Developer dissolving company after each project

Ybe

eddddy said:

So it's this development: https://www.kfh.co.uk/north-london/n3/shakespeare-house/property-for-sale/d2002175/

So they're being sold through a reputable EA - not "Del and Rodney with shiny suits and a nice webpage". The EA will have done some level of due diligence investigating the developer before agreeing to sell the developer's properties.


Back to your original question - ask the EA what selling terms the developer is looking for. For example, is it...

• Exchange of contracts in 28 days with 10% deposit
• Completion on notice

You can also ask the EA if the flats come with a new conversion warranty, and how the deposit will be protected.

For example, there's the NHBC conversion warranty - which protects buyers' deposits.  https://www.nhbc.co.uk/builders/warranties-and-cover/conversion

It's a large reputable EA with a new homes division - so hopefully they'll understand the significance of your question. But either way, you'll need to get your solicitor to check everything.


If you want, you can also ask the EA to ask the developer for the relevant planning application reference numbers - but that might be overkill. Again, your solicitor will ask for that.

It apparently has a 10 year building warranty. 5% deposit on exchange and reservation for 28 days. 

AdrianC

Ybe said:

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. 

It's absolutely bog-standard.

Developers use Single Purpose Vehicle (SPV) companies to provide financial separation for each project, so if one project fails, it doesn't have a knock-on to others. They also allow investment to be raised for just one project.

Have a read of this for some of the reasoning...
https://c-link.com/blog/special-purpose-vehicles-and-construction-management/

user1977

AdrianC said:

Ybe said:

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. 

It's absolutely bog-standard.

Developers use Single Purpose Vehicle (SPV) companies to provide financial separation for each project, so if one project fails, it doesn't have a knock-on to others. They also allow investment to be raised for just one project.

Have a read of this for some of the reasoning...
https://c-link.com/blog/special-purpose-vehicles-and-construction-management/

And assuming all of the OP's posts are about the same developer, some of those dissolved companies look like they never actually carried out developments (formed and then dissolved months later) - possibly for projects which never got off the ground.

AdrianC

user1977 said:

AdrianC said:

Ybe said:

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. 

It's absolutely bog-standard.

Developers use Single Purpose Vehicle (SPV) companies to provide financial separation for each project, so if one project fails, it doesn't have a knock-on to others. They also allow investment to be raised for just one project.

Have a read of this for some of the reasoning...
https://c-link.com/blog/special-purpose-vehicles-and-construction-management/

And assuming all of the OP's posts are about the same developer, some of those dissolved companies look like they never actually carried out developments (formed and then dissolved months later) - possibly for projects which never got off the ground.

Situation normal.

I'd be more worried about a developer which wasn't insulating projects in that way.

theartfullodger

Yet another example of the flaws, well known for years, that capitalism fails to control.  A popular tactic for dodgy businesses.  Shame on the b*RDSt*ds.  

Thrugelmir

theartfullodger said:

Yet another example of the flaws, well known for years, that capitalism fails to control.  A popular tactic for dodgy businesses.  Shame on the b*RDSt*ds.  

Take any major company. It may well have in excess of a 100 subsidiary operations. 

Ybe

AdrianC said:

Ybe said:

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. 

It's absolutely bog-standard.

Developers use Single Purpose Vehicle (SPV) companies to provide financial separation for each project, so if one project fails, it doesn't have a knock-on to others. They also allow investment to be raised for just one project.

Have a read of this for some of the reasoning...
https://c-link.com/blog/special-purpose-vehicles-and-construction-management/

I know SPVs are common in infrastructure. Hadn’t heard of it in property before.  

AdrianC

theartfullodger said:

Yet another example of the flaws, well known for years, that capitalism fails to control.  A popular tactic for dodgy businesses.  Shame on the b*RDSt*ds.  

Because, obvs, housing development works SO well when capitalism is totally removed from the equation.

Ybe

AdrianC said:

theartfullodger said:

Yet another example of the flaws, well known for years, that capitalism fails to control.  A popular tactic for dodgy businesses.  Shame on the b*RDSt*ds.  

Because, obvs, housing development works SO well when capitalism is totally removed from the equation.

Are these 80s council estates? 

AdrianC

Ybe said:

AdrianC said:

theartfullodger said:

Yet another example of the flaws, well known for years, that capitalism fails to control.  A popular tactic for dodgy businesses.  Shame on the b*RDSt*ds.  

Because, obvs, housing development works SO well when capitalism is totally removed from the equation.

Are these 80s council estates? 

Not quite...

The photo is from this article...
https://www.themoscowtimes.com/2017/02/21/russias-khrushchevki-a57229

I suspect that Cortinas outnumbered GAZs in 80s council estates.