Legal Q&A: can we get our money back on a new-build flat we were promised months ago but is still not ready?

We paid a reservation fee in January for a new-build flat we were told would be ready by May, but now it is November and it is still nowhere near completion. What can we do?
Merrily Harpur
Fiona McNulty4 November 2017

QUESTION: We paid a reservation fee for a new-build flat back in January this year. We were told that our home would be ready by May. But now it’s November and there is still no sign that it is going to be ready for us to move into anytime soon. Can we get our money back?

ANSWER: You have entered into a reservation agreement with the developer which gives you the option to purchase the flat for the agreed price.

The terms of such an agreement usually require the developer to take the property off the market, not to offer it for sale to other potential buyers, while requiring the buyer to exchange contracts within a certain period of time — often within 28 working days of receipt of the contract papers by their solicitor.

When buying a new-build home, contracts are commonly exchanged while the property is in the course of construction. If you did not exchange contracts because the flat was not ready, you may very well have failed to satisfy the terms of the reservation agreement. Whether you are entitled to the return of the reservation fee depends on the terms of this agreement.

However, if your developer is registered with a home warranty provider such as the National House Building Council or Premier Guarantee, they agree to comply with the Consumer Code for Home Builders — so if your sale falls through, your reservation fee must be returned, although the developer can usually deduct their administrative expenses.

WHAT’S YOUR PROBLEM?

If you have a question for Fiona McNulty, please email legalsolutions@standard.co.uk or write to Legal Solutions, Homes & Property, London Evening Standard, 2 Derry Street, W8 5EE. We regret that questions cannot be answered individually, but we will try to feature them here. Fiona McNulty is a solicitor specialising in residential property.

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