When you’re buying a house, particularly a new build, you may be asked to pay a reservation fee to secure the property. Reservation fees are mostly used by developers selling new build homes, where properties might still be under construction. However, you might occasionally encounter them with regular property sales, especially in competitive markets or with unique properties.
Key takeaways
A reservation fee is typically (£500-£2,000) to secure a property off the market for an agreed period, typically used with new build homes
It's paid upfront before contracts and is different from a deposit - it shows serious buyer intent to developers
Fees are usually non-refundable if you change your mind, but refundable if the developer fails to meet their obligations
The reservation agreement sets out payment terms, time limits, and exactly when you can or can't get your money back
If the purchase completes, your reservation fee typically gets deducted from either your deposit or final purchase price
What is a reservation fee?
A reservation fee is an upfront payment you make to a developer or seller to secure a property or plot once your offer has been accepted to have it taken off the market for an agreed period. Think of it as paying to ‘hold’ the property while it’s being constructed, or you’re sorting out your mortgage, legal arrangements, and other purchase details.
How is it different from a deposit?
Unlike a deposit, which forms part of your final purchase price and is paid when you exchange contracts, a reservation fee is typically paid much earlier in the process. It’s essentially a commitment fee that shows you’re serious about buying, while a deposit is part of the actual legal transaction.
How much does it cost?
Reservation fees can vary depending on the property value or developer. They typically range between £500 and £2,000. Developers of new build properties may charge a flat rate regardless of property price, while others calculate it as a percentage of the purchase price.
What does it secure for you?
Paying a reservation fee gives you exclusive rights to purchase the property for a set timeframe – this will vary depending on what you agree to. During this period, the seller cannot sell to anyone else, giving you a little breathing space.
