Buying a new build property is an exciting time for most people. They have done their research, visited development sites, booked an appointment to view a show home.
Once they have settled upon their dream property, many customers will be in a process which they may never have experienced previously. They may have bought and sold properties previously but may not be familiar with the different stages of buying a new-build property, understanding what happens from the reservation stage through to moving in. Some may find it confusing and intimidating. They may perceive that their house sale is made when their reservation monies are paid whereas the legal point of sale is actually when contracts are exchanged.
The Competition and Markets Authority (“The CMA”) has been reviewing the way new-build properties, in particular leasehold, are sold to ensure that customers are treated fairly and well-informed at every stage of the process. Whilst the focus of the CMA investigation remains on leasehold properties, in the context of their investigation they have raised a number of more general issues with housebuilders in relation to the whole of the sales process.
In addition to providing advice in relation to the CMA investigation, we are working with housebuilders as part of a wider conversation which is taking place within the housing sector on how customers’ experience can be improved.
Our involvement with the CMA
Gateley Legal completes c.12,000 plot sales per annum working with most of the UK’s largest housebuilders and many smaller residential developers. As a result of this experience, and our involvement with the CMA investigation, we are well-placed to review the sales process from reservation through to completion to ensure that the information which is shared at each stage of the process is consumer-friendly and helps to explain, in a straight-talking way, what the customer’s obligations are and takes into account the concerns flagged by the CMA
The CMA have recently escalated its year-long investigation into the sale of new-build properties using leaseholds and now is, therefore, a good time to consider improvements that might be appropriate in relation to sales processes and related reservation and contract documentation.