Developer dissolving company after each project

Ybe

Is it normal for an independent developer to have a history of dissolved development companies. It seems he creates a limited company to build a property then dissolves it once it’s done. He sells off plan but it gives me suspicions that he’s not making money on any of these developments and is dissolving the companies to wipe the debt. 

user1977

It's pretty commonplace to have one company for each project, nothing inherently suspicious about it. You can check on Companies House why they were dissolved i.e. whether they went into liquidation because they were bankrupt etc, rather than just because they had served their purpose.

Do you care how much of a profit they're making anyway?

Ybe

user1977 said:

It's pretty commonplace to have one company for each project, nothing inherently suspicious about it. You can check on Companies House why they were dissolved i.e. whether they went into liquidation because they were bankrupt etc, rather than just because they had served their purpose.

Do you care how much of a profit they're making anyway?

No. I just want to know that if I pay my money, I get a fully delivered property. Or if they fail to deliver, I don’t lose anything and get my deposit back. It just says liquidation on companies house. 

user1977

Ybe said:

user1977 said:

It's pretty commonplace to have one company for each project, nothing inherently suspicious about it. You can check on Companies House why they were dissolved i.e. whether they went into liquidation because they were bankrupt etc, rather than just because they had served their purpose.

Do you care how much of a profit they're making anyway?

No. I just want to know that if I pay my money, I get a fully delivered property. Or if they fail to deliver, I don’t lose anything and get my deposit back. It just says liquidation on companies house. 

And was it liquidated after they completed the relevant development, or before?

eddddy

Anyone offering loans or credit (e.g. banks, suppliers etc) to the developers would do their due diligence. If the directors had a history of a string of bankruptcies behind them, they wouldn't lend to them or offer credit to them.


And if their business plan relied on selling property, and then going bankrupt to avoid paying debts - I suspect that some of their more 'aggressive' creditors would have made sure the directors were disqualified, and maybe pushed to have them prosecuted for fraud.

Ybe

user1977 said:

Ybe said:

user1977 said:

It's pretty commonplace to have one company for each project, nothing inherently suspicious about it. You can check on Companies House why they were dissolved i.e. whether they went into liquidation because they were bankrupt etc, rather than just because they had served their purpose.

Do you care how much of a profit they're making anyway?

No. I just want to know that if I pay my money, I get a fully delivered property. Or if they fail to deliver, I don’t lose anything and get my deposit back. It just says liquidation on companies house. 

And was it liquidated after they completed the relevant development, or before?

Not sure. He has a few with no charges on it.  

Justonemorecupoftea

Is it a way of avoiding claims under the new builds home guarantee or claims for other defects (as I understand it one of the challenges with getting cladding issues rectified is that lots of the companies don't technically exist anymore).

Ybe

Justonemorecupoftea said:

Is it a way of avoiding claims under the new builds home guarantee or claims for other defects (as I understand it one of the challenges with getting cladding issues rectified is that lots of the companies don't technically exist anymore).

I see. So basically better to get all snags agreed prior to completion? 

pinkteapot

Are you sure it's not the management companies you're looking at? These days it's common to set up a separate company for the estate management of each development (where the so-called fleecehold charges come from) while the development is being built, then to sell it off when the development is complete. So you'll see a history of short-lived companies, one per estate, while the actual building company is separate and continues. 

If not - if it is a builder who perpetually reinvents himself under a new company - I'd be slightly wary to be honest. 

pinkteapot

Ybe said:

Justonemorecupoftea said:

Is it a way of avoiding claims under the new builds home guarantee or claims for other defects (as I understand it one of the challenges with getting cladding issues rectified is that lots of the companies don't technically exist anymore).

I see. So basically better to get all snags agreed prior to completion? 

That's always best as it won't be a priority for any builder to fix your snags once they have your cash. 

If the builder's company does go bust, it's fine as your new-build warranty (provided by a separate company like NHBC, Premier, and others) cover you. Normally, the builder is responsible for the first two years, then the warranty company for the next eight. If the builder has gone under though, the warranty company sort you out. 

Again, getting them to actually do stuff is another matter. 

Ybe

pinkteapot said:

Are you sure it's not the management companies you're looking at? These days it's common to set up a separate company for the estate management of each development (where the so-called fleecehold charges come from) while the development is being built, then to sell it off when the development is complete. So you'll see a history of short-lived companies, one per estate, while the actual building company is separate and continues. 

If not - if it is a builder who perpetually reinvents himself under a new company - I'd be slightly wary to be honest. 

It’s the builder I think. He sells all his flats and houses as share of freehold or freehold so he doesn’t have any property management.