2.1 Early bird arrangements

Developers may offer customers an option to be told when a plot (or plots) on a development is available to buy, before it goes on general sale. This is sometimes known as an early bird or plot-option arrangement.

Developers can charge a fee for these arrangements but must meet the following conditions:

1. they must not charge more than £150 (or any future maximum amount that we may set).
2. they must make it clear to the customer, before the customer pays the fee, how long they have to accept the early bird offer and how long they will have to change their mind and still receive a full refund of the fee they have paid (see below).

If a developer charges a fee, they must refund this in full if the customer tells them, within 24 hours of being told the plot is being released for sale (or within a longer period that the developer tells the customer before they pay the fee), that they do not want to go ahead with the purchase. If the customer tells the developer they do not want to go ahead with the purchase after this time, the developer may deduct administration costs from the refund, as long as they explained this to the customer when they paid the fee.

If there is any difference between the rights and expectations customers have regarding early bird arrangements and the information given in this Code, this Code will take priority.

2.2 Reservation Agreements

If a customer wants to reserve a new home, they must enter into a formal Reservation Agreement with the developer.

The customer and the developer must not enter into a Reservation Agreement until all the information outlined in the list below has been provided.

The developer must make sure that the terms of the Reservation Agreement are clear, fair and written in plain language, and that they keep to all relevant legislation.

The developer and the customer must sign the Reservation Agreement (digitally or in person), and the developer must give the customer a copy.

The terms of the Reservation Agreement must include the following details:

1. Who the customer is buying their new home from.
2. The amount of the reservation fee.
3. The customer’s right to cancel within the reservation period.
4. The terms under which the reservation fee can be refunded, and any administration fees or similar costs that the developer may deduct from the refund.
5. That there is a 14-day cooling-off period, during which the customer can cancel the agreement and receive a refund of the full reservation fee.
6. How the customer can cancel the Reservation Agreement, including as a result of a major change (as set out in part 2.9).
7. That the sale is ‘subject to contract’ (England, Wales & Northern Ireland only). This means that although the sale has been agreed, it is not legally binding until the contract has been signed.
8. Details of the new home, including the type of property, plot number, development name, postal address (if available) and parking arrangements.
9. The purchase price of the new home.
10. How long the price and the Reservation Agreement are valid for.
11. How and when the Reservation Agreement will end.
12. Contact details for the provider of any warranty for the new home, together with a summary document of the warranty cover provided.
13. The date by which exchange of contracts (conclusion of missives in Scotland) must take place. This date must be reasonable in the circumstances of the transaction, taking account of when all the information listed in part 2.6 is provided, and not less than six weeks after the reservation date (28 days plus 14 days cooling-off period) unless the customer asks for an earlier date. If exchange and completion take place within the cooling-off period, it must only be with the express consent of the customer.
14. Any matters that the sale depends on, for example details of the part exchange (if this applies).
15. Details of how the customer can include in the contract of sale any spoken statement that is to be relied on.
16. The estimated yearly cost of any management services (factoring costs in Scotland), together with other costs the customer will have to pay.
17. The tenure of the new home (for example, leasehold, freehold, commonhold and so on) and all costs associated with this, including how these costs may change in the future.
18. Any event fees that might apply and how these will be assessed.
19. The process for asking for changes to the new home, and the type of changes the customer canask for (for example, paint colour, design changes, specification changes).
20. The mechanism by which shared spaces, roads and amenities on the development are to be managed (i.e. local authority, management company, etc.). The developer must also provide an affordability schedule for any expected costs. This is a list of any costs that are likely to be directly associated with the tenure and management of the new home over the five years following the sale, and which the developer can reasonably be expected to be aware of.

The Affordability Schedule must include the following details:

1. Details of any ground rent, including the amount, the payment dates and the formula used to calculate it.
2. Estimated amounts of any additional costs that the developer knows or expects will arise directly from the sale. This includes management fees (for example, to maintain the landscaping and highways that the local authority is not responsible for, and so on), event fees and other charges. This information must bring to the customer’s attention any service charges that may increase or be charged in the future as more facilities become available or sinking fund charges that may be introduced for repairs or maintenance. If the developer does not know the actual value of costs or charges, they must give the customer a schedule of costs without including the values.
3. Details of known or expected costs or charges for regular maintenance of built-in equipment at the development, such as the shared heating system, equipment which collects grey water (water from sinks, baths, showers and washing machines), air-source heat pumps and so on, if these are not already included in the management fees or event fees (for example, following a change of circumstances). If the developer does not know the actual value of costs or charges, they must give the customer a schedule of costs without including the values.
4. Estimated costs for maintaining the property (for example, painting render and so on) and repairing or replacing any fixtures or appliances as necessary during the first five years.

2.3 Cooling-off period

All Reservation Agreements must include a cooling-off period of at least 14 days. If the customer wants to cancel the reservation, for any reason, during the cooling-off period, the developer must refund the full reservation fee.

2.4 If the customer cancels the reservation after the cooling-off period

The Reservation Agreement may set out deductions that will be taken from the refund the customer will receive if they cancel the reservation after the cooling-off period.

The developer must refund the reservation fee, less any deductions set out in the Reservation Agreement, within 14 days of the date of the customer’s notice of cancellation (see section 2.2), subject to compliance with anti-money laundering regulations.

2.5 No right for the developer to cancel the reservation

While the Reservation Agreement remains valid, the developer does not have the right to cancel the reservation and must not enter into a new Reservation Agreement or sale agreement with another customer for the same new home.

Subject to any data protection requirements, at the end of the Reservation Agreement period, the developer must give the home warranty provider full details of the buyer and the home they have reserved, if the provider requires this.

2.6 Pre-contract of sale

The developer must give the customer’s legal adviser suitable and relevant information to help the customer get appropriate advice and make fully informed decisions relating to buying the new home.

In all cases, this information must include the following:

Information about the property and planning matters

1. A written Reservation Agreement.
2. A summary of the cover provided by the home warranty and contact details of the relevant warranty provider.
3. The tenure of the new home (for example, leasehold, freehold, commonhold).
4. The reference number of the planning consent which applies to the new home and details of any future building phases that the developer has planning consent for, and any facilities which the developer may build or pay for on the development, where this is known.
5. A list of contents in the new home that are included in the price (for example, cooker, fridge, washing machine, curtains, carpets, wall tiles, door-entry systems, plug sockets and bathroom fittings).
6. Confirmation that the specification of the new home will be as advertised, including the type of materials used for the main structural frame of the building (masonry, timber, steel frame or other).
7. Information relating to the standards the new home is being built to, including confirmation that it will meet the building regulations, the relevant home warranty provider’s standards and the manufacturers’ and suppliers’ performance and installation standards.
8. Any exceptional restrictions relating to using, living in or the appearance of the new home and its grounds. This does not include standard terms covered in the title deeds, plot transfer of ownership or equivalent document. The developer must recommend that the customer asks their legal adviser about any exceptional restrictions that apply.
9. Details of any services, facilities and responsibilities which may not immediately transfer from the developer to the customer on the completion date (for example, responsibility for the water and drainage systems and utilities). If these will transfer to the customer on a later date, the developer must explain this in full and give the customer written details.

Information about actual and expected costs

1. A description of any management services (and the organisations that will provide them) which the customer will be committed to.
2. An indicative cost schedule. This is a reasonable indication of the costs that are likely to be directly associated with the tenure and management of the new home over the next five years, and which the developer can reasonably be expected to be aware of. This includes any obligation to contribute towards the costs of maintaining or replacing services and facilities. It does not include everyday maintenance and replacement costs for things such as systems, equipment and appliances inside the new home, or utilities. The indicative costs schedule must include the following:
   1. Details of any ground rent, including the amount, the payment dates and the formula used to calculate it.
   2. Estimated amounts of any additional costs that the developer knows or expects will arise directly from the sale, such as management fees, event fees and other charges. This information must bring to the customer’s attention any service charges that may increase or be charged in the future as more facilities become available or sinking fund charges that may be introduced for repairs or maintenance. If the developer does not know the actual value of costs or charges, they must give the customer an indicative costs schedule without including the values.
   3. Details of known or expected costs or charges for regular maintenance of built-in equipment at the development, such as the shared heating system, equipment which collects grey water, air-source heat pumps and so on if these are not already included in the management fees or event fees (for example, following a change of circumstances). If the developer does not know the actual value of costs or charges, they must give the customer an indicative costs schedule without including the values.

The developer does not have to tell the customer about the normal costs and charges associated with owning the new home (for example, the cost of utilities, energy bills, and home insurance). The customer should make separate enquiries to find out about these and take steps to consider whether they can afford the new home, taking account of information about additional and expected costs relating to the new home.

The indicative costs schedule does not need to set out estimated possible costs which will depend on decisions made by a management or service company and which are not necessary costs associated with maintaining the new home and its facilities. However, it must clearly show who owns and is responsible for the surrounding land, services and facilities (for example, street lighting, parks, landscaping and so on).

If the new home is not yet completed, the developer must also give the customer:

the expected completion date (the developer’s estimate of when the new home will be ready for the customer to move into); and brochure or plan showing the size, specification, general layout, plot position and facing direction of the new home. This must include details of any steep slopes in the garden and grounds of the new home and information on how the surfaces and any fences and or boundary walls will be finished. All outbuildings and garages must be clearly marked and include details of finishes and construction if this will be different to the structure of the new home.

The developer must tell the customer (and their legal advisers), in writing, who to contact (with names and contact numbers) if they have any questions before ownership of the new home transfers to them, and how their questions will be answered.

The developer must keep the customer informed about any additional costs that they know or expect will arise for the new home (as far as is reasonably possible) as well as any restrictions that apply to services (for example, gas, electricity, broadband, water, sewerage or other standard services) and the service providers.