Reservation

A reservation locks in the buyer’s interest in the property, preventing it from being sold to someone else during the reserved period. It allows the buyer time to arrange finances, such as securing a mortgage, and finalise legal details.

It shows the commitment of both the buyer and the seller, allowing the transaction to proceed smoothly.

Non-refundable Fee: In most cases, the reservation fee is non-refundable if the buyer decides not to proceed with the purchase, although it is usually deducted from the final purchase price if the transaction completes.

Time Limit: The reservation period typically lasts between 14 and 28 days, after which the buyer must exchange contracts or risk losing the reservation.

Contractual Obligations: Some developers may have specific terms regarding the reservation fee and its usage, so buyers should ensure they understand these before committing.

Deposit: A larger sum paid after the reservation to secure the property once contracts are exchanged.

Exchange of Contracts: The point at which the property purchase becomes legally binding.

Offer: The initial amount proposed by the buyer to purchase the property, which, once accepted, leads to a reservation.

Advantages: A reservation secures the property for the buyer, preventing it from being marketed to other potential buyers. It provides peace of mind and time to finalise financial and legal arrangements.

Disadvantages: The reservation fee is typically non-refundable, meaning if the buyer decides not to go ahead with the purchase, the fee is lost.

Investors often use reservations to secure high-demand properties while they finalise funding or conduct further due diligence. For example, an investor may reserve a new build development property to ensure they have time to evaluate the investment before fully committing.

Scenario: A property investor interested in an off-plan development might pay a reservation fee to hold the unit while awaiting finalised planning details or financial approval.

Is the reservation fee refundable if I change my mind?

In most cases, the reservation fee is non-refundable unless the developer fails to proceed with the sale for reasons beyond the buyer’s control.

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.

Property reservation fees in the UK typically range from £500 to £2,000, depending on the property type and location. For off-plan developments, the reservation process is especially important due to high demand for units.