Case date: 5th July 2023
The customer complained that the developer had not treated them fairly because they had failed to take account of the circumstances of their mortgage offer during the reservation process.
The customer and developer completed a reservation agreement for a property with an estimated completion date around 7 months after exchange was anticipated. The customer had secured a mortgage offer on attractive terms and was concerned to ensure that the purchase could be completed within the period of the mortgage offer. The reservation took place in the final quarter of 2022 when the mortgage market was having to adjust to rapidly changing economic circumstances. The customer did not want to have to seek out an alternative, less favourable offer, if the purchase did not complete.
The reservation agreement was extended several times and the parties got to the point of exchange, but the customer was concerned that the contract referred to the possibility of final completion being beyond the expiry of their mortgage offer.
A final short extension was agreed and a further attempt took place between the legal representatives to address the customer’s concerns. The developer remained confident that the property would be completed within the original timeframe, but because of the build stage at the time, the contract included a longer date by which the developer would be required to complete the build.
The parties could not reach agreement on ways to amend the contract to the customer’s satisfaction and the reservation agreement lapsed. Although the customer subsequently decided that they would be prepared to exchange on the available terms, the developer had already decided to remarket the property and proceeded with another purchaser.
We made some further enquiries to understand what had happened to cause the reservation agreement to expire without contracts being exchanged. Although the customer’s concerns about timing were understandable, the nature of buying a new build property is that there can be less certainty about completion dates than is the case with other properties. The developer’s documentation made it clear that they could not guarantee a completion date within the mortgage offer, although they tried to assure the customer that they felt confident about the original dates. We were satisfied that the developer had followed the requirements of the New Homes Quality Code, including the need to be transparent with the information provided and fair in their treatment of the customer.
© 2022 New Homes Ombudsman Service, All Rights Reserved.
New Homes Ombudsman Service is operated by The Dispute Service Ltd, which is a company registered in England and Wales with number 4851694. Registered Office Address: West Wing, First Floor, The Maylands Building, 200 Maylands Avenue, Hemel Hempstead, HP2 7TG.
