flat purchases in salford quays

pbeastty

would like some advice with regards to this money problem. have put deposits of £23,000 down on two flats in salford quays on january 2007 before they were built. they will be finished in january 2009. the 10% deposit on each has now increased to a 30% deposit due in january due to the credit squeeze. i am now in a situation whereby i either walk away and lose £23,000 or take a gamble and try and raise a further £40,000 plus and potentialy invest in flats i may or may not be able to rent. each studio is priced at £118,000 and £116,000 respectively. they are still advertised at the initial asking price.

question

1. the chances are they will have depreciated by the 10% before i actually purchase them is it time to walk away or is there any way i can recoup some of the deposit. i nearly wish i had hit vegas and put the money on red. or am i just being greedy. Any help appreciated

chrisandanne

NELLY...is this you ?????? mr.b's been looking everywhere for you. Ax

OP..If this is a genuine question I'm sorry for being flippant. But you would need someone with more patience and expertise than me to answer. Ax

m00m00

off plan new builds in salford

the odds are they have depreciated by more like 30% than 10% easily. Why do you think they are now insisting on a bigger deposit. It's to cover the lenders, they know what's happening with new build city centre flats

jonesMUFCforever

The deposit is the least of your worries IMO.
How if you struggling to raise the £40k required now do you intend to raise the money to complete?

How much will your mortgages cost (if you get one versus the rental income you might get?)?

You might well be advised to walk away.

pbeastty

in the process of selling house this should release £100,000 but not big into investing all my savings into potential non rentable flats . i still think the area is a winner with the bbc move in two years but it could end up being a real pain trying to juggle them. when i think about it if they had increased by 10% would i be complaining?

pbeastty

they are now priced at £5,000 more than i purchased for but the rental score is the prob. out of a 250 apt site there are only 24 left but i reckon we all jumped on theband wagon.

Ian_Griffiths_Halifax

Out of interest, how did you find out about the development? Did you go to a seminar? What rental returns were/are you expecting?

geoffky

you will lose 30 to 40 % on these places and i am not joking....

fishtastic

Have a read your contract, are they able to demand an increase in your deposit like that? Is it an opportunity to get out of this mess?

May a small investment in a solicitor may be useful?

I hope I'm reading this right,

£23k for two houses. The price you agreed to buy them at was £234k total.

So total value £234,000, if house prices drop/have dropped 30% by Jan 2009 then you have a instant loss of 70k. You use the 10% drop figure in you message, house prices have dropped that from the peak on average, your city centre new builds have took a significantly bigger fall. I would suspect that you're going to be looking at something like a 30% drop by then from the peak for city centre new builds, they started dropping before the overall market and have dropped faster.

Can you afford to buy in Jan? If your going to sell them on can you afford to make the mortgage payments while selling? If you are going to rent them, the market is cut-throat in Manchester at the moment, lots of supply.

Top whack for a 1 bed flat bought for ~120k is a rental income of ~£600, maybe slightly more, but not much more assuming you have a nice £120k 1 bed flat. On top of that are service charges, voids and repairs all coming out of that rent. If that £120k flat isn't desirable then you could be getting less. This is doubly so for a studio, which you say these are, which isn't as desirable as a 1 bed.

One issue is that Salford Quays is so near to Manchester City centre that it is only a short tram ride away. The gross over supply of flats their will affect the prices at Salford Quays, if you are a young media type and your BBC $ will buy more in Manchester near all the exciting things going on:beer: than in Salford Quays then it's natural to say no to Salford Quays, it's not like Salford Quays isn't surrounded by scum, because it is.

I would see if you can get out of this, demanding a bigger deposit out of the blue seems odd. Definitely contract checking time.

When you invested in these flats at £118,000 and £116,000, how much did think you would get in rent? Was this told to you at a seminar or by agents etc.?

EDIT: Forgot to say, BBC salaries for the guys actually doing the work are not spectacular, when they advertise on their own website they often don't include salary. When they do include salary then it makes me laugh as I wouldn't get out of bed for what they are paying for some highly skilled jobs.

Good Luck

Riq

The price probably already incoporates the BBC aspect I would have thought.

FraudBuster

Will the developer go bust before they are completed?