What is a reservation agreement?

A reservation agreement is a contract that fills the gap between an accepted offer and exchange of contracts — the eight to twelve weeks in which, under the ordinary process, neither side is committed to anything.

How it works

  1. The offer is accepted in the normal way, at a price both sides are happy with.
  2. Both sides sign a reservation agreement setting out the price, the timetable, and the specific circumstances in which the fee is returned.
  3. The buyer pays a reservation fee, held securely until exchange or refund of the fee as per the terms of the agreement. It is paid on top of the purchase price.
  4. The property comes off the market. The seller has committed, so the buyer can spend on a survey and legal work without being outbid.
  5. At exchange the agreement has done its job and the normal process takes over.

What happens if someone pulls out

Buyer withdraws without a stated reason

The fee is forfeited. This is the deterrent the whole arrangement rests on.

Seller withdraws

The fee is returned to the buyer in full, and depending on the terms the seller may owe compensation.

Something material was not disclosed

Where an undisclosed problem affects the value or the buyer's funding, the fee is returned.

Mortgage refused

Handled expressly in the agreement rather than left to argument, which is the point of writing it down in advance.

Why both sides agree to it

Sellers sign because it converts a non-committal buyer into a committed one, and because they can stop paying for surveys on sales that evaporate. Buyers sign because it stops them being gazumped and lets them spend on due diligence with some confidence.

Agents use them because around a third of agreed sales collapse, and an agreement of this kind removes most of the withdrawals that are simply a change of mind — the claim we make is that it prevents up to 95% of them.

Reservation agreements in England and Wales

They are not yet standard here. Scotland's missives system binds the parties far earlier, and reservation agreements have been discussed as a route to something similar in England and Wales for several years. For now they are used property by property, by agents who choose to offer them.

For estate agents

PurchaseSecured provides the agreement, the payment handling and the progression tracking, and the agent keeps the larger share of every fee. See how it works for agents or book a demo.

Common questions

What is a property reservation agreement?

A written agreement signed by buyer and seller shortly after an offer is accepted. The buyer pays a reservation fee, the property comes off the market, and whichever side withdraws outside the agreed reasons bears the cost.

How much is a reservation fee?

Typically between £1,000 and £6,000, set by the agent against the value of the property. It is paid on top of the agreed purchase price, not deducted from it.

Is the reservation fee refundable?

It is refunded where the agreement says so — commonly if the seller withdraws, or where something material about the property was not disclosed and affects value or funding. If the buyer simply changes their mind, it is forfeited.

Are reservation agreements legally binding?

The agreement itself is a contract between the parties and is binding according to its terms. It does not replace exchange of contracts — it governs what happens in the gap before exchange.