Buying From BMV Company

Gareth78

Hi all,

My parents are thinking of purchasing an investment property from a company called Broadgate Residential Investments.

The deal seems pretty fair - a 3 bedroom house in Yorkshire which has had £27,500 knocked off the asking price of £125,000, it has sitting tennants who have been there for 6 years paying £550 per month in rent which more than covers the mortage on the property.

So, on the face of it, its a fairly good deal. I am, however a bit sceptical about these sort of companies and wondered if anyone has had any experience with this one in particular. They charge a £1000 reservation fee plus £495 administration fee which are both refunded on exchange/completion and say that should the deal fall through through no fault of my parents, the fees are fully refundable (all of which is stated in the terms and conditions on the property brochure). They also charge 2.5% of the sale price of the property as their fee on completion (as far as I can make out, the reservation fee and administration fee are taken off of this 2.5% charge.)

Any advice and/or peoples experience in these type of deals would be much appreciated.

Gareth78

Anyone????!

welshy_2002

Looking on companies house website

Name & Registered Office:
BROADGATE RESIDENTIAL INVESTMENTS LTD
2ND FLOOR
145-157 ST JOHN STREET
LONDON
ENGLAND
EC1V 4PY
Company No. 07174778

Status: Active
Date of Incorporation: 02/03/2010

They've only been properly registered since March this year. I'd double check what name they are actually registered under mind, since there are a lot of companies with similar names

PasturesNew

Are they sitting tenants, or tenants (there is a difference)?
What would the property be worth on the open market, if it had no tenants?

If they're sitting tenants, then often that means "for life" and they might even have rights to pass it on to a family member. If they're sitting tenants, then I'd expect the house on the open market to be worth 2x the value with sitting tenants in it (say £200-250k from the original £125k price; £180k-225k based on the lower price)

What size of deposit do your parents have?

maninthestreet

I assume it is this company:

http://www.thebroadgategroup.com/

Google doesn't reveal much about them, but then they have only been in existance since 02/03/2010, according to Companies House.
Their MO of fees upfront to be refunded at completion matches MOs for other 'property intermedaries' who have taken the fees and then seem to be extremely difficult to contact or even disappear altogether.
The only advice I can give is not to pay fees up front, only pay them on completion of the property purchase.

G_M

Have you viewed the house or just had it described by the company?

I would never take at face value a recommendation by a company that has a vested interest in selling to you.

I would also never pay a 'reservation/ admin fee', even if supposedly refundable. What happens if between 'reservation' and Completion the price goes up or the legal searches find an issue eg right of way across garden ? You have to choose between paying the higher price or losing your fee? etc etc.

should the deal fall through through no fault of my parents, the fees are fully refundable

Define 'no fault......'

As Pasturesnew says, sitting tenants greatly reduce the value of the property, and reduce your control. Selling will be hard, increasing the rent will be hard, yet you'll still be liable for maintenance. What condition is it in? Have you had a survey? What if the survey finds a problem? I bet your 'reservation fee' is lost if you back out...!

My advice? If you want to invest in property, do the research yourself. Find the property yourself.

Gareth78

Thanks for the help everybody.

As regards my "sitting tenants" quote, they are actually just tenants who have been there for a while (6 years) and as far as we know are happy to stay there when the property changes hands, my bad, sorry!

With regards to the value of the property, the due dilligence in the brochure suggests that similar properties in the area are indeed valued around the £125,000k mark and my parents have done some of there own and have found nothing untoward to suggest that this isn't a bona fide deal.

My parents have around £50,000 as a deposit although they were thinking of splitting it and purchasing two properties at around the £100,000 mark.

Companies house info interesting as they have only been registered for 4 months or so but as you say Google doesn't throw up much about them. I suppose the positive in that is that there is nothing bad about them so far!

ILW

Why not just contact the estate agents in the area and say you want to buy a house. You will get a large selection and not have to pay any fees at all.
Anyone asking for any money up front is 99% some sort of con. ( may even find the same house at a lower price).
Tell your parents to run away as fast as they can.

G_M

the due dilligence in the brochure suggests .....

Ah! :rotfl: :rotfl: :rotfl:


See you in 6 months when you come back with the story of how your parents were led to believe...... but actually...... and what can you now do about it.

ILW

Due dilligence is done by the buyer, not the seller.

Gareth78

To be fair to the company in question, it does state that the due dilligence they have shown is indicative only. My parents have done some of their own and have arranged a viewing on the property. I will get back to you once they have seen it to let you know the outcome and their decision.

I have indictaed that i'm not entirely happy with the situation hence me posting here but at the end of the day I can only show / pass on yours and my opinions. I for one am hoping they don't get caught out, some of that money is my inheritance!!

They are viewing tomorrow, will update the post once I know more.

Thanks again for your advice.