Buyer premium

JenKKR

I had a verbal offer accepted on a property but it came with a buyer premium. I paid the premium and now after having a MIP my application has been declined. 

I am now out £3600 premium and the house will have to go back on the market as I can't get a mortgage for it currently. Should the premium be refunded or am I being stupid to think estate agents should have morals when it comes to such things? 

Im a FTB with no clue about most of the ins and outs of buying and what's normal or not. So annoyed at myself for not realising I may lose all that money if the mortgage didn't go through. 

Is there anything I can do?

eddddy

JenKKR said:

Is there anything I can do?

I'm assuming that when you say "Buyer's Premium", it's some kind of pre-contract deposit or reservation fee.

As you probably realise, most estate agents don't ask for a "Buyer's Premium" / deposit / reservation fee.

Why was your mortgage refused? Was it a problem with your financial situation, or was it a problem with the property?

Maybe there are 2 angles to investigate...



Firstly, the contract angle...

• Were you given a written terms of the "Buyer's Premium" agreement / contract, before you paid the money?  Or were you directed towards some terms on a website, or similar?

• (In general, it's not sensible to pay £3600 to anyone unless you have something in writing explaining in detail what it's for.)

• If you were given written terms, what do they say about this situation? (Being refused a mortgage?)

• If you were not given written terms, what were you told verbally (before you paid the money) about the situations where you would lose the "Buyer's Premium", or when it would be refunded?

• Whatever you were told (in writing or verbally) before you paid the money would be terms of the contract, and they should apply now

Secondly, the Property Ombudsman Scheme...

• Is the estate agent a member of the Property Ombudsman Scheme? Most are.

• Hopefully, the Property Ombudsman would regard the "Buyer's Premium" as a deposit, and the Property Ombudsman's "rules" about deposits are:

• 

• Link: https://www.tpos.co.uk/images/codes-of-practice/TPOE27-8_Code_of_Practice_for_Residential_Estate_Agents_A4_FINAL.pdf

• So if the estate agent is member of the Property Ombudsman scheme, and they didn't follow those rules - you can initially complain to the estate agent, and then to the Ombudsman.

• The Ombudsman has the power to tell the estate agent to refund the £3600, if the estate agent didn't follow those rules. (But it's not guaranteed that would happen, it's up to the Ombudsman to decide.)

grumpy_codger

https://www.google.com/search?client=firefox-b-d&q="Buyer's+Premium"

It says that "Buyer's Premium" can be required for auction purchases

_Penny_Dreadful

JenKKR said:

I had a verbal offer accepted on a property but it came with a buyer premium. I paid the premium and now after having a MIP my application has been declined. 

I am now out £3600 premium and the house will have to go back on the market as I can't get a mortgage for it currently. Should the premium be refunded or am I being stupid to think estate agents should have morals when it comes to such things? 

Im a FTB with no clue about most of the ins and outs of buying and what's normal or not. So annoyed at myself for not realising I may lose all that money if the mortgage didn't go through. 

Is there anything I can do?

This sounds like a property being sold using the Modern Auction Method which is a hybrid of traditional auctions and private sales, worst of both worlds.  Typically, the winning bidder (you) pays a non-refundable reservation fee and has x number of days to exchange contracts and complete the purchase.

You need to read the contract you signed when you paid the £3,600 to find out if it's refundable.  My guess is that it's not.  One might consider the morally correct thing to do is to abide by the contract one signed.

In future, avoid properties being sold by the Modern Auction Method.  The majority of properties sold in the UK are not sold using the Modern Auction Method.