Liam Taylor exchanged on his off-plan home last August on the understanding it would be completed by April. On the day contracts were exchanged he was told the date had been pushed back to October. “Dates were vital for us because we were applying for schools for my daughter and had to be in residence by April for her to be accepted,” says Taylor, who paid £369,950 for a four-bedroom Persimmon home in Deal, Kent.
“My wife was due to give birth in May and we’d hoped to be settled in time. Moreover, we risked losing our mortgage offer because of the delay.”
Taylor agreed to swap his chosen plot for a larger £379,950 house on the same development which was due to be completed between May and July, in time for his daughter to start school. Two days after he exchanged contracts he was told he and his family might have to wait until the end of October before they could move in. Now he’s been told it could be late November, with building work not expected to start until July. He estimates the delay will cost him £10,500 for temporary rental accommodation.
“Had we been informed of the potential delay on the second plot, there is no way that we would have continued with the purchase,” says Taylor. “We cannot legally terminate our contract so, as our daughter has since been offered a school place, we either have to rent in Deal for an unknown number of months, or face driving six hours a day from our current home to take and collect her from school. Since Persimmon allows us only 14 days to complete the purchase after the home is finished, it makes even a short-term rental almost impossible.”
Contracts for new-build homes and the industry-led code of practice that informs them are heavily weighted in favour of the developer. The Consumer Rights Act does not include new builds, giving buyers less protection than high-street shoppers, and each year hundreds of purchasers are left in limbo when a home is not finished in time. They can’t pull out and reclaim their deposit until building works look likely to exceed what’s known as the “long-stop” date – the final date by which a property can be finished, which is often buried in the small print.
This can be up to six months later than the legal completion date cited in the contracts, and the legal completion date is often months later than the estimates given when contracts are exchanged. Most mortgage offers are only valid for three months.
While purchasers are legally bound to the developer’s timetable for the exchange and completion of contracts and face substantial penalties if they delay, developers allow themselves generous leeway.
A completion date only becomes legally binding when the home is ready and a “completion notice” is served, after which purchasers have seven to 10 days to pay up or else face interest charges on the balance.
Nor are developers obliged to pay compensation for delays, unless the developer exceeds the “long-stop” date. Purchasers who have to proceed with the sale of their old home after exchanging contracts, or to rearrange a mortgage when their offer expires, can be left heavily out of pocket.
Grant and Alexis Ross have spent £14,000 on rent and storage after the completion of their £400,000 flat in Bristol was delayed by 14 months by Galliard Homes. “We exchanged contracts in December 2016 and were told completion would be late 2017,” says Grant Ross. “The long-stop date was 31 December 2018. After many delays, in August 2018 we received an email from the developer’s agent asking us to get our money together for completion in six to eight weeks, so we completed the sale of our old house. However, the flat wasn’t ready and the project director gave us new completion dates on an almost weekly basis, always two to three weeks away.”
The completion notice was eventually served in December, but the form was incomplete. The couple moved in at the end of February, having spent five months in hotels and Airbnb accommodation while their furniture racked up charges in storage.
“Because of the constantly changing completion dates we couldn’t rent on a short-term lease,” says Ross. “Galliard refuses to take any responsibility and will not provide any compensation or refund of expenses.”
Galliard insists completion was not delayed, despite the estimated dates given in the reservation details, because the completion notice was served in time for the long-stop date. It declines to comment on the incomplete completion notice, which caused another two-month delay, and says that instead of compensation “extensive alterations” requested by the couple were undertaken at no charge. Ross says this was the installation of under-floor heating, which had been promised in the contract but not delivered to any of the flats in the development.
Persimmon has similarly declined to compensate the Taylors for the delays, which it blames on unforeseen archaeological works and inclement weather. “We kept Mr Taylor informed of delays throughout the process,” says the managing director of its south-east division, Tom Wright. “In January we estimated the build completion date to be 9 August 2019. Mr Taylor accepted this date and instructed his solicitor to exchange contracts. The act of exchanging contracts triggered a letter from our construction team that confirmed the date agreed, but, as required by the Consumer Code for Home Builders, provided a band of dates depending on the stage of construction, which in this instance was 9 August – 31 October 2019.”
The company says its contracts do not include a long-stop deadline by which a building must be completed. Instead it cites a “termination date” after which customers still waiting to move in can cancel their contracts without forfeiting their deposit. “The termination date becomes effective six months after the estimated build date provided for at exchange of contracts,” adds Wright. “In this case the termination date is 9 February 2020.”
It says it has offered Taylor early cancellation rights as a goodwill offer, but Taylor says it’s too late to start househunting from scratch and be moved by September.
Last year Persimmon made a record profit of more than £1bn, partly thanks to the government’s help to buy scheme, which offers interest-free loans to get buyers up the housing ladder. Half of the 16,000 homes it built last year were sold using the subsidy, but allegations of poor quality and unfair leases have prompted a review by the housing secretary, James Brokenshire. Persimmon says new customer service and skills initiatives should improve standards.
Campaigners say insist the industry needs an overhaul. “When completion is delayed by weeks, even months, costs fall on those purchasing, which is totally unfair,” says Paula Higgins, chief executive of the HomeOwners Alliance. It is calling for standard contracts that cover accommodation costs when completion is delayed and a mandatory independent ombudsman scheme.
The government announced plans for such an ombudsman last year but no time has been given for the legislation and there are proposals to restrict its remit to a code of practice drawn up with input from the industry.