Buying a New Build Property in Scotland

Buying a new build property in Scotland can be an exciting venture, but there are specific steps and considerations unique to Scotland’s legal system and housing market.  Please keep on reading to gain a basic understanding over the process of buying a new build home in Scotland.

Reserving Your New Build

Once you’ve chosen a property, you typically pay a reservation fee (often £500–£2,000) to secure it.  This fee will be deducted from the final price.  You will sign a Reservation Form at the sales office and this will be passed to the developer’s solicitors and then onto your own solicitors.  Prior to making your reservation, you should appoint a conveyancing solicitor (preferably a firm with experience in purchasing new build properties, such as Gebbie & Wilson) and inform the developers of your choice.  We have an exciting new offer in place for new builds at Cornhill Village, Hamilton.  Please click here to find out more about this!

Concluding Missives

The legal contract for buying property in Scotland is known as “Missives”.  Typically, the developer’s solicitors will issue an Offer to Sell along with the title pack for examination by your solicitor.  Developers often push for Missives to be concluded within 4 weeks of the Reservation Date. Therefore, if you require a mortgage, you should submit your application as soon as possible.  Please note, some lenders offer specific deals for new build properties, but be aware that your offer may expire if construction delays occur.  If you are subject to the sale of a property, Missives will need to be concluded on your sale first.  Some developers may allow for the purchase Missives to be conditional upon your own sale Missives being concluded.   Often, a deposit amount will need to be paid upon conclusion of Missives. This will also be deducted from the final price.

Title Examination

Titles over new build properties are usually much more extensive.  This is because new rights have to be created, retained or reserved by neighbouring titles in relation to connection to utility providers and access rights. 

Planning Permission is required for new developments and any significant changes to land use or existing buildings. It ensures that the Local Authority has approved the property’s construction plans.  Building Warrant is also required to ensure that the construction meets required building standards in Scotland.   Once the Property is completed, a Completion Certificate will be issued by the Local Authority; this confirms that the building has been constructed according to approved plans and building standards.  A Habitation Officer will inspect the property prior to settlement and confirm Habitation verbally.  The Completion Certificate, if not available at settlement, will be delivered post-settlement once issued by the Local Authority.

Road Construction Consent is required if the development involves the construction or alteration of roads to ensure they meet public safety and access standards.  This will usually be constructed to a standard that can be adopted by the Local Authority.

Section 75 Agreement may be registered over the title.  This is a legal agreement between the developer and the Local Authority, often requiring the developer to provide certain public infrastructure (e.g., schools, roads, or parks) as part of the development.

Utility Consents will also have to be exhibited during the title examination process.  Developers often need consents to connect the property to essential utilities like water, electricity, gas, and sewage.

 New Build Warranties

New homes typically come with warranties such as the NHBC (National House Building Council) 10-year warranty.  The first 2 years often cover defects, while the remaining years cover structural issues. When settlement occurs, you may consider getting a snagging survey carried out, which identifies any defects or unfinished work in the property.  Developers usually fix these issues before or just after you move in.  Increasingly, the time limit for raising snags is becoming more restricted (e.g., all snags must be raised during the walkthrough demo).

Tax Considerations

Land and Buildings Transaction Tax (LBTT): This is Scotland’s version of Stamp Duty. Depending on the property price, you may have to pay LBTT.  First-time buyers qualify for relief on properties below certain thresholds.

Additional Dwelling Supplement (ADS): This applies to second dwellings and is 6% of the purchase price, payable at settlement. 

Ongoing Costs

Factor Fees: Many new build developments have shared spaces or amenities, like gardens, that require upkeep.  You’ll likely have to pay factor fees for the maintenance of these areas.  A factoring float is often taken at settlement and paid along with the purchase price.

Insurance: New builds may come with guarantees, but ensure you have adequate building and contents insurance from the moment the transaction has settled.  You may also need to register the appliances at the property for new warranties to come into effect.

Points to note:-

• The Title Examination process is usually much more onerous as the title is more extensive.
• Developers push for Missives to be concluded as soon as possible so there is often pressure on purchasers to have their loan papers issued and have sale Missives in place.
• Be prepared for potential delays in the completion date, as construction schedules can sometimes slip due to material shortages.
• Upon settlement, be aware of whether there are warranties in place for the appliances inside the Property as these will have to be registered by you.
• Consider instructing a Snagging Survey to be carried out over the Property.