Reservation fee - buying off plan

K999

We are first time buyers and in need of some advice on the reservation fee for new builds. We've just put in an offer for a new build house which will be completed this November. Won't find out whether the offer will be accepted until next week but the sales consultant has been pestering us for a £2000 reservation fee (in the form of a cheque which she swears she will not bank until our offer is accepted!!!) and to fill in a reservation form. She has left several messages insisting this happens as her sales director has specified it as a requirement. We have ignored the messages so far as we are reluctant to hand any money over or sign any forms - can anyone whose gone through the process of buying a new build clarify this reservation fee and form business please??? Many thanks.

Premier_2

Call her up and tell her to stop calling you until she has confirmation of your offer being accepted.

Tell her that you want an urgent decision as there is another property down the road that you are also interested in and that you need to decide which one to progress with.

Natty082

How sure are you the property will be finished by November? - there are a number of horror stories on here about delayed properties.

For reference my first house I bought the reservation fee was £350, the one we bought recently was £500.... £2000 sounds very high.... sounds a bit suspect to me!

Is it a big developer?

K999

It's with Bryant homes - I know they are part of George Whimpey and that they are having financial problems. We asked how they came up with the sum £2000 as res fee and have not received a satisfactory answer. We've told them we are not signing anything or handing over any money until they confirm the offer. We said we were happy to put the money in an escrow and they seemed backed off about the cheque but are still insisting we fill in the reservation forms - not sure what that would legally bind us to even though they haven't accepted our offer yet. Also no guarantees from them that the property will be finished by November...

GDB2222

I strongly recommend that you do not sign ANYTHING without having an independent solicitor look it over first.

The standard new-build contract allows the builder to finish the build whenever they wish, and you then have to be prepared to complete within 2 weeks. They will not finish the development until they have it almost all sold, so you could be waiting months or years for it to be finished. Do not agree to buy anything that is not yet finished and ready to move into. Alternatively, you can renegotiate the contract.

There is no rush, as they have virtually no buyers.

I wouldn't hand £2k to a house builder who may go bust next week.

pinkshoes

Have you got a mortgage offer in place, and a suitable deposit for that particular property? (If the bank won't lend, you won't get the £2000 back!).

Don't hand over a penny until the offer has been agreed, then I would also ask for a clause in the contract stating that the completion date will be november, and to agree to a penalty (or be allowed to pull out) should this completion date not be met.

K999

We have a mortgage certification approved and a 10% deposit in the bank so we are in a very strong position.

Thanks for all the advice...think we will be handling very cautiously.

GDB2222

K999 wrote: »

think we will be handling very cautiously.

No, you need to be more cautious than that!

Premier_2

Unfortunately it's unlikely the developer will change the sale contract for you.

Large developers, such as Wimpey, have a standard sales contract that was drafted by their legal team. They are renouned for not altering that standard contract for individuals - it's a case of take it or leave it, sorry.

Expect the completion date to be open ended, but for it to take place within 14 days of notice to you to do so. If you are lucky, it may include a clause or two that may help in hurrying them up - but you probably won't get a fixed or long stop completion date.

You are right to be cautious about handing over any money before exchange - if it is not fully refundable should you decide not to proceed to exchange for any reason, then seek advice from your own solicitor.

GDB2222

Premier wrote: »

Expect the completion date to be open ended, but for it to take place within 14 days of notice to you to do so. If you are lucky, it may include a clause or two that may help in hurrying them up - but you probably won't get a fixed or long stop completion date.

That's a pretty ropey contract at the best of times, ie when sales are powering ahead, so completion is quite likely to be more or less on time. These days, when the builders may not be able to sell the rest of the building at all, it's appalling.