If you’re buying a new-build property or a home on a recently constructed estate, you may be told a Section 38 agreement is required before your lender will release funds. Many buyers are naturally concerned about delays, mortgage approval, or road maintenance responsibility. This guide explains what a Section 38 Agreement is, why it matters to buyers and lenders, and what your conveyancer will check to keep your purchase moving smoothly.
Quick overview for homebuyers:
- What it is: A legal agreement which makes provision for the new roads to be be constructed to standard and adopted by the council.
- Why it matters: Protects buyers and lenders from unexpected maintenance costs or legal responsibility by ensuring the road will eventually become a public highway maintained at public expense
- Who it affects: Buyers of new-build homes or recently built estates, and their mortgage lenders
- What buyers should check: That a valid agreement exists, any bonds are in place, and adoption timescales are clear.
What is a Section 38 agreement?
A Section 38 agreement is a legal agreement under the Highways Act 1980 between a property developer and the local authority. It makes provision for roads that are built as part of a new development will be constructed to an approved standard and once completed, eventually adopted by the council
Until adoption happens, the road remains private. The agreement exists to protect future homeowners – and their lenders – by ensuring the road won’t be left without long-term maintenance or legal responsibility.
In conveyancing, a Section 38 agreement is one of the key documents checked when a property is served by a new or adopted road.
When is a Section 38 agreement required?
A Section 38 agreement is typically required when:
- You’re buying a new-build property
- The home is on a recently constructed estate
- The road serving the property has not yet been adopted by the local authority
If the road is already adopted, a Section 38 agreement is usually not needed. If it’s still private, your conveyancer will need to confirm whether you have legal rights to use the road and how the road will be maintained (more simplified) the legal title contains adequate rights of way over it and whether there are sufficient provisions within the legal title which provide for its future repair and maintenance, for example by a management company.
Why mortgage lenders care about Section 38 agreements
Mortgage lenders assess long-term risk. If a road remains private with no clear plan for adoption, it can affect:
- The value of the property
- Future saleability
- Responsibility Who pays for repairs and maintenance
Many lenders require confirmation that a valid Section 38 agreement exists before they’ll release mortgage funds. If it’s missing or incomplete, and not supported by a bond or financial security the lender may delay or even refuse to lend until the issue is resolved. This is one the most common reasons Section 38 agreements become a sticking point during conveyancing.
What happens if there is no Section 38 agreement?
If there is no Section 38 agreement, or if it’s defective, several issues can arise:
- Your lender may refuse to proceed
- You could become responsible for road maintenance
- Future repairs could be unexpected and significant costly and unexpected
- Future resale or remortgage (more simplified) Selling or refinancing the property later may be more difficult
In some cases, buyers can still proceed – but only if alternative protections are in place. Your conveyancer’s role is to identify the risk early and explain your options clearly.
Can a Section 38 agreement delay conveyancing?
Most Section 38 agreements are straightforward, but problems can arise that may delay your purchase.
Here’s what can go wrong:
- No bond in place to guarantee completion
- Expired or incomplete agreements
- Developer insolvency before adoption
- Unclear responsibility for repairs
- Delays in finalising the agreement or providing required documentation
- Unclear adoption timescales
These are exactly the kinds of issues your conveyancer will identify as part of their review of the legal title. Our conveyancers regularly deal with new build and lender-led requirements and can confirm whether everything is in place – so your mortgage and completion stay on track.
Who is responsible for the road before adoption?
Before adoption, the road is classed as unadopted. Responsibility for maintenance typically sits with either the developer or a management company set up for the estate.
This means maintenance costs may be covered by the developer initially, then passed to homeowners through service charges until the road is adopted by the local authority.
Road adoption often takes 6-24 months, but lenders usually focus on whether the agreement and bond are in place, rather than adoption being complete.
Understanding who is responsible for maintaining the road, and for how long, is an important part of your conveyancer’s checks.
How your conveyancer checks Section 38 agreements
Your conveyancer will typically:
- Confirm whether a Section 38 agreement exists
- Check it has been formally entered into with the local authority
- Verify that an appropriate bond is in place
- Report the position clearly to your lender
- Explain any risks to you in plain English
- That the agreement covers the full extent of the estate roads
This ensures your purchase proceeds smoothly and avoids any unexpected delays or liabilities.
Do you need a Section 38 agreement to buy a house?
Not always – but many buyers do, especially when purchasing new-build properties or homes on recently built estates.
In some cases, you can complete without a Section 38 agreement, but this depends on your lender’s requirements, the level of risk involved, and whether alternative legal protections exist.
The existence of a Section 38 agreement is usually revealed in a local authority search result, and our conveyancer can confirm whether it’s in place, if it could affect your mortgage or completion and if proceeding is sensible. Call the team 0333 3055 249 or email info@leadingpropertylawyers.co.uk.
