CONVEYANCING
Reservation Agreements
Buying your first home is a milestone unlike any other.Your first step on to the property ladder can be as nerve-racking as it is exciting. Stephen Ward, Director of Strategy and External Relations at the Council for Licensed Conveyancers , looks at the situation
Stephen Ward , Director of Strategy and External Relations, Council for Licensed Conveyancers
For some unlucky buyers, however, the dream can unfortunately – and through no fault of their own – be interrupted by another buyer swooping in to out-bid them with a higher offer before contracts have been exchanged. This is the sadly all-too common practice known as gazumping. Change is on the way, with a raft of major Government reforms announced including mandatory and legally binding sales agreements to prevent either party pulling out without legitimate cause. This long-awaited protection for buyers and sellers will not be introduced until the end of 2029, but there are steps that you can take to safeguard your interests now. RESERVATION AGREEMENTS At present, buyers and sellers in England and Wales can withdraw from a transaction at any time between the acceptance of an offer and the exchange of contracts. This differs in Scotland, where the use of reservation agreements is more common. A reservation agreement (also known as a “binding conditional contract”) allows a buyer to reserve the right to buy a property for a specified period of time upon payment of a reservation deposit to the seller. It is a contract between the parties that agrees the price and terms under which the property will be sold and is used in place of the usual contract on exchange. The reservation deposit (usually a small fraction of the property purchase price) is then deducted from the ultimate purchase price following a successful sale. If a buyer withdraws from their property purchase after signing a reservation agreement, they will then forfeit the deposit to the seller. The exception to this is if there is reasonable cause, the clauses of which will be specified in the contract’s wording. In addition to the extra layer of security it brings, there are other benefits to reservation agreements, such as deterring buyers and sellers who are not properly committed to the transaction and ensuring anti-money laundering compliance.
CHANGE ON THE WAY
relevant information underpinning the purchase must be available at an early stage to enable the buyer to enter an agreement with confidence. The CLC encourages engaging and working with a licensed conveyancer to ensure that a reservation agreement is drafted with clear and fair terms about prescribed exceptions (eg sudden job loss, divorce, the deliberate provision of misleading information) and how they will operate if any of those clauses are engaged. Practices regulated by the CLC will have our badge prominently displayed on their website which, when clicked on, will take you to our site and confirm that the firm is genuinely regulated by us.
The Government’s homebuying and selling reforms will be a positive step towards better protection, especially for those buying a home for the first time. Other changes include making important information about the property, such as its condition, leasehold costs and chain status, available to buyers much earlier in the process via “sales packs”. A new code of practice will also be introduced for estate agents to help raise their standards. The Government estimates that these changes, which the industry has long been campaigning for, will save buyers an average of £650, which is certainly very welcome news. While future homebuyers will see the benefit, however, for those looking to purchase a property now, reservation agreements are the next best thing. For a reservation agreement to be viable,
You can nd a list of CLC-regulated conveyancers, as well as more guidance on buying and selling property at: clc-uk.org
86 First Time Buyer October/November 2026
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