Buying a house in Fruit Market as part of a ‘collaborative development’ uses similar processes to buying a traditional home. However, there are some marked differences.
Collaborative development is a common approach to building a home throughout Germany and the Netherlands and is steadily growing in popularity in the UK. We’ve travelled across Europe to see how it’s done, and have teamed up with some top consultants to develop an efficient and effective process for the homes at Fruit Market.
It’s helpful to remind ourselves of the traditional house buying process. If you’ve not bought a house before or it’s been some time since you did, here’s a reminder:
A typical house buying method
1. Finding your house and making an offer - After relentlessly looking for the perfect home, you will find something close enough and make an offer. Most people will have already sought pre-approval from their mortgage company.
2. You make an offer to the vendor and pay a deposit.
3. Survey and Application - Once the offer is accepted, you carry out a survey, and, all being well and your mortgage application is approved.
4. Exchange and completion of contracts - The solicitor then carries out due diligence on the property and contracts are drawn up between the parties. Once they are agreed, the contracts are exchanged and completed, the mortgage is released and you move into your new home.
Buying a house as part of a collaborative development
Buying a house as part of a collaborative development uses the same range of professional procedures and services plus a few more. The procedure is very similar but there are a number of key differences that are designed to protect your interests and make the process easier than building a house from scratch on your own.
This gives you the benefit of creating somethings special along with peace of mind.
A robust procedure designed for your peace of mind
Blueprint are using their development expertise to establish a framework for the project to minimise the complex administration for you the homebuyer, and to ensure the build process is efficiently managed and completed.
Blueprint will also use their expertise to obtain outline-planning approval for the site master plan and to develop a design code for the range of house types that you will be able to choose from.
Stage 1 - Financial assessment
One of the key differences is that you may require a stage-payment mortgage . We are working in partnership with Build Store, an independent financial advisor that specialises in brokering these types of mortgages. Build Store will help identify the most appropriate financial package for your needs.
Anyone interested in buying a home at Fruitmarket will need to have a financial assessment. This will determine that you have the finances to proceed within the collaborative build project.
Stage 2 - Reserve a plot
Once you’ve passed the financial assessment, you will be able to choose your preferred building plot and house-type and pay a reservation fee to reserve your ‘plot’.
Stage 3 - Join the group and customise
Once there are 12–15 people that meet the financial requirements and outline planning is secured a ‘group’ is formed. At this stage each member pays a non-returnable ‘design deposit’. During this phase the group will determine the design of their shared facilities within the development and you will work with the architect to customise the design of your home.
The entire project will be overseen by Blueprint and an independent project management consultancy. The project manager will monitor the project programme to ensure it runs as timely as possible, monitor costs compared to budget and will be able to provide technical advice to group members regarding customisation choices if required.
At the end of the design process, you will have a good idea of what your new house will look like and how much it will cost to build. If you need to borrow money to finance the building of your house, it is at this point in the process that Build Store will help you identify and secure a specialist mortgage product.
Stage 4 - Obtaining approvals
Once the key design work is complete, a non-refundable ‘approval deposit’ is paid by each member and a Reserved Matters application is submitted. As Blueprint will have worked closely with the planning department to seek outline planning consent, the principle and layout of the project will already have been agreed. The Reserved Matters application will instead focus on the design details decided during the customisation process. Building Regulation and final mortgage approvals will also be secured at this stage.
Stage 5 - Forming the company
With planning permission secured and mortgage products agreed, Blueprint and the members of the group will then form a company for the duration of the build which will be structured by a specialist solicitor.
The role of the company is:
• To be a legal entity to protect the interests of the individuals, the group and the development in a legally binding way
• To be the single point of payment for the house builder
• To ensure group buying power
To join the company, each member will pay a deposit equivalent to 10% of their chosen plot price and sign a contract for the delivery of their house.
Stage 6 - The build procedure and staged mortgage payments
Once the designs of the site and individual houses are complete, a house builder is selected. The builder will be an established and reputable construction company that will build your home in accordance with Building Regulations, planning requirements and provide a home warranty (such as an NHBC policy) for your home. One builder will build all the homes for the group members..
When the build reaches foundation level, each member will finish paying for their plot and pay for foundations, damp proof course and conduits. This stage is commonly known as “Golden Brick” and is timed so as to be tax efficient as possible to the purchaser.
• Site surveys and staged payments
The site is surveyed at various stages by the mortgage lenders in order to pay the house builder in instalments. This protects you as a customer as the house builder will only be paid when various stages are complete and protects the house builder as they know when they will get paid.
Stage 7 - Project completion
Once the house and development is complete, the company the group has formed will have fulfilled its use as a developer of the houses and will instead focus its purpose to managing and maintaining the shared areas of the development. Once the management function of the company is up and running and operating smoothly, Blueprint will exit the company.
Each individual will now be able to have his or her house valued as the finished article. It could be that the house is now worth more than it cost to build and the homeowner can secure a lower loan-to-value ratio mortgage on improved terms.
You will then be neighbours, having achieved something extraordinary!