Buying a home is one of the largest investments people make and it is therefore important that the newly built property has the benefit of adequate protection under a suitable building scheme.
The scheme should provide warranty and insurance protection and cover should start from exchange of contracts and last up to a maximum of 10 years after the legal completion date.
One very important point to consider is that any deposit paid on exchange of contracts is protected in the event that the developer becomes insolvent before the property is structurally completed and legal completion has taken place.
Under the contract for purchase, a deposit of 10% of the purchase price is payable.
It is common to exchange contracts prior to the property being structurally completed and frequently there can be many months between exchange of contracts and structural completion.
During this time, there is a risk that the developer can become insolvent and in these circumstances the deposit paid could be lost.
Under a satisfactory building scheme, insurance protection should be in place to cover repayment of the 10% deposit. However, there may be a cap on the amount insured.
Your legal advisers should therefore check what building scheme will be used by the developer and that adequate protection is offered.