Brokers are calling for new regulation to correct the new build and mortgage markets that are “chaotically out of sync”, putting buyers under pressure to exchange contracts within 28 days on homes that may not be completed for 12 months, exposing them to rates that have more than doubled in a year.

Developers usually stipulate that new build homes have to complete within a month of reservation for properties that might not be ready to hand over to the buyer for up to a year, as builders struggle with labour and material supply chain shortages.

But the cost of living crisis has seen mortgage rates double from below 2% this year, leaving buyers to face higher payments, or risk seeing the transaction collapse. Typically, a lender’s mortgage offer lasts for six months.

The average rate for a two-year fix lifted by 10 basis points to 4.27% last week, according to Moneyfacts, while the average rate for a five-year fix rose by 9bps to 4.36%.

The data group adds that the average time a mortgage product remains on the market is currently 17 days.

Broker Scott Taylor-Barr of Carl Summers Financial Services says: “The new build market and mortgage market are now deeply out of sync and it’s causing chaos.

“We’re seeing build times that are far longer than many mortgage lenders are now able to hold applications and offers open for, which is a problem when builders are still insisting on exchange 28 days after reservation, even when they don’t think they will have the property built for nearly another 12 months.”

SelfEmployedMortgageHub.com founder Graham Cox adds: “This kind of dodgy practice should be made illegal. It’s made even more egregious by the fact many new build homes are sold to inexperienced first-time buyers.

“While an exchange many months ahead of completion is great news for the property developer, it potentially leaves the buyer on the hook for thousands of pounds. They could find themselves with a new, much more expensive mortgage offer, which ends up being unaffordable.

“The developer, of course, pockets the agreed non-completion fee. These unethical developers should be named and shamed.”

Harmony Financial Services director Imran Hussain says: “This issue of exchanging contracts with no actual completion date in sight is extremely detrimental to prospective buyers.

“I have personally had clients who have had to wait over nine months for a new build to be completed, and in that time, the mortgage product they originally had has doubled, hitting affordability for six and threatening the purchase.

“Exchanges should only take place when the property is built and when the transaction is near completion, just like a regular house purchase. Some form of regulation needs to be brought in for new build developers as currently they are a law unto themselves and are treating buyers with contempt.”