Buying process · Reservation

Reserving a new home:
deposit, refunds and contract stages.

The money you pay to hold a new London flat is called the reservation deposit in the agreements. This guide explains when that money comes back, what a reservation commits you to, and at which stage the sale becomes binding.

Last checked: 14 October 2026 · About 7 minutes to read
A person signing a printed document with a pen
Signing a document. Photo: Scott Graham, Unsplash (Unsplash License).
Short answer

A reservation holds the flat;
exchange binds the sale.

A reservation holds the flat for you for a set period at an agreed price, but the sale stays “subject to contract” until exchange: it is agreed, not legally binding.

If the developer is registered with the New Homes Quality Code, the reservation agreement includes a cooling-off period of at least 14 days; cancel within it and the full reservation deposit is refunded, and after it the deductions set out in the agreement apply.

The sale becomes binding at exchange; ownership passes to you at completion.

From reservation to completion: when the money is at riskReservation holds the flat. During a cooling-off period of at least 14 days you can cancel for a full refund. After that, cancellation costs the deductions set out in the agreement. Exchange makes the sale binding; ownership passes at completion.01ReservationDeposit paid; the flatis held at the agreedprice. Not yet binding.02Cooling-offAt least 14 days underthe Code: cancel and getthe full deposit back.03Checks and offerContract, lease,searches, AML, anymortgage. Set deductionsapply if you cancel.04ExchangeThe sale becomes legallybinding; the contractdeposit is paid.BINDING05CompletionThe balance is paid;ownership and the keyspass to you.From reservation to completion: when the money is at riskReservation holds the flat. During a cooling-off period of at least 14 days you can cancel for a full refund. After that, cancellation costs the deductions set out in the agreement. Exchange makes the sale binding; ownership passes at completion.ReservationDeposit paid; the flat is held atthe agreed price. Not yet binding.Cooling-offAt least 14 days under the Code:cancel and get the full depositback.Checks and offerContract, lease, searches, AML,any mortgage. Set deductions applyif you cancel.ExchangeThe sale becomes legally binding;the contract deposit is paid.BINDINGCompletionThe balance is paid; ownership andthe keys pass to you.
Based on the New Homes Quality Code V2, which applies to reservations made with a registered developer from 2 March 2026: the exchange deadline is at least six weeks after reservation unless you ask for an earlier date. Your own reservation agreement sets the exact terms.
Side by side

One holds the flat.
The other buys it.

A reservation feels decisive but is not; exchange looks like a formality but is the point of no return. The difference matters most for buyers moving quickly and from a distance.

Step one

Reservation

Step two

Exchange of contracts

What it isReservationA short agreement that takes the flat off the market and holds it for you at the agreed price until the expiry date it states.
What it isExchangeThe moment the signed sale contracts are exchanged between your solicitor and the developer’s solicitor.
What you payReservationA reservation deposit. If your agreement says it is credited against the price at exchange, it is not an extra cost.
What you payExchangeThe contract deposit: a percentage of the price, set by the sale contract. If the reservation deposit is credited, it is deducted from this.
What it commits you toReservationThe reservation terms. The sale stays “subject to contract” until exchange; neither side is yet bound to buy or sell.
What it commits you toExchangeThe sale itself. From exchange the purchase is legally binding; usually neither side can pull out without paying compensation.
How you withdrawReservationBefore the reservation expires, in writing and in the way the agreement sets out. With a Code-registered developer the first 14 days are a cooling-off period.
How you withdrawExchangeUsually not without losing the deposit and facing a claim for compensation. The time to be sure is before exchange.
OwnershipReservationDoes not pass. The flat is only held for you.
OwnershipExchangeDoes not pass at exchange either. At completion your solicitor pays the balance, the transfer documents are sent to you, you get the keys and the home is yours.
TimingReservationDay one. The agreement sets a deadline for exchange. For a reservation made with a Code-registered developer from 2 March 2026, that date is at least six weeks after reservation unless you ask for an earlier one.
TimingExchangeBy that deadline, once your solicitor is satisfied and any mortgage offer is in place. For an off-plan flat, the completion date is set by the notice provision in the contract.
The time in between

What those weeks
are actually for.

The deadline in the reservation agreement is the deadline for exchange, not a countdown to sit through. Five things run in parallel in that time.

Your solicitor reviews the contract and the leaseLease length remaining, service charge, ground rent, estate charge, and anything the developer can still change. The reservation period exists for exactly this.
Anti-money laundering (AML) and source of fundsIdentity checks and the documents that show where the money came from. Leaving them to the last minute can delay exchange; preparing early reduces that risk.
Searches and enquiriesLocal authority and other searches, plus the written questions your solicitor raises with the developer’s solicitor.
Your mortgage offer, if you are borrowingThe lender’s valuation and the formal offer. You do not control this timetable; talking to your mortgage adviser before you reserve gives it more room.
The decision itselfYou are paying to have the flat and the price held for a few weeks. Use them. If you are not sure after the answers come back, cancelling within this period is a normal outcome, not a failure.
Refunds

Is the reservation deposit
refundable?

Under the Code, yes, but not always in full. The points below are based on the version of the New Homes Quality Code that applies to reservations made from 2 March 2026 (V2).

The cooling-off period is at least 14 days. Cancel within it, for any reason, and the full reservation deposit is refunded. Fees you have paid your own solicitor or surveyor are not part of that refund.
If you cancel after the cooling-off period, the deductions set out in advance in the reservation agreement are taken off, and the rest is paid within 14 days of your notice of cancellation. Anti-money laundering checks can affect that payment.
If the developer notifies you in writing of a major change, one that significantly affects the size, appearance or value of the home, you can cancel within 14 days of receiving the details and get back the reservation deposit, any contract deposit and other payments in full.
While the reservation is valid, the developer cannot cancel it and cannot reserve or sell the same home to another buyer.
Cancel in writing, in the way the agreement sets out; a phone call is not enough.
These terms end at exchange. After that, the money at risk is the contract deposit: if you withdraw you may lose it and have to compensate the seller for other losses. The rights you keep come from the contract and the general law; your solicitor will explain them.

The New Homes Quality Code is an industry code that developers register with; it is not a general legal right in every property purchase.

It covers only purchases from registered developers, and you can check a developer on the New Homes Quality Board (NHQB) register. Under the Code, a purchase by a commercial entity such as a company or trust is outside its scope. Reservations made before 2 March 2026 fall under the earlier version (V1).

Whatever applies, the document that governs your purchase is your own reservation agreement, not this page: it sets the amount, the deductions and the deadline. Read it before you pay, and ask your solicitor about anything you do not recognise.

Last reviewed on 14 October 2026. General information, not legal advice on your own purchase; your solicitor advises on your agreement.

Before you pay

What you should see
in writing in the agreement.

A Code-registered developer has to put these in the reservation agreement or provide them with it. For a wider list covering the unit, the costs and the timetable, see our ten questions to ask before you reserve.

The amount of the reservation deposit and whether it is credited against the price at exchange.
The cooling-off period, how to cancel, and the deductions that can apply after the cooling-off period.
How long the price and the reservation are valid, and the deadline for exchange.
The tenure (leasehold for most flats) and an estimate of the yearly costs that come with it; the Code also requires a schedule of the costs expected over the first five years (the Affordability Schedule). More in our guide to new-build flat running costs.
Details of the home: type, plot number, development name, postal address if available, and parking arrangements.
Frequently asked questions

Short questions,
short answers.

Is the reservation deposit always refunded?

For a reservation under the Code, in full within the 14-day cooling-off period, and less the agreement’s deductions after it. After exchange the money at risk is the contract deposit. If the Code does not apply, your only basis is the reservation agreement.

Does ownership pass at exchange?

No. At exchange the sale becomes legally binding and the completion date is set. The home becomes yours at completion: the balance is paid, the transfer documents are sent and you get the keys.

How long is there between reservation and exchange?

Until the deadline in your agreement. For a reservation made with a Code-registered developer from 2 March 2026, it is at least six weeks (28 days plus the 14-day cooling-off period) unless you ask for a shorter period.

If I buy through a company, does the Code protect me?

No. Under the Code, a purchase by a commercial entity such as a company or trust is outside its scope. Your rights then come only from the contract; read it with your solicitor.

Are the reservation deposit and the contract deposit the same thing?

No. The reservation deposit is paid to hold the flat. The contract deposit is paid at exchange and is a percentage of the price; if your agreement says so, the reservation deposit is deducted from it.

Sources

What this guide
is based on.

Last checked: 14 October 2026. The founder’s own reservation agreement (a London developer, 2024) was also read; because it is a single agreement, its amounts are not repeated on this page.

Read next
How much money you need → Ten questions before reserving → UK mortgage on Turkish income → Source of funds, prepared → Buying off-plan → The full buying process →
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