Pulling Out Of New Build House - What Penalty?

[auntiebertie]

A friend has put down a 20% deposit (£35,000) on a flat that is priced at £180,000. Due to change in circumstances they cannot proceed. Completion is due in July. What penalty will they have to pay? Large UK house builder. Thanks.

[gingejbee]

I think the answer might be found on the paperwork that they would have signed at the time. Anything else is just guesswork, I would think.

[Buenchico]

Most of the big house building companies offer NHBC, Premier Guarantee or LABC warranties. To do so they have to sign up to the Consumer Code for Homebuilders. That deals with 'reservation agreements', which the deposit probably falls under. If so, the following applies:
"The Reservation fee must be reimbursed if the Reservation agreement is cancelled. The Home Buyer must be told of any deductions that may be made."

So that suggests that your friend should get the bulk of his money back but he'll need to check the small print in his agreement to find out what deductions can be made under it.

http://consumercodeforhomebuilders.com/wp-content/uploads/2017/03/Consumer-Code-Scheme-Fourth-Edition_April-2017_Final.pdf