Buyer reservation fee or free?

Published on Tuesday, 06 February 2024. Posted in Case Studies

A case that The Property Ombudsman (TPO) was asked to review came from a buyer against an agent following her request for the reservation fee of £13,650 to be refunded, which the agent denied.

The buyer said she was under a great deal of pressure when she offered to purchase the property and that she subsequently realised that it was not suitable for her, with its proximity to a busy and noisy road, as she cared for a daughter with additional needs.

Although she understood that the reservation fee was non-refundable, she had asked that her circumstances were taken into consideration, together with the fact that the property sold again for a greater amount than she had offered.

The agent said that having considered the buyer’s request, they did not feel it warranted a refund of the reservation fee. The agent offered the buyer £100, which she declined and proceeded with a complaint to The Property Ombudsman.


The agent provided their records, which included copies of call recordings with the buyer. The buyer questioned whether she was made aware of these calls being recorded.  On review, the Ombudsman was satisfied that the agent’s call system stated that ‘calls may be recorded for training and monitoring purposes’ and that since the buyer made the first call to the agent, she would have been aware that conversations were recorded.

The buyer received the auction pack and had initial discussions with the agent prior to the first viewing, confirming she had read the details of the action pack. She also advised that she was familiar with the process used by the agent as she had bid on a property the previous year, although she had been unsuccessful.

Following the viewing, further calls took place in which the buyer listed the issues she had found with the property, the extensive work required and the proximity to a busy and noisy road. She mentioned that she did not consider it was particularly good value for money but it was on a good road that she knew well. The buyer said she had been following the property all year. At this stage she was still considering bidding at the auction but had not yet decided.

The agent reminded the buyer that she should do her due diligence and that she had to be happy. An example of the total cost was given including the fees. The buyer confirmed that she was in a good position as she was on the verge of completion, had her own house and cash.

On the final day of the auction, the agent called before the end of the auction and the buyer advised that she was watching and was aware there were no other bids, saying she “checked it all the time”.  The road noise was mentioned again and she worried that she may struggle to sell it on. It was agreed that it was a big investment and that she needed to be happy.

No bids were received by the end of the auction and the agent contacted the buyer to advise that the vendor, who was motivated to sell, would potentially be open to offers. The property had been marketed with a starting bid of £375,000 and the buyer said that the vendor’s proposal of £350,000 plus costs would still be too much. The buyer said that she would not make a decision, but would go and speak to someone first. There was no evidence that the agent put pressure on the buyer to make a decision and were happy for her to take the time to discuss as requested.

The buyer subsequently made an offer of £325,000 which, based on the fact she was a cash buyer, the vendor accepted in preference to a slightly higher bid from someone who was not able to move as quickly.

At this point, the agent reminded the buyer in several of the calls that the reservation fee was non-refundable and this was clearly stated on their website, the auction pack and the reservation fee agreement. In a further call, the agent reiterated that the buyer had to be happy with her decision. The buyer confirmed that she was about to exchange on her current property and wanted to get going.

The agent explained the process of signing the reservation agreement after which payment would be taken and the property would be reserved for her for the agreed period. The agent offered to stay on the phone while the buyer completed the reservation agreement but she declined as she wished to read through it first.

In the next phone call, the payment went through, and the agent explained the onward process which included obtaining ID and proof of funding and solicitor details.

Following this, the buyer had a few other discussions with the agent including a few questions for the vendors regarding kitchen units and a bath panel. Conveyancing continued for the next couple of months, and then late in the process, the buyer instructed a survey. Following this, she contacted the agent to enquire about renegotiating the price or withdrawing, saying there was too much work to be done and that it was not suitable for her needs. The agent requested a copy of the survey however the buyer did not provide this.

During this call, the buyer acknowledged that if she pulled out she could lose her fees. The agent advised that she could request a return of the fees, which they would present to the management team, but it was unlikely this would be granted.

The buyer withdrew from the purchase and made a request for a refund the reservation fee, which was declined. The property sold for £330,000, £5,000 more than the buyer offered. The buyer said that the property sold the following day.  However, the agent’s records showed that the offer was accepted over a month later.




The Ombudsman was satisfied that the buyer had adequate time to ensure that the property met her needs prior to making her offer and was fully aware of her obligations when placing the offer.

The Ombudsman was also satisfied that the agent not only clearly stated the terms of the reservation fee, but also reiterated these on several occasions and the buyer was fully aware that it was non-refundable unless the vendor withdrew.

The Ombudsman also advised the buyer the fact that the property was resold in a little over a month did not negate the terms of the agreement. Whilst the buyer’s personal situation may have been stressful at the time, there was no evidence that the agent applied any undue pressure for her to make an offer.

As such, the Ombudsman did not support the complaint and did not consider that the circumstances merited an award of financial compensation.

The buyer was reminded that she was free to reject the Ombudsman’s decision and pursue the matter through the court if she considered that would be more appropriate.