bought off plan cant get a mortgage

muscles_2

First time i ve posted on here but need some frank advice as my solicitor who was appointed by the developer dos'nt seem to want to help.

Anyway i purchased a one apartment off plan in Birmingham City Centre in 2006 for £152,500.00 of which it was meant to be completed in June 2008. I paid a deposit of 10% £15,250.00. I recently had it valued at around £90,000.00 so no bank will offer me anywhere need the mortgage i require. The developer George Wimpey and there solicitor wont entertain anything im saying and my solicitor has said that they will keep my deposit if i dont complete. Im also scared encase they sue me (constant sleepless nights and permenant stress)!!! The initial completion date is 12 months overdue so do i have any chance of suing them for breach of contract due to the initial completion date being put back 12 months (its due to complete June 2009)? My solicitor has said that i could go for counsel (barrister) but their fees are unbelievable (around £350 per hour)!!! Anyone got any advice on what i should as i dont want to sued and i dont think its fair that they can keep the whole of your deposit!!!

Any info will be much appreciated x

Richard_Webster

Maybe unfair but that's the risk of buying off plan.

The solicitors that act for you, did they not point out the risks of doing this? If they didn't sue them! Totally irresponsible to allow anyone to exchange contracts with no mortgage and no knowledge of whether a mortgage would be available without warning very clearly of the risks involved.

You need to read carefully through the report they sent you with the contract to sign. You got a written report didn't you? Were the risks explained? If not then go to a solicitor who specialises in professional negligence and ask them to take the case for you.

If the risks were explained then, sorry, you took a risk and lost out. If the flat had gone up in value it would have been easier to get a mortgage before completion and you no doubt could have sold it at a profit very quickly afterwards.

Although builders massively over egged their asking prices, particularly for flats it would have been wise to consider whether even in 2006 the price could be justified except by reference to other similar new builds (also over egged). Mortgage lenders were also to blame because they were so anxious to lend that they didn't stop the builders asking stupidly high prices for these flats. They are now doing this by down valuing new builds.

westv

Richard_Webster wrote: »

Totally irresponsible to allow anyone to exchange contracts with no mortgage and no knowledge of whether a mortgage would be available without warning very clearly of the risks involved.

I thought it would be impossible to exchange without providing proof that finance was in place. I guess I thought wrong but, then again, why go for exchange without having a confirmed mortgage offer?

AMILLIONDOLLARS

Take heart, you're not the only one these people are in the same boat as you
http://www.panpeninsula.org/
http://groups.yahoo.com/group/berkeley-customers/
http://www.wharf.co.uk/2009/04/pan-peninsula-buyers-dont-know.html

Berekely homes - Royal Arsenal have buyers in a similar situation - you'll have to register to look at their information but it is well worth it as they have some legals advising them.

Do a search on the internet I am sure you'll find a support group for your development, main thing is to approach the developer in a group forum. I have been reading about this situation this week and these two companies are just the tip of the ice-berg, the S**t is just hitting the fan on this one.

dont' forget to read the comments on the last link

Good luck you're gonna need it

AMD

googler

Did you buy via a property sourcing company who promised you 'instant equity' on the deal?

silvercar

westv wrote: »

I thought it would be impossible to exchange without providing proof that finance was in place. I guess I thought wrong but, then again, why go for exchange without having a confirmed mortgage offer?

Mortgage offers are neve valid for more than a few months. So buying off plan always carries the risk that a mortgage won't be available at completion time. A risk that your solicitor has a duty to explain to you.

westv

silvercar wrote: »

Mortgage offers are neve valid for more than a few months. So buying off plan always carries the risk that a mortgage won't be available at completion time. A risk that your solicitor has a duty to explain to you.

When I bought a newbuild in 1998 we exchanged in August and completed in December but I guess the OP's time lag is a lot more than that.

silvercar

Very similar thread here:

http://forums.moneysavingexpert.com/showthread.html?t=1646937

_bankrupted

Would you be any happier if a bank were to lend you the full mortgage of approximately £137,250 and then buy a property valued at £90,000.

I have lost a great deal of money (considerably more than your deposit loss) on a Spanish property. The loss has now been crystallized. So I know the position you are in and the fact that how you look at the situation makes a huge difference to the psychological view. if I had not sold today at a large loss. Two years time it would have been 30% greater.

The alternative scenario for you was that you completed early in 2007/2008, and paid out £152,500 for a property worth £90,000 now; a loss of £62,500.

In some respects the fact that you have not completed has worked in your favour, your loss is £15k not £60k. Think about it!!

My advice...

Walk away and take the loss. Then approach the developer and buy the property at the market value. If you bargain hard then maybe you can drop the valuation by another £5k~£10k. So your loss may well be less than £15k and you secure the property.

I can't see that the developer has a queue of people waiting to buy. This recession has a long way to go.

Focus on the fact that you can buy the property today (or in 12 months) at half the value of when you signed. Your loss of £15k then really equates to the fact that you didn't buy at the bottom but just off it.


You really have been lucky.. Change your mindset.

_bankrupted

Edit...

With regard to the builder forcing you to complete and suing you if you don't. You don't have to worry.

I am not a legal expert, but you did not commission the builder to build the property for you, the build started regardless of whether properties had been sold. I think in a court of law the builder would have to prove that without your agreement to purchase the build would not have been started etc. Then there is the delay on completion on behalf of the developer, preventing you from selling a falling asset and compounding your losses. Then your ability to pay the original purchase price without a mortgage. It just isn't going to happen as in all probability the builder would lose.

silvercar

_bankrupted wrote: »

Would you be any happier if a bank were to lend you the full mortgage of approximately £137,250 and then buy a property valued at £90,000.

I have lost a great deal of money (considerably more than your deposit loss) on a Spanish property. The loss has now been crystallized. So I know the position you are in and the fact that how you look at the situation makes a huge difference to the psychological view. if I had not sold today at a large loss. Two years time it would have been 30% greater.

The alternative scenario for you was that you completed early in 2007/2008, and paid out £152,500 for a property worth £90,000 now; a loss of £62,500.

In some respects the fact that you have not completed has worked in your favour, your loss is £15k not £60k. Think about it!!

My advice...

Walk away and take the loss. Then approach the developer and buy the property at the market value. If you bargain hard then maybe you can drop the valuation by another £5k~£10k. So your loss may well be less than £15k and you secure the property.

I can't see that the developer has a queue of people waiting to buy. This recession has a long way to go.

Focus on the fact that you can buy the property today (or in 12 months) at half the value of when you signed. Your loss of £15k then really equates to the fact that you didn't buy at the bottom but just off it.


You really have been lucky.. Change your mindset.

I like the creative thinking!