What Is Delayed Completion & Is It A Risk?
Completion is the final stage in the process of buying a property. This is the point at which you pay the agreed purchase price, meaning the house becomes legally yours. Ordinarily, the time period between exchange and completion is usually 2-4 weeks, however in some cases it may be possible for a delayed completion house purchase to be implemented. Let’s take a closer look at what this involves.
What Does ‘Delayed Completion’ Mean?
With a delayed completion, a sale price is agreed with a buyer, however the actual completion is delayed for months to years. There are many different reasons that delayed completion can be beneficial for buyers and sellers. These include the following:
- Your seller needs more time to find themselves a new property to move into
- You can’t move into the property for a delayed period of time e.g if you’re moving back to the UK from abroad
- You’re buying a new build property for which construction has not yet finished
- You’re buying a rental property and need to wait for the current tenancy to end before you can move in
- You’re waiting on speculative planning permission to see if you can make the necessary changes to the property before completing the purchase
As you can see, there are many benefits to delayed completion. It gives sellers time to find the perfect home for them with the assurance that their house is already sold (subject to actual completion). Delayed completion also gives buyers the time they need to raise funds to purchase their new property and look into any maintenance that might need doing, as well as giving them time to organise a removals company without rushing. Delayed completion can be an effective negotiation tool for buyers as sellers will often accept a lower price if they know they have the time to find their ideal new home.
That being said, delayed completion does also come with it’s own set of risks. Let’s take a closer look at what these involve:
What Are The Risks Of Delayed Completion?
- As a seller, you maintain full control of the property until the date of completion. The seller is legally obliged to hand over the property in the same state as when it was exchanged, making them responsible for any maintenance issues until completion
- Additionally, delayed completion gives the seller more time to change their mind. As a buyer, the property is not legally yours until completion actually takes place.
- A lower deposit may need to be agreed. In the case of delayed completion, it is not uncommon for deposits as low as 5% to be agreed.
- The mortgage in principle may not be upheld by the time you get to completion
If you are thinking of entering into a delayed completion, it’s crucial to ensure that buyer and seller mutually agree on the terms of the agreement. If delayed completion is successful it has many benefits for both buyer and seller, however it doesn’t come without risk. There is a high chance of the sale falling through and of additional financial costs being incurred. That’s why it’s important to think about the decision thoroughly and be 100% sure that buyer and seller are on the same page.