New Build Longstop Compensation

OrpMoench

We reserved a new build in July 2021 with estimated completion 31st Dec 2021. We were advised of some minor build delays but none the less exchanged in Feb 2022 with an estimated completion of 31st March 2022 and long-stop date set at 30th Nov 2022. 
Long story short it's been delayed and delayed every couple of months... we've now been in rented more than 12 monthly payments more than budgeted for, had to get a new mortgage offer (with larger deposit and increased rates) and now we're nearly a week past the long stop date which we were told over and over if it went past the long stop we could walk away with our money back or continue with the property purchase but be entitled to compensation. The agent says we are entitled to sue yet have no experience of it before and won't comment on what other buyers are saying...
Our solicitors say we could approach it with the developers solicitors but that is via litigation and £600+vat initially and then £295+vat per hour thereafter. All the way along the discussion of compensation was it was automatic should the highly unlikely event be that we pass the long-stop date, nothing stipulated in the contract however. 

Do any other new build purchasers have experience of successfully getting compensation for the delays in these circumstances from developers? 

doodling

Hi,

The first thing I would do is go back to your solicitors and get them to explain what compensation they believe you're due under the contract.  They should be able to do that at very low cost, without involving litigation specialists, as they will have reviewed that contract as part of your original purchase and it is their job to understand it.

Once you have an idea of what compensation you might be due (if any) you can think about whether spending the sums they suggest is a good idea.

user1977

Does your contract say anything about compensation? It would be very unusual in this scenario, and I can't see why you would otherwise have any entitlement to compensation. Your remedy generally is just to walk away. You could in theory threaten to walk away unless they give you £x, but they could just say no.The (developer's) estate agent is not a source of legal advice! 

propertyrental

Best to stick to one thread with all the info in one place.

https://forums.moneysavingexpert.com/discussion/6329379/new-build-long-stop-dates-longer-than-mortgage-offer-inc-help-to-buy#latest

eddddy

OrpMoench said:

.... now we're nearly a week past the long stop date which we were told over and over if it went past the long stop we could walk away with our money back or continue with the property purchase but be entitled to compensation....

Who told you you could get your money back and/or get compensation? Were you told that before you agreed to the reservation and before you instructed your solicitor, applied for your mortgage etc? Do you have some evidence that you were told that (e.g. an email)?


For example, if it was the estate agent who told you that, you could try complaining to the estate agent's redress scheme (usually the Property Ombudsman, but sometimes the PRS).

If you can convince the Property Ombudsman (or PRS) that the estate agent misled you, they might order the estate agent to pay you compensation.

A benefit would be that there are no legal fees etc to pay, if you complain to the Ombudsman or PRS. But you have to follow a process and complain to the estate agent first. 




Edit to add...

And the Property Ombudsman is generally more biased towards a consumer than a court would be - so you'd probably have a better chance of success, than you would with litigation.

But all this assumes that it was the estate agent who misled you - and you can convince the Ombudsman of that. 

timbotambo

Prices have gone up a lot in 12 months. So be careful of any actions which mean you lose the flat and end up paying inflated costs for a new one in this market!

user1977

timbotambo said:

Prices have gone up a lot in 12 months. So be careful of any actions which mean you lose the flat and end up paying inflated costs for a new one in this market!

Indeed. Sometimes developers are delighted if buyers pull out at a longstop date, if they can remarket at a higher price.

pinkteapot

Who was it who said you could get compensation after the longstop? That's highly unusual. Usually it just entitles you to cancel the contract - to pull out and get your deposit (the one you paid on exchange) back. It doesn't even normally entitle you to any claim for costs (e.g. legal fees for the aborted purchase). 

dealio123

@OrpMoench I haven’t really got anything useful to add, other than you have the patience of a saint waiting 17 months for a property! Not the best experience for you as you’re a FTB, but best of luck to you whichever route you go down!