Newbuild Holding Deposit - refundable? (and another question)

csq

Hi all,

short question:
Is a holding deposit for a NewBuild property refundable if we change our minds? The solicitors said that it isn't, but in the paperwork it only says that the administrative costs would be taken off.

long story:
We put down a £1000 holding deposit for w newbuild flat with a NewBuild developer a month ago, paid the legal fees, and began the legal and mortgage approval process.

In the meantime however, me and my wife have been declined for two attractive rate mortgages because she had started a new job in June, and
a) she's on probationary period (although the job is in the same fashion as her last, just better paid)
b) she has been on emergency tax code for two month - because her previous employer didn't send the P45 soon enough, and thus her real earnings came up £200 short

We are now suggested to try for another mortgage, to keep the flat. However, I don't feel comfortable going for a mortgage that would make us £122 or £43 a month worse off compared with the two we tried to apply for before.

Before we started the process, we weren't aware that her status could affect our application this badly. Apart from this, we worked on our credit scores for years to have them squeaky clean.

I think I'd rather pull out and wait a couple of months before re-applying, even if we were to lose the plot. I need to calculate the money lost properly though to assess our loss/earnings.

I realise that my question sounds like I already answered myself. I just need a bit of advice in the pickle we're in.

Many thanks.

martinsurrey

Since its due to you changing your mind, yuo will lose it, If the developer changes anything (such as schedule for build) that make you pull out, they will in most cases return the deposit.

Your best bet is to be honest with the developer, they will be more likely to look favourably on you if you show you are open with them.

Even if they don’t give you the cash back, ask them if they’d be willing to transfer it to another plot if you reserve it in a few months time once things have settled down.

csq

martinsurrey wrote: »

Even if they don’t give you the cash back, ask them if they’d be willing to transfer it to another plot if you reserve it in a few months time once things have settled down.

We're very likely to do this as we really like the flat, and the entire development. We hope they will see our honest intentions to buy from them, but just with a better mortgage.

GDB2222

There's a code of practice that virtually all builders are meant to follow, and under that it's refundable.


"The Code, which came into effect in April 2010, applies to all homebuilders registered with the UK's main new home warranty providers; NHBC, Premier Guarantee and LABC Warranty and consists of 19 requirements and principles that home builders must meet in their marketing and selling of homes and their after-sales customer service."

http://www.consumercodeforhomebuilders.com/code.php

csq

GDB2222 wrote: »

There's a code of practice that virtually all builders are meant to follow, and under that it's refundable.


"The Code, which came into effect in April 2010, applies to all homebuilders registered with the UK's main new home warranty providers; NHBC, Premier Guarantee and LABC Warranty and consists of 19 requirements and principles that home builders must meet in their marketing and selling of homes and their after-sales customer service."

Thank you, but I'm not sure where exactly does this code talk about holding deposits.

kingstreet

You haven't paid a holding deposit in my opinion. You've paid a reservation fee.

Ask the builder for its policy on such payments if you are unable to get a mortgage to be able to purchase.

csq

kingstreet wrote: »

You haven't paid a holding deposit in my opinion. You've paid a reservation fee.

That's possible. I might have confused the terms.

GDB2222

You can download the consumer version of the code at http://www.consumercodeforhomebuilders.com/resources/Consumer+Code+-+Code+Requirements+-+Second+Edition.pdf

Reservation fees are covered at section 2.6 on page 7.

2.6 Reservation
Home Buyers must be given a Reservation agreement that sets out clearly the terms of the
Reservation, including, but not limited to:
ƒ the amount of the Reservation fee;
ƒ what is being sold;
ƒ the purchase price;
ƒ how and when the Reservation agreement will end;
ƒ how long the price remains valid;
ƒ the estimated cost and nature of any management services the Home Buyer must
pay for.
The Reservation fee must be reimbursed if the Reservation agreement is cancelled. The
Home Buyer must be told of any deductions that may be made.
While the Reservation agreement is in force, the Home Builder must not enter into a new
Reservation agreement or sale agreement with another customer on the same Home.

Umm, you WERE given a reservation agreement, weren't you? If not, I don't think that the builder can make any deductions from the reservation deposit at all. If you did get a reservation agreement, all this should be covered in it, but then you wouldn't be asking, would you?


However, you get a bit more detail if you download the builder's version at
http://www.consumercodeforhomebuilders.com/resources/Consumer+Code+-+Builder+Guidance+-+Second+Edition.pdf

Reservation fees are covered at section 2.6 on page 9 of this version.

GDB2222

kingstreet wrote: »

You haven't paid a holding deposit in my opinion. You've paid a reservation fee.

Ask the builder for its policy on such payments if you are unable to get a mortgage to be able to purchase.

Under the code, the buyer can cancel for any reason, or just on a whim. "Ask the builder for its policy on such payments" - that should be in the reservation agreement. If there was no reservation agreement, no deductions can be made, and the whole res fee should be returned.

Mickygg

Surely an option is to delay the process for 2 months. Just say you are trying to get a better mortgage.

housebuyer66

We paid reservation fee of £500, Once it was agreed sale price of our PX deal from both parties and the sdale of our new plot. They (Redrow Homes) took the deposit out of our account the following day. Yet 48 hours later they contacted us to inform us that they ( sales ) had made an error and would look to reduce there offer on our property by £10000, . and increase the new build by another £10000 on top of what was agreed, This now meant there was a shortfall of £20,000 in which they required from us.

we have printed sales contract signed by there sales team and authorised by their sales manager. With a exchange date.


They cannot explain how this error has occured. The sales person is not new and has been with them for several years.

It has now been three months and we are still waiting for the £500 to be re-inbursed. We have called into sales office , sent e.mails and called North West Head office, and still no explanation why the money has not been paid back into our account. This was not us cacelling the agreement, but they (Redrow) not honouring what we understood to be a legal /binding contract.