contract and refund your deposit if they decide not to proceed (e.g., the development is not viable) | Developer — allows them to walk away if market conditions change, property values fall, or they find a higher bidder |
| Mutual sunset clause | Either party can cancel after the sunset date | Appears balanced but the developer is usually in a stronger position — they get to keep building and selling other plots while you lose your purchase |
Watch out for: Developer-only sunset clauses that allow the developer to cancel without your consent. This means you could exchange, wait months or years, and then have the contract cancelled because the developer found a better deal. Your solicitor should flag this as a serious concern.
Part 3: Special Conditions
New build contracts typically include a lengthy section of 'special conditions' that modify or add to the standard conditions. These are where the most buyer-unfriendly clauses tend to hide.
Common Special Conditions
| Condition | What It Says | Risk Level | Your Solicitor Should |
|---|---|---|---|
| Variation of specification | Developer can change materials, layout, or design without your consent as long as changes are 'minor' or 'equivalent' | Medium | Check how 'minor' and 'equivalent' are defined. Push for specific exclusions (e.g., kitchen units, bathroom suite, flooring) |
| Changes to the development | Developer can change the wider development — alter layouts of neighbouring plots, change communal areas, add or remove amenities | Medium–High | Understand what could change around your property. A promised park could become more housing. Views could be blocked |
| Access and services | Developer retains right to access the property or neighbouring land for construction, utilities, or maintenance | Low–Medium | Check the scope and duration. Short-term access for completing the development is reasonable; permanent access rights need careful scrutiny |
| Restrictive covenants on the buyer | Restrictions on what you can do with your property — no business use, no alterations without consent, no satellite dishes, specific fence types, no caravans or commercial vehicles | Low–Medium | Ensure you can live with the restrictions. Some are reasonable (estate appearance); others may be overly restrictive |
| Developer's reserved rights | Developer keeps rights over your land for utilities, drainage, or access to other parts of the development | Medium | These are often necessary for the development but should be proportionate and time-limited where possible |
| Estate management obligations | You must join and contribute to a management company that maintains communal areas | Medium–High | Review the management company structure, estimated charges, escalation provisions, and your rights as a member. See if charges are capped or can increase without limit |
| Transfer of title timing | Developer may not transfer the freehold or common parts to the management company immediately — may take years | Medium | Check when the freehold of communal areas transfers. Delays leave the developer in control of management decisions |
| Limitation of liability | Developer limits its liability for defects, delays, or other issues to the minimum required by law | High | Ensure the limitation does not exclude the developer's liability for things they should be responsible for. The warranty provides a safety net but is not a substitute for developer responsibility |
Part 4: Financial Clauses
| Clause | What to Check | Risk |
|---|---|---|
| Deposit amount and timing | How much, when it is payable, and whether the reservation fee is deducted | Higher deposits mean more money at risk if something goes wrong |
| Interest on late completion | If you fail to complete on the date given in the notice, the developer may charge you interest (typically 4–8% above base rate) | This can be very expensive. Ensure the notice period gives you enough time to arrange everything |
| Apportionment of charges | Ground rent, service charges, and council tax are usually apportioned — you pay from the date of completion onwards | Check the apportionment basis. Some contracts calculate unfairly |
| Developer incentives | All incentives must be documented. Check whether incentives affect the purchase price (they must be disclosed to your lender) | Incentives above 5% of purchase price can reduce the amount your lender will advance |
| Additional payments | Some contracts require additional payments beyond the purchase price — management company joining fees, connection fees, or infrastructure contributions | Any additional costs should be disclosed before exchange. Ask your solicitor for a complete list of all money you will need to pay |
Part 5: Leasehold-Specific Contract Clauses
If your new build is leasehold (flats and some houses), the contract will reference a lease that forms part of the agreement.
| Lease Clause | What to Check | Post-2022 Position |
|---|---|---|
| Lease length | How many years? 125 years is common; 999 years is better. Lenders typically require at least 85 years remaining | New leases are still commonly 125 or 999 years |
| Ground rent | Annual amount payable to the freeholder | Must be peppercorn (zero) for new leases granted after 30 June 2022 under the Leasehold Reform (Ground Rent) Act 2022. Any ground rent above zero on a new lease is unlawful |
| Service charges | Estimated annual amount, what it covers, how it is calculated, and review/challenge rights | Review carefully — service charges on new developments can be high (£1,500–£4,000+ per year for flats) and may increase |
| Sinking fund / reserve fund | Contributions towards future major works (roof repairs, lift replacement). Some leases require these from day one | A sinking fund is good practice — it means large bills are spread over time rather than hitting you all at once |
| Permitted use | Usually 'residential only' — check whether working from home is restricted | Most modern leases permit home working but may restrict business signage or client visits |
| Alterations | What changes you can make with and without consent | Most leases require freeholder consent for structural changes and sometimes for non-structural internal changes too |
| Assignment (selling on) | Can you sell freely or does the freeholder need to consent? | Consent should not be unreasonably withheld — check the fee structure for granting consent |
| Subletting | Can you let the property? Some leases restrict this | If you might need to let the property in future, check the lease allows it (some shared ownership leases restrict subletting) |
| Insurance | Who insures the building and how much the 'insurance rent' is | The freeholder usually insures. Check the cost is reasonable and you can see the policy |
Contract Red Flags — What Should Concern You
| Red Flag | Why It Is Concerning | What to Do |
|---|---|---|
| Very short notice of completion (5 working days or less) | Not enough time to arrange mortgage drawdown, which takes 5–7 working days | Your solicitor should push for at least 10 working days' notice. If the developer refuses, understand the risk that you may need to borrow short-term or ask your lender to prepare in advance |
| Deposit released to developer (not held as stakeholder) | Your deposit is at risk if the developer becomes insolvent | Request stakeholder holding. If refused, check the warranty provider's deposit protection scheme and its limits |
| Wide specification variation rights | You could receive a property with different materials, layout, or finishes from what you expected | Ask for specific protections for key items (kitchen, bathroom, flooring) or a right to withdraw if changes are material |
| Developer sunset clause allowing cancellation | Developer can walk away from the deal, even after you have waited months | Your solicitor should flag this prominently. Consider whether you are comfortable with this risk |
| Very long longstop date (36+ months) | You could be locked in for years waiting for a property that may never be finished | Push for a shorter longstop date. If refused, understand your maximum exposure period |
| No snagging provisions | No contractual right to inspect before completion or to have defects fixed | The Consumer Code gives you a right to a pre-completion inspection. Ensure the contract does not override this |
| Escalating estate management charges | Management charges that can increase without limit, leaving you with rising annual costs | Ask for estimates of future charges and any cap provisions. Understand your rights to challenge unreasonable charges |
| Ground rent above peppercorn (post-June 2022) | Unlawful for new residential leases | This should never appear in a new lease. If it does, your solicitor should refuse to proceed until corrected |
| Restriction on choosing your own solicitor | Developer insisting you use their solicitor creates a conflict of interest | You have the right to independent legal advice. Refuse any pressure to use the developer's solicitor exclusively |
| Penalty interest rates above 8% over base | Excessive penalty if you are late completing — far above commercial rates | Your solicitor should negotiate this down or highlight it clearly so you understand the financial risk of any delay on your side |
What Your Solicitor Should Do with the Contract
| Solicitor's Task | What You Should Expect |
|---|---|
| Full review | Your solicitor reads every clause and highlights anything unusual, unfair, or concerning |
| Raise enquiries | Sends questions to the developer's solicitor about ambiguous or missing provisions |
| Attempt amendments | Requests changes to the most buyer-unfriendly clauses. The developer may refuse, but your solicitor should try |
| Report to you | Provides a clear, jargon-free explanation of what the contract says, what the risks are, and what they recommend |
| Flag deal-breakers | If there are clauses that pose serious risks (deposit exposure, developer sunset, excessive variation rights), your solicitor should tell you clearly and explain the worst-case scenario |
| Confirm Consumer Code compliance | Checks the contract meets Consumer Code requirements — pre-purchase information, reservation terms, warranty, complaints procedure |
| Check mortgage compatibility | Ensures the contract terms meet your lender's requirements under the UK Finance Handbook |
For more on what solicitors do during the conveyancing process, see our guide to why you need a new build solicitor.
Negotiating Contract Terms
Developers are reluctant to amend their standard contracts, but negotiation is not impossible — especially in a slower market or for higher-value properties.
What You Can Reasonably Negotiate
| Term | Chance of Success | How to Approach |
|---|---|---|
| Notice period for completion | Medium | Request 10 working days minimum. Explain that your mortgage lender needs this time to release funds |
| Deposit held as stakeholder | Low–Medium | Some developers agree, especially for higher-value plots. Worth asking |
| Specification protections | Medium | Request that specific items (kitchen brand/range, bathroom suite, flooring) cannot be changed without your consent |
| Longstop date reduction | Low | Developer sets this based on their construction programme. Push for the shortest period they will accept |
| Removal of developer sunset clause | Low | Some developers will remove this. Most will not. Make sure you understand the implication if they refuse |
| Cap on management charges | Low | Management charges are usually set by the management company, not the contract. But you can ask for first-year estimates to be capped |
| Interest rate reduction on late completion | Medium | Push for base rate + 4% rather than base rate + 8%. Some developers agree |
Negotiation Tips
| Tip | Detail |
|---|---|
| Let your solicitor negotiate | Contract amendments are solicitor-to-solicitor communications. Do not try to negotiate legal terms through the sales office |
| Pick your battles | Focus on the 2–3 most important issues rather than trying to change everything. Developers are more likely to concede on a few points than on many |
| Market conditions matter | In a slow market with unsold stock, developers are more flexible. In a hot market, you have less leverage |
| Document everything | Any agreed amendments must be in writing as formal contract variations. Verbal agreements with the sales team are not enforceable |
| Be prepared to walk away | If the contract terms are genuinely unacceptable and the developer will not negotiate, walking away (and recovering your reservation fee under Consumer Code grounds) may be the right decision |
Transfer Deed and Plans
The transfer deed (TR1 form) is the document that actually transfers ownership from the developer to you at completion. Your solicitor reviews this alongside the contract.
| What to Check | Why |
|---|---|
| Property boundaries on the plan | Ensure the plan accurately shows your plot boundaries, including any garden, driveway, garage, and parking space. Errors here can cause boundary disputes later |
| Rights granted to you | Rights of way over communal roads, paths, and shared areas. Rights to use drainage, utilities, and shared facilities |
| Rights reserved by the developer | Rights the developer keeps over your land — for example, rights to lay pipes, access for maintenance, or pass over your land to reach other plots |
| Restrictive covenants | Obligations you are bound by — maintaining fences, not running a business, keeping the property appearance consistent with the development |
| Positive covenants | Obligations to do something (rather than not do something) — contributing to estate maintenance, maintaining boundary walls. Positive covenants can be harder to enforce against future buyers but estate management structures usually address this |
| Indemnity covenants | You may be asked to indemnify the developer against future claims relating to the covenants. Standard but check the scope |
Warranty and Defects Clauses
| Clause | What It Should Say | Watch Out For |
|---|---|---|
| Warranty provider named | NHBC Buildmark, Premier Guarantee, LABC, or another approved provider clearly identified | No warranty specified or an unfamiliar provider that your lender may not accept |
| Defect liability period | Developer is responsible for fixing defects in years 1–2 (the 'builder period'). Clear process for reporting and resolution | Developer limiting their defect liability to 'structural defects only' during years 1–2. The warranty builder period should cover all construction defects, not just structural |
| Snagging rights | Your right to inspect before completion and submit a snagging list within a reasonable period after moving in | No snagging provision or very short deadlines (7 days) for reporting defects after completion |
| Relationship between warranty and contract | Clear explanation of how contract defect claims relate to warranty claims | Contract wording that makes the warranty your 'sole remedy' — effectively waiving your contractual rights against the developer in favour of the warranty provider |
For detailed warranty information including how to make claims, see our after-sales and warranty guide.
Contract Review Checklist
| Item | Checked? |
|---|---|
| Purchase price matches agreed amount | ☐ |
| Plot number and description are correct | ☐ |
| Deposit amount and payment mechanism clear | ☐ |
| Deposit protection (stakeholder vs agent) understood | ☐ |
| Completion date or notice mechanism reviewed | ☐ |
| Longstop date identified and acceptable | ☐ |
| Specification document read and acceptable | ☐ |
| Developer's variation rights understood | ☐ |
| All agreed incentives/extras documented | ☐ |
| Warranty provider identified and acceptable to lender | ☐ |
| Defect reporting process clear | ☐ |
| Estate management charges estimated | ☐ |
| Lease terms reviewed (if leasehold) | ☐ |
| Ground rent confirmed as peppercorn (if new lease) | ☐ |
| Restrictive covenants reviewed and acceptable | ☐ |
| Plans and boundaries checked | ☐ |
| Interest rate for late completion noted | ☐ |
| Sunset clause (if any) understood | ☐ |
| All additional costs identified | ☐ |
| Solicitor's report read and questions asked | ☐ |
Frequently Asked Questions
Can I negotiate a new build contract?
You can try. Developers are reluctant to amend their standard contracts because they use the same terms for all buyers on the development. However, some clauses (notice period, specification protections, interest rates) can sometimes be negotiated, especially in slower markets. Your solicitor handles negotiations on your behalf — solicitor-to-solicitor communication is the standard process.
What happens if the developer changes the specification after I have exchanged?
Most contracts allow the developer to make 'minor' substitutions of 'equivalent or better' quality. If the developer makes a material change that significantly affects what you are receiving, you may have grounds to rescind the contract or claim compensation. The definition of 'minor' and 'material' is often the point of dispute — which is why your solicitor should push for tighter specification protections before exchange.
Should I be worried about deposit release?
If your deposit is released to the developer rather than held as stakeholder, it is at risk if the developer becomes insolvent. Most large developers are financially stable, but insolvencies do happen. Check whether the warranty provider offers deposit protection (NHBC covers up to £100,000 per home under Buildmark). If there is no deposit protection and the developer insists on release, your solicitor should advise you on the risk clearly.
What is a Section 106 agreement and should I care?
Section 106 of the Town and Country Planning Act 1990 allows local authorities to require developers to provide affordable housing, infrastructure, or community facilities as a condition of planning permission. These obligations are attached to the land and can affect the development (e.g., restrictions on selling certain plots at market price, ongoing maintenance obligations). Your solicitor should check whether any Section 106 obligations affect your specific plot.
How long should I spend reviewing the contract?
Take as long as you need. The Consumer Code gives you the right to adequate time to review and seek advice. Do not let the sales team pressure you into exchanging before your solicitor has completed their review. If the reservation period is too short for thorough due diligence, ask for an extension. If the developer refuses, consider whether this pressure tactic is a red flag about how they operate.
What if my solicitor says the contract is fine but I am still worried?
Ask your solicitor to explain the specific clauses that concern you. A good solicitor will walk you through each clause in plain English and explain the worst-case scenario. If you remain uncomfortable, you can seek a second opinion from another solicitor. The cost of a second review (typically £200–£500) is small compared to the risk of signing a contract you do not understand.