London - at my wits' end - new build delay and difficult developer - advice?

MiseryChastain

I reserved a plot at a new build development in London almost five months ago (end of September 2016). I paid the reservation fee, instructed a solicitor and mortgage broker, came up with the figures and the financing would take the form of two year fixed rate mortgage (and variable thereafter) and a 30% London HTB equity loan. I received a verbal representation that the development would complete in late May or early June 2017.

A number of strange things occurred early on in the process, one of which was the developer tried to pressure me into exchanging contracts within 28 days of the reservation which I obviously thought was ludicrous since the developer would also not release any sale transaction draft documentation to my conveyancer until authority to proceed was obtained from the agency.

The last month has been a hive of activity as they imposed an exchange deadline of TOMORROW despite only releasing sale paperwork to my conveyancer three weeks ago and the developer having failed to answer most of the enquiries to date. They then said that they would only consider an extension to the exchange deadline if my conveyancer confirmed that she held my deposit and my signed contract paperwork. So where we are now is that my conveyancer holds the signed contract and deposit and authority to proceed from help to buy.

However, one of the key provisions I had to insist on being included in the contract was a long stop date of the end of July as my mortgage would expire around that date and I wanted the ability to walk away with my deposit and reservation fee if we did not complete by then. After a lot of push back from the developer (jncluding insisting that i re apply for a mortgage with a longer validity period) they finally agreed to include wording to that effect and a long stop date.

So subject to receiving satisfactory replies to enquiries, we were ready to exchange contracts.

However, yesterday, a day before due date for exchange, the developer emailed my conveyancer to say that the long stop date has been withdrawn. After many frantic calls today to find out why on earth the change of approach, the developer stated that they wont be able to commit to a completion date by the time my mortgage expires and therefore my solicitor cant include the date of completion on the certificate of title - consequently they require me to apply for a new mortgage.

I told my conveyancer that whilst I would be open to re-applying for a new mortgage, this MUST be on the condition that a long stop date is nevertheless included in the contract as this is slipping further and further into the year. The developer told me verbally that they might still agree to a long stop date, but it would now have to be end of August to give them flexibility.

I feel like I am being truly messed around by the developer and they don't seem to have a clue when it will complete. It was originally May/ June and now they want 'flexibility' in case it completes in August. At the end of the day, I am their buyer, and their attitude has been appalling from day one.

I am not sure what to do as I am truly at a crossroads. Do I

1. Agree for my broker to make a new mortgage application (assuming there are no additional fees payable) and simply accept the delay but insist on the inclusion of a long stop date when we finally come to exchange contracts to stop this slipping on and on; or

2. Accept that this is simply more hassle than it is worth, pull out now and do not proceed to exchange contracts and find another help to buy property that is ready to move into (not sure there would be many in London?). Clearly my wasted costs here would be potential loss of the reservation fee and my solicitors fees but nothing more as I have not exchanged contracts.

On balance, given the developer's attitude, I have an inkling that the plot has increased in value since I reserved it in September and potentially the developer is thinking of putting it back on the market and hence making things as difficult as possible for me. Given this, perhaps it really is best to wait it out and exchange (subject to inclusion of a long stop date).

Sorry if this seems to not make sense, I am a first time buyer using the help to buy scheme and I am thoroughly disillusioned by this process. I completely accept that there are inherent risks in buying off plan, particularly with this very large gap between exchange and completion. My conveyancer has been absolutely fantastic (the developers' conveyancer is a moron) but he cannot advise on a practical life decision as to whether to proceed or not and I'd really appreciate some advice.

Windofchange

Guess it comes down to how much money you will lose compared with how much you want the flat. Nobody here is going to be able to say what the developer is up to, whether they are honest or not - I tend to side on the bunch of crooks side of the argument when it comes to property. Another reason I wouldn't touch HTB in London with a bargepole to add to my many.

MiseryChastain

Windofchange wrote: »

Guess it comes down to how much money you will lose compared with how much you want the flat. Nobody here is going to be able to say what the developer is up to, whether they are honest or not - I tend to side on the bunch of crooks side of the argument when it comes to property. Another reason I wouldn't touch HTB in London with a bargepole to add to my many.

Sorry, I don't see the link between HTB London and developers being crooks - can you clarify this?

System

Could be that the developer requires x amount of sold properties to release funds, seems all they are trying to do is get you to fully committed with no risk of you not getting a mortgage at completion. It's very possible and normal that completion dates move and developers need to be sure properties will be finished (and mortgageable) on the exchange dates, so will require a bit of flexibility.
If you are finding the situation stressful, buy something ready to move into, buying off plan can get you a decent deal but you need to be prepared for the build to encounter issues with the programme

Windofchange

MiseryChastain wrote: »

Sorry, I don't see the link between HTB London and developers being crooks - can you clarify this?

Well your suspicions are they are messing you about because they think they can get a higher price from someone else? Maybe they are pressuring you to complete by a date for sales targets a la Barratt homes in the press recently? Let's face it they aren't doing you any favours.

As for what you are getting for your 500 grand or whatever, don't get me started...

Philuk

I wouldn't be too worry about the developer playing the waiting game for value increase reason. Knight Frank latest report shows a price drop of 6.7% in the so called prime London (most of zone 1 and 2) and many area like battersea are pilling up huge inventories, notably new builds. It s much more likely that they have problems of their own such as findings, contracter shortage, or unforeseen issues getting the development completed. If you have your finance sorted, you are in a very strong position in the current market, and likely to have valid alternatives.

deFoix

Developers are nearly always late on completion. Why would they agree to your terms? Personally I would never buy a new-build in London (or anywhere else). A quick search on this forum will give a plethora of reasons why others feel the same way.

Maybe it's best to do more research and consider walking away while you can?


***Sorry to sound harsh but unless you can demonstrate to yourself that I'm totally wrong for reasons x,y,z then I would thing long and hard abotu completing on the rush of the developer***

deFoix

MiseryChastain wrote: »

Sorry, I don't see the link between HTB London and developers being crooks - can you clarify this?

Because HTB is limited to 'new homes' and therefore involves developers. Ever wonder why the gov't limited the scheme to new builds only?

MiseryChastain

Boler1985 wrote: »

Developers are nearly always late on completion. Why would they agree to your terms? Personally I would never buy a new-build in London (or anywhere else). A quick search on this forum will give a plethora of reasons why others feel the same way.

Maybe it's best to do more research and consider walking away while you can?


***Sorry to sound harsh but unless you can demonstrate to yourself that I'm totally wrong for reasons x,y,z then I would thing long and hard abotu completing on the rush of the developer***

Sorry, I'm new to the forum and haven't seen the relevant threads you allude to. I have read some news articles about the pitfalls of buying off plan, however, buying a new build with HTB finance is my only viable option to buy somewhere that isn't a shoebox in London.

I did consider a few properties with solely mortgage finance that were not new builds, but the maximum mortgage offer I have is only £280K so I'd need almost 100K for a fairly decent second hand apartment (say, 10 years old) in an OK area. I'm not complaining about my situation, I earn a decent salary to be able to afford to buy alone, but I wasn't actually seeking advice on the merits of buying a new build, I was seeking advice on how to deal with this difficult developer.

Thrugelmir

MiseryChastain wrote: »

I feel like I am being truly messed around by the developer and they don't seem to have a clue when it will complete.

Unfortunately that's the nature of construction work. Not a precise science. So many variables that can cause delays.

Windofchange

It's advice nobody can give you. You either want the flat and will jump through some more hoops for it / take a risk with the mortgage and completion date, or you aren't that bothered / are risk averse and go find something else. Only you can answer that one.