Legal risk to property investors

kennyboy66_2

Who can have much sympathy with these buy to let investors ?

However, I do have a little sympathy for people who were buying a home in the circumstances.

Some people may choose to go bankrupt or get an IVA, but this is obviously not suitable for some professionals (but then maybe they should have known better).

Generali

AIUI, if the buyer isn't in a position to complete then they'll sell to someone and persue the off-plan buyer for the loss in price (if there is one) plus financing costs.

It wouldn't be a nice position to find yourself in. I have some sympathy regardless of the buyers motivation but it does come down to caveat emptor. Someone has to take the loss and I don't see who else it can be except the person who agreed to buy.

Thrugelmir

kennyboy66 wrote: »

However, I do have a little sympathy for people who were buying a home in the circumstances.

Though how many people were in this position? Buying their home off plan with a 2 year plus construction timetable.

Even if it was going to be their home. Could they too have thought if we don't like the finished developement we can just sell it on for a profit.

kennyboy66_2

Thrugelmir wrote: »

Though how many people were in this position? Buying their home off plan with a 2 year plus construction timetable.

From annecdotal evidence, albeit outside London, I would say at least 25% were private buyers. You could almsot guess the proportion soon after a development was finished by seeing how many cars were in the car park in the evening.

Thrugelmir wrote: »

Even if it was going to be their home. Could they too have thought if we don't like the finished developement we can just sell it on for a profit.

Quite possibly. I think the only hope for people is if they can challenge that the development is either substantially different or if the completion was significantly later than promised, although I know some contracts had "time is not of the essence" type clauses in.

brit1234

It seems fair to me. If prices went up as many beliefed they would they would get the profit, so reasonably they should get the loss.

The builders are going to back down, they are all technically bankrupt with huge debts, overvalued land banks and property. Its only specially banking agreements, government housing schemes and rights issues keeping them going.

I say pay up. If you can afford £400,000 -£500,000 for a 1 bed flat your not the average ftb or family.

mewbie_2

Fortunately property always goes up. I am very surprised that bullish types aren't leaping in to pick up these sure fire winners. Maybe not many of them in Aberdeen?

bryanb

Generali wrote: »

AIUI, if the buyer isn't in a position to complete then they'll sell to someone and persue the off-plan buyer for the loss in price (if there is one) plus financing costs.

How about the (unlikely) scenario, that they sold at a higher price. Should the difference be awarded to the non completing buyer?

Generali

bryanb wrote: »

How about the (unlikely) scenario, that they sold at a higher price. Should the difference be awarded to the non completing buyer?

Morally I would say it should (once costs etc have been deducted). Legally, I have no idea.

kennyboy66_2

bryanb wrote: »

How about the (unlikely) scenario, that they sold at a higher price. Should the difference be awarded to the non completing buyer?

Legally, if someone could not complete they would forfait their deposit and would be able to be sued for damages which would be shortfall in purchase price plus additional marketing costs of the property.

If it was sold for more, then legally they would be able to claim the difference, however you can imagine any developer would be throwing all kind of spurious marketing, sale and finance costs to avoid this happening.

As you say, its unlikely.