Advice needed - Property developer going into Administration

allybee101

Hi there.

I'm hoping you kind folks can give me advice on an issue that has appeared quite suddenly please. Apologies for the length of the post, but I want to get as much detail in as possible.

I am in the process of buying a shared ownership flat (I know S.O is not favoured by some, but I have weighed up all the pros and cons and am happy with the scheme I am going into. So please, no criticisms of this).

I will set out the course of events. So far I have:

-applied to housing association and been approved for S.O. I gave them £100 to reserve the property, and then once I had been accepted I gave them a further cheque for £400 to start admin.
-I had to visit an IFA to for a financial check which was approved.
-I have seen a mortgage broker and they have processed my application which has been accepted by the lender (no fees paid yet)
- Solicitor has been engaged and inital payment of £300 made.

This evening I read on the local online news that the developer on the site has gone into administration! See link http://www.thisisnottingham.co.uk/Southreef-administration/story-13010646-detail/story.html

The flats are finished and ready to move into (they have been handed over to the H.A and signed off), but there is still some external finishing work to be completed - office units downstairs having final fittings, external comestic finishing as far as I can tell.

Do I cut my losses and run, losing potentially up to £1000? Or do I continue with the purchase? The accountants say that tenants and owners would not be affected, but I worry about selling on a property if the block is still not finished in a couple of years.
What's the likelihood of the remaining work being completed by the developer/sub-contractors/another developer? Would this sort of development (flats,offices and hotel unit) be sold onto another investor for the work to be completed?

If I went ahead with the purchase I would be paying rent and service charges, which covers buildings insurance, 24 hour concierge/security/ car parking etc.
If the project is not complete, will building control/planning sign off on the planning permission?

I'm planning to call the H.A in the morning and find out what is happening. Unfortunately my solicitor is on holiday for the next 10 days so I can't speak to them about it. I don't know how useful her assistant would be.

Right now I feel like crying and stamping my foot in frustration!
Any advice gratefully received. Thanks

SusieT

Speak to the housing association, if the flats have been signed over to them its likely that you will be ok but they can advise properly.

As to the office units if they are pretty much complete its likely that the administrators will either get them to a saleable standard or sell those parts to another developer who will finish the job.

The building control would have had to sign off on your part of the building before the housing association would have paid and accepted them. As for whats going to happen in the future, who is to say with any property, but ask the housing association in the morning as they may know more than you do.

Hope it goes ok for you

allybee101

Thank you Susie!

I can envisage clock watching til the H.A office opens in the morning!

allybee101

Update from housing association is that they manage the properties and shared areas in the sections of building they own. All proprties have been signed over to them from developer. There is no major structural work remaining. The developer is likely to complete, or project will be sold on. I feel more comfortable about this, but will discuss with my parents tomorrow when I go to see them.
If anyone has any further adivce it'll be gratefully received!
I never do anything simply, I always seem to find the most awkward way!

poppy10_2

If the housing association move in a bunch of housing benefit tenants then the value of the whole block will go down. Sad but true. Cut and run while you still can.

allybee101

Poppy, that wasn't my question and to be honest that's not very constructive help. I was specifically looking for advice on the situation with the developer.
To respond to your generalisation, all the properties in the block I'd be buying in have been sold as shared ownership so there won't be tenants in there. And that's being a bit stereotypical claiming that everyone on housing benefits are bad news. Plenty of folk on hb for circumstances beyond their control.