Reserving house before ready to buy

juliako

Hi so my partner and I are planning to buy a house around November time as that’s when we will have the full deposit. We went to see an independent mortgage advisor last week and got Mortgage in Principle. When I contacted Persimmon Homes if there’s going to be any more houses available in November and they have said that I can reserve a property for a £500 fee now even though we won’t have the deposit ready until November... does that sound right? From What I understood is that we have to do the ‘exchange’ within 30 days and then the completion day would be some time after we have the full deposit. Can i go through the exchange without the proof of a full deposit? 

Thank you in advance:)

AdrianC

Exchange means you are legally bound to purchase the property, and you are in for a world of pain and expense if you can't.

If you're that certain that you'll have got your savings arranged - and you can persuade a mortgage lender to give you a firm offer on that basis - then goferit.

GDB2222

Why reserve a property so far in advance? What’s the point? Do you gain a lot from that?

If you change your mind, or your circumstances change, will you get your £500 back?

In short, of course the salesman will take your money, but what’s in it for you?

anteguardian

Both posters above have some great points?

Are houses in such demand in your area you are needed to reserve one this far in advance? Also what do you do if they don’t build a house you like in the new part of the estate? 

Unrelated, but have you done your research on Persimmon homes?
There are a couple of new build companies that I personally wouldn’t touch, Persimmon being one of them... just an FYI. 

RelievedSheff

Reserving early does mean that you will get your choice of plot and will be able to choose the finishes in the house. November is only 5 months away which isn't a long time.

If you are certain that you will have your deposit in place in time then there is no reason not to reserve your chosen plot. Some developers will allow you to postpone the exchanging of contracts until closer to the completion date if you reserve early. 

I agree with the above about researching Persimmon Homes. They do not have a great reputation for build quality, but that said they build a lot of houses and they can not all be bad, but they are getting a lot of bad press at the minute. Of course it is usually a vocal minority of home owners who complain and not the silent majority.

bucksbloke

GDB2222 said:

Why reserve a property so far in advance? What’s the point? Do you gain a lot from that?

If they don't reserve it now, someone else will. When they come to November, they might be looking at completing mid 2021. 

eidand

GDB2222 said:

Why reserve a property so far in advance? What’s the point? Do you gain a lot from that?

If you change your mind, or your circumstances change, will you get your £500 back?

In short, of course the salesman will take your money, but what’s in it for you?

the only benefit I see is the choice of plot. I assume that early birds have a lot more options, although it's going to be down to price, ultimately. Best plots would attract a premium, I would expect. If the OP has a set budget which means they can't really benefit much from being early, then I don't really see the point of an early reservation tbh.

juliako

The only reason we are looking to reserve so soon is because there already isn’t many properties available that meet our criteria and also we will be able to choose the finishing touches if we reserve now

GDB2222

I’ve been reading about the consumer code for home builders, and I think the major developers have signed up. I certainly would not touch a developer who hasn’t. The code says:

2.6 Reservation

Home Buyers must be given a Reservation agreement that sets out clearly the Reservation’s terms, including, but not limited to:

• the amount of the Reservation fee;

• what is being sold;

• the purchase price;

• how and when the Reservation agreement will end;

• how long the price remains valid;

• the nature and estimated cost and of any management services the Home Buyer must pay for;

• the nature and method of assessment of any event fees such as transfer fees or similar liabilities.

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.

This all means there are no standard terms for reservations. You need to read the reservation agreement to find out what you are signing up to, for example whether they can increase the price during the reservation period. It also tells you how much of your reservation fee they can keep if you can’t proceed.  

I assume that a sensible person would ask for a copy of it to take home and study before handing over £500. 

GDB2222

juliako said:

The only reason we are looking to reserve so soon is because there already isn’t many properties available that meet our criteria and also we will be able to choose the finishing touches if we reserve now

It seems to me that:

You should read the reservation agreement very Carefully before signing up, although I suspect that the worst that happens is you lose your £500.

You should not sign the contract until you are much closer to the final completion date, minimising the risk of something going wrong between exchange and completion.

I cannot believe that the builders will really personalise the finishes until after you have signed the formal contract. Otherwise, you might choose puce kitchen units and green carpets, they install those, and then you demand your reservation fee back.

OldMusicGuy

GDB2222 said:

I cannot believe that the builders will really personalise the finishes until after you have signed the formal contract. Otherwise, you might choose puce kitchen units and green carpets, they install those, and then you demand your reservation fee back.

Not true in our case. We reserved and chose all of our finishes about four weeks before exchange of contracts. It all depends on the build schedule, the builders will be forced to order kitchen units/flooring/whatever at a certain point in the build. If you reserve before then, you can choose the options. If you reserve after that date, you have no choice, you have to accept what the builders have chosen. Builders will not offer "strong" colours  like puce carpets and bright green units. There will be a limited set of choices, none of which would be "offensive" to another buyer.

You may well get the reservation fee back if you pull out, but you won't get back the cost of extras and upgrades. 

Choice of plot and choice of fixtures and fittings are big reasons for reserving early IMO.