Reservation Form

A reservation form provides both the buyer and seller with security, as it prevents the seller from accepting other offers during the reservation period. For the buyer, it serves as an initial commitment to the purchase, giving them time to arrange financing or sell an existing property.

It helps avoid losing a property to other potential buyers while the necessary preparations are made for completing the sale.

Reservation Fee: The buyer typically pays a reservation fee (non-refundable in most cases) to reserve the property. This fee is usually deducted from the purchase price if the sale proceeds.

Reservation Period: The reservation form sets a specific time frame (typically 14 to 28 days) during which the buyer is expected to proceed with the sale by signing contracts. If the buyer fails to complete the purchase within this period, the property may be put back on the market, and the reservation fee may be forfeited.

Price and Terms: The reservation form locks in the price of the property and may include other important terms, such as any incentives offered by the developer or specific conditions related to the sale.

Deposit: A larger payment made later in the buying process, usually when contracts are exchanged, that solidifies the buyer’s commitment to the purchase.

Exchange of Contracts: The legal step following the reservation process, where both parties sign a contract to formally commit to the sale.

Completion: The final stage of the property purchase, when ownership is transferred from the seller to the buyer.

Advantages: A reservation form ensures that the buyer has first claim to the property, securing it from other potential buyers. It provides a period for the buyer to arrange financing or sell an existing property without fear of losing the reserved property. For sellers, it demonstrates the buyer’s commitment through the payment of a reservation fee.

Disadvantages: The reservation fee is often non-refundable if the buyer decides not to proceed with the purchase. Additionally, if the buyer cannot meet the deadlines for exchange of contracts, they risk losing the property and their reservation fee.

Property investors often use reservation forms when purchasing off-plan developments or new-build properties. The form allows them to secure a property in a competitive market while they complete their due diligence or secure financing. It also locks in the price of the property, which can be advantageous in a rising market.

Scenario: An investor interested in a newly launched development signs a reservation form and pays a £2,000 reservation fee to secure an apartment. The property is held for them during the reservation period, giving them time to arrange the necessary funds and complete the legal work.

Is the reservation fee refundable?

In most cases, the reservation fee is non-refundable if the buyer decides not to proceed with the purchase. However, it is usually deducted from the final purchase price if the sale is completed.

How long is a property reserved for?

The reservation period typically lasts between 14 and 28 days, during which time the buyer must exchange contracts to proceed with the purchase.

Reservation fees for off-plan or new-build properties in the UK typically range from £500 to £2,000, depending on the value and type of property. The reservation period can vary but is often set for around 2–4 weeks, giving buyers time to arrange mortgages and complete necessary checks.