Reserving is the moment a new-build purchase starts to feel real. You pay a fee, the plot comes off the market, and a clock starts for mortgage, searches and exchange. On an off-plan home there may be nothing to walk around yet except a show home and a plan. The reservation agreement is what you are actually agreeing to, and in England and Wales it is still subject to contract: you are not bound to buy until you exchange.
What the fee does, and what it does not
The fee takes the plot off the market for a stated period. It is not the purchase price, and paying it does not make you the owner. Ask the amount, whether it is later deducted from the price, and the date by which you must exchange. A developer registered with the New Homes Quality Board has to put those points, and a plain-language explanation of the refund rules, in the reservation agreement, and give you a copy.
Under that code there is a 14-day cooling-off period in which you can cancel and have the reservation fee back in full. After that, any deduction has to be a cost the agreement already described. The code also says the deadline for exchange should be at least six weeks from reservation, unless you ask for sooner, so that there is time for the legal paperwork. Developers who are not registered with the code are not bound by those exact rules. Ask which code, if any, covers this seller, and read the refund terms either way.
What you should have seen before you pay
Before you reserve you want the price, the plot number, what is included in the specification, the tenure, and an estimate of the yearly cost of running the home. For a leasehold flat that means the service charge, any estate charge, and the ground rent position. New long leases of homes in England and Wales are generally restricted to a peppercorn ground rent, but service charges are a separate bill and they can rise.
You also want the warranty provider, the expected completion window, and what happens if that window moves. The government’s guide to buying a home still applies underneath the sales process: a solicitor or conveyancer, searches, and a mortgage valuation that protects the lender rather than you. On an unfinished home, ask which drawings and specification the contract will freeze, and how a change to the layout or materials is treated.
Off-plan timing
A home that is not built yet is sold against a date that can move. Weather, labour, a planning condition and the order of plots on a site all affect handover. The contract should say how long the developer has, what notice you get, and what you can do if the date slips past a long-stop. “Options” in a brochure are not the same as a right to walk away with your fee and your costs.
Your mortgage offer will also have an expiry date. A delay on site can mean reapplying, at a different rate, or with a lender that no longer wants that development. Build that risk into the reservation period. If exchange is being pushed to happen inside the cooling-off period, the New Homes Quality Code says that should happen only with your express consent.
Before the money leaves your account
Have your own solicitor read the reservation agreement before you pay, not the day after. Independence matters if the person talking you through the form works for the developer. Ask them to check the fee, the cooling-off period, the exchange deadline, the incentives you think you have agreed, and any condition that you use the developer’s recommended mortgage adviser.
Keep the specification, the plan and the incentive offer with the agreement. Spoken promises are hard to rely on later. The code for registered developers includes a route to have a spoken statement written into the contract if you are relying on it. Use that route, or an equivalent email that the seller confirms, for anything that affected your decision: a view, a parking space, a contribution, a room size.
What to know
- In England and Wales the reservation is subject to contract. Exchange is the point the purchase becomes binding.
- On a New Homes Quality Code developer, the cooling-off period is 14 days and the fee is refunded in full if you cancel inside it.
- Not every developer is on that code. Read the refund rules of the agreement in front of you.
- Match the reservation period to the build date and to the life of your mortgage offer.
Questions to ask the developer
- How much is the fee, is it deducted from the price, and when do I get it back if I cancel?
- Are you registered with the New Homes Quality Board, and does the 14-day cooling-off period apply?
- What is the completion window, and what can I do if it slips?
- Which incentives, plans and specification form part of this reservation?
Sources
General information only, not financial or legal advice. Rules and offers change, so check the sources and your own adviser before you rely on a figure.