Reserving a new home

From New Homes Wiki

A new build home is reserved by paying a reservation fee to the builder, typically between £100 and £500. The reservation fee is usually not refundable and will usually be put towards the cost of the property.

Paying a reservation fee provides little in terms of legal protection and it is possible for the builder to sell the property to someone else. However, this is only likely if the property is a completed or 'stock' property on which no contract has been exchanged. The builder will do this if the other buyer is more attractive financially or in terms of risk. For example the original buyer may have a part-exchange property, but the new buyer is a cash buyer.

It is common practice for the developer to push for contracts to be exchanged within 28 days of the reservation fee being paid. It is important that this pressure does not result in contract being carefully checked by the buyer and the conveyancer. The Office of Fair Trading has taken action against some developers, such as Barratt Homes, for having unfair terms in their contracts. If contracts are not exchanged within twenty-eight days you may have to pay a higher price for the property!