New build reservation fees and your right to cancel

A reservation fee takes a new build plot off the market for a period set out in a reservation agreement. In the Consumer Code’s sample reservation agreement, the seller agrees to reserve the property at the purchase price until the reservation expiry date, and the fee is deducted as part payment of the deposit due on exchange of contracts. Your own agreement may differ. This is general information rather than legal advice, and the agreement you sign is the document that governs your position.

Find out which code applies to your plot

Two consumer codes operate side by side, and they are not identical. The Consumer Code for Home Builders applies to most homes covered by the UK’s main home warranty bodies, NHBC, Premier Guarantee, LABC Warranty and Checkmate, and its fifth edition applies to homes reserved from 1 January 2024. The New Homes Quality Code applies where the developer is registered with the New Homes Quality Board, and version 2 applies to homes reserved from 2 March 2026.

NHBC says the builder should let each homebuyer know which code scheme applies to their purchase. Ask in writing before you pay anything, because the detail below differs between them. The New Homes Quality Board also publishes a register of developers, and its guidance says to check that your developer is listed as active with a registration start date on or before the day you reserved.

The cooling-off period

Under the Consumer Code for Home Builders, the reservation agreement must state that there is a 14 calendar day cooling-off period during which you can cancel and receive a refund of the full reservation fee. The builder must refund within 14 calendar days of your notice of cancellation.

The New Homes Quality Code requires a cooling-off period of at least 14 days, with a full refund if you cancel for any reason within it. If you cancel after the cooling-off period, the agreement may set out deductions from the refund, and the refund is due within 14 days of your notice.

The practical point is to read the deductions clause before you pay, not after. The codes set the floor and the agreement sets what you actually get back if you cancel after the cooling-off period.

What the fee stops the builder doing

Under the Consumer Code for Home Builders, while the reservation agreement remains valid the builder does not have the right to terminate it and must not enter into a new reservation or sale agreement with another customer on the same home. The New Homes Quality Code likewise says the developer has no right to cancel a valid reservation agreement. That is the substance of what the fee buys.

Both codes also cap the separate early bird fee at £150. Under the New Homes Quality Code a full refund is due if you withdraw within 24 hours of being told the plot is being released for sale, although the developer may allow a longer period.

The codes leave the long stop date to your contract

A long stop date is a date in the contract after which you can walk away if the home is not finished. Neither code sets one itself.

What the codes require is narrower. The Consumer Code for Home Builders requires the contract of sale to state clearly what will happen if construction is delayed and the home will not be ready by the date the builder stated, and requires the builder to give reliable and realistic information about when construction is scheduled to finish. If you end the contract because of an unreasonable delay, as defined in the contract, the builder must repay the contract deposit, reservation fee and any pre-payments in full within 28 calendar days. The New Homes Quality Code requires the contract to set out the circumstances in which you can cancel, which it says might include an excessive or unreasonable delay in completing construction.

So what counts as unreasonable delay is for the contract to define. Ask your conveyancer whether it gives a specific calendar date rather than a formula tied to the builder’s own notice, and what happens to your deposit on that date.

The timing rules in version 2

Under version 2 of the New Homes Quality Code, the reservation agreement must set an exchange date that is reasonable and not less than six weeks after the reservation date, being 28 days plus the 14 day cooling-off period, unless you ask for an earlier one. Our guide to exchange and completion shows how the two stages differ. The completion notice period is usually expected to be at least 14 calendar days.

If the developer makes a major change, you have 14 days from receiving written details of it to cancel with a full refund of the contract deposit, reservation fee and any other payments, and the notice to complete cannot be served during that 14 day window.

As an example, on a £1,000 reservation fee, cancel inside the cooling-off period and you get £1,000 back. Cancel outside it and you get £1,000 less whatever deductions the agreement named when you signed it. Get the agreement and the proposed contract in front of a conveyancer in the same week you reserve, and get conveyancing quotes before you reserve so you are not choosing in a hurry. Our guide on how to choose a conveyancer sets out what to compare.