HOUSE PURCHASE - RESERVATION FEES - LEGALLY BINDING??

Discussion in 'Army Pay, Claims & JPA' started by Seedubs, Jun 17, 2008.

Welcome to the Army Rumour Service, ARRSE

The UK's largest and busiest UNofficial military website.

The heart of the site is the forum area, including:

  1. Hi, anyone know anything about buying houses etc...?

    Put a reservation fee down on a house with the intention of moving in when the build was due to finish around Aug/Sep.

    They now ring me saying that its being brought forward to July, good you may think, but I am in a rental agreement until Sep and cannot afford to pay both rent and mortgage.

    The longer I look at the property the worse the deal seems, so I am thinking of walking, now I am assuming I will lose my reservation fee......or do I?

    How legally binding are these? I have not exchanged contracts or anything, just paid the reservation fee and began choosing interiors etc......Anyone?

    Cheers!
     
  2. You will notice the use of the term reservation fee not deposit. You paid a fee to reserve the house, the terms probably stated that would be offset against the purchase price but not refundable if you choose not to then buy the house.

    Read the small print.
     
  3. Thanks,

    I understand the concept, but as you say, read the small print, I have nothing that I have signed to say this.

    I simply signed a checklist, which says things like, "You have had boundaries explained...Yes/No" which I tick off and then signed, having read through this one page summary, I cannot find anything specific relating to the reservation fee.

    Now obviously I am thinking of asking for this back, I know they said it was non-refundable, but I didnt move the goal posts, they did, they made situation different due to bringing forward the completion date.

    Obviously going to small claims court probably would be worth it for either of us, so the question remains, how legally binding are they.
     
  4. You lose the fee, that's it. You have to 'complete' by a certain date or the property is no longer reserved. Therefore, if you dont 'complete' and exchangge contracts, you walk away they place house back on sale. Endex
     
  5. Thanks for the advice guys, well there goes £750. I was hoping there was some loophole or legal shenanigans I could exploit!
     
  6. Shedubs,

    Unless you are desperate to move I recommend taking the hit and walking away. New builds will be substantially discounted over the next 12 months as builders are becoming increasingly desperate to shift them to maintain cash flow, and potential buyers have all but disappeared.

    Alternatively, play hard ball and renegotiate the price you are paying for the property downwards. The buyer now holds all the cards so do not shy away from gazundering.
     
  7. Shedubs

    Pombsen-armchair-warrior's comments about buyers being in the stronger position and gazundering are absolutely right - if you decide to play hardball and still want the new place, try getting them to solve your cashflow problem (which it seems they are causing by completing earlier than you had been expecting) by asking them to cover your rent until September (and then ask for a further discount too)

    Couple of other thoughts: (sorry if you've already had them)

    If you do walk away and dont get your 750 back, although that seems like a lot to loose, its not as much as you might by buying and trying to sell in a short time if you come to decide that the property isnt right for you.

    Although the 750 appears to be a non-refundable fee, theres nothing to be lost in asking for it back, and if they wont do the cash route try other options that are cheaper or more attractive to them, such as asking can they hold it for you towards another property in the futur?

    Good luck with whatever you decide.
     
  8. Thanks guys,

    We fall for the sales patter this time as first time buyers, we went to see the property and was told that there was a lot of interest in our plot and we should hurry.

    Then was told that for an offer to be made we had to reserve the property, which of course we did, the offer was made and we negoiated the price down a little to cover the rent for two months.

    Now a month down the line second hand properties seem much cheaper and although we would loose this £750, we have seen other properties with much more for over £10,000 less, so yes I agree I think we are making the right decision.

    As for asking for the £750 to be retained is a good idea and worth a shot.

    My only other concern is that I recently paid a cheque for £250 for some extra tiles to be put into the bathroom, now they havnt put them in yet, I assume I can get this money back?
     
  9. If they have not put in the tiles and you have paid for them, get them delivered to your self.
     
  10. There was something in the media about more and more people walking away from new-builds and losing their deposits (it wasn't clear what that covered).

    If you need somewhere to live, negotiate hard; asking them to pay for the rent sounds a good starting point.

    But be prepared to walk away. The stories going around at the moment are that the builders are in trouble, which is why the share prices of Persimmon (the UK's largest builder) and Barratt (no 2) have more than halved in less than a year. The whole housing market has seized up and the price of new-builds will plummet, if they haven't already done so.

    Just a thought.... do you have a mortgage lined up or were you planning to sort out that closer to the day? You could suggest to them that you are in severe difficulty because they have moved the date to the left and you can't find a mortgage and need £10k for the increased deposit and would they like to contribute....

    Litotes
     
  11. Called it off today, they said I had lost the reservation fee of £750 and the £250 for the extra tiling, little did she know I had already cancelled the cheque for the tiling.

    Anyway she did ask if it was worth them coming back with another offer, but said no. Felt hurried along and I know I can get a second hand property, which is bigger, more to it for over £10,000 less, so will shop around some more first.

    I believe I am in a good position, first time buyer, with a mortgage offer and renting, so no chain.

    Put it down to experience I suppose.
     
  12. Barratt from 10 squid per share to 80 pence... in 12 months..
    52 week high: 1022p on 03-Jul-07
    52 week low: 76p on 12-Jun-08




    Take the hit on the 750 quid lesson learned..

    You will save 20 to 30 times that by waiting 6 -12 months..


    02
     
  13. You're in the best position possible matey. Especially if buying a pre-owned house. Sellers will be biting your hand off, you are holding all the cards.
     
  14. .....and just in case you still have doubts the fol extract is from today's Evening Standard:

    Fewer than 1,000 new homes will be started in the capital over the next six months on top of the 11,300 built so far this year, according to London Residential Research.

    This 2008 total - of 12,300 - is a dramatic 60 per cent below the 28,800 homes built in 2007.

    "We are not expecting to see any more large sites start this year," confirms LRR researcher Hannah Gardiner. "House builders are simply reacting to the market."

    The advice for anyone who has reserved a new home is stark. Housing consultants London Development Research, which polled more than 200 developers, discovering a market on the brink of catastrophe, says: "If you have just put down a £2,000 deposit on an off-plan purchase, you ought to walk away - right now."


    Link below:

    http://www.thisislondon.co.uk/standard/article-23497853-details/Revealed%3A+the+biggest+new+homes+crash+in+70+years/article.do

    ..and if you still have any doubts read about the £238K flat (and others) that has lost 70% of its value in 2 years:

    http://www.dailymail.co.uk/news/index.html
     
  15. The builders have pretty much overbuilt for the last 8 years, so now they're struggling with prices staying static or dropping. It's funny that at the time they're struggling the government are coming up with these 'new towns' of affordable housing, i guess that'll keep the likes of Persimmon and Barrat in work for the next couple of years.

    As for new builds themselves, when i bought a couple of years ago i had a look at them, but they were always smaller and were closer together than older style houses, several of them being overlooked by at least 4 houses, so i went and bought a 1980s house with a big garden with about 15% extra space and a double garage for the same price, at least now i know that it'll hold its value better in this area, unlike the new builds we looked at.