Developers go to the courts over contracts
14/01/2010 - New build price collapses cause problems for landlords
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For many landlords the current situation, whereby countless properties have been snapped up at bargain prices, has been an investor’s dream, for others, however, who have taken a different route, it hasn’t worked out that way.
The past year has been very hard for many buyers across the UK who have dipped their toes in to the buy to let sector, bought new properties off plan and suffered the consequence of falling property prices and a lack of available credit to fund their purchases.
Many large developments in city centres as well as prestigious out of town developments have been particularly badly hit by a fall in prices, sometimes by as much as 50 per cent of their original value at the point of exchange. Now, months and sometimes years later, the developments are finished and ready to complete. However, with their original buyers now saying that they are unable to fund the purchase and will willingly forfeit their deposit than pay for the balance, developers have been left high and dry.
With that in mind, many investors will not be happy to know that a landmark case has just been decided against the purchaser who refused to honour the contract signed on two new build flats. The purchaser had forfeited the deposits and hoped to walk away from the deal without the developers taking action. The developers, Prestige Home from the Plymouth area, have reached an agreement with some of their reluctant purchasers but are in the unfortunate position of having to take further people to court. There are currently more than 250 claims outstanding from developers
