Property developer actions cancel our contract, then increases price!

MrJolly44

We found a new build house that was perfect for us and were the first to show commitment to the developers with a reservation. We paid a reservation fee and have the money ready to pay the deposit at exchange of contracts. The developers solicitors failed to prepare the contracts in time to meet their own target deadline date. Without warning the developers then exercised their right to cancel the purchase and remarket the property. But now for a lot more money. This increase is out of our reach now. We, and our solicitors (ones that we had to chose from the developers list!) did everything as quickly as possible, we were just let down by the developers own solicitor. Would they/are they allowed to manipulate this on purpose? We're gutted (and pretty cross). Is there anything we can do about this?

Postik

First of all, name the developer so everyone else can see who they are.

Secondly, you had a lucky escape, because you chose to use the developer's "pet solicitor" or "recommended" solicitor as they would like to call it. You should never do this, although you may well find if you don't, they refuse to sell to you (thus breaking the Consumer Code For Homebuilers they sign up to, as well as possibly breaking the law, but you'll never get any recourse). They want you to use their recommended solicitor so they can gloss over any issues and steamroller you into things.

Thirdly, count yourself lucky you've found out exactly what they are like and who you were dealing with before you parted with all of your money, and it was too late. When they are this unscrupulous, imagine how they'll behave when they have all your cash and you have issues that need rectifying.

It's not uncommon for them to pull a fast one like this when suddenly they think they can get more money or a "better" buyer comes along.

Leave them a 1 star review on TrustPilot, then watch as they go into overdrive and bury it with 5 star reviews from people that haven't even completed on their house, or just looked around the show homes one Sunday afternoon.

Once you understand that you are dealing with the lowest of the low, you can instead buy a secondhand house from a regular person, or at least be prepared for the worst. But to answer your question directly, I suspect you can get your reservation fee back (if you've not already) but not much more than that.

Alderbank

MrJolly44 said:

We found a new build house that was perfect for us and were the first to show commitment to the developers with a reservation. We paid a reservation fee and have the money ready to pay the deposit at exchange of contracts. The developers solicitors failed to prepare the contracts in time to meet their own target deadline date. Without warning the developers then exercised their right to cancel the purchase and remarket the property. But now for a lot more money. This increase is out of our reach now. We, and our solicitors (ones that we had to chose from the developers list!) did everything as quickly as possible, we were just let down by the developers own solicitor. Would they/are they allowed to manipulate this on purpose? We're gutted (and pretty cross). Is there anything we can do about this?

'...the developers then exercised their right to cancel the purchase...is there anything we can do about this?'

What does the contract say?

TheJP

Alderbank said:

MrJolly44 said:

We found a new build house that was perfect for us and were the first to show commitment to the developers with a reservation. We paid a reservation fee and have the money ready to pay the deposit at exchange of contracts. The developers solicitors failed to prepare the contracts in time to meet their own target deadline date. Without warning the developers then exercised their right to cancel the purchase and remarket the property. But now for a lot more money. This increase is out of our reach now. We, and our solicitors (ones that we had to chose from the developers list!) did everything as quickly as possible, we were just let down by the developers own solicitor. Would they/are they allowed to manipulate this on purpose? We're gutted (and pretty cross). Is there anything we can do about this?

'...the developers then exercised their right to cancel the purchase...is there anything we can do about this?'

What does the contract say?

I don't think they had a contract, just paid a reservation fee, exchange had not taken place.

OP unfortunately this is common with new builds, developer sees rise in demand so wants to max out return or they need to hit a certain financial yearly return so they increase slightly across the board. Nothing you can do as you hadn't exchanged contracts at this stage

UnderOffer

Did they give a reason? If you were using their recommended solicitor (advice is to always always source your own independent solicitor) then why did the developer withdraw? 

I suspect the properties are in great demand and therefore they have plenty of potential buyers and wanted to increase price. They will always chase the money. 

eddddy

TheJP said:

I don't think they had a contract, just paid a reservation fee, exchange had not taken place.

There would have been a reservation contract - I expect that's what @Alderbank is referring to.


Typically, a reservation contract says that the reservation can be cancelled, if exchange of contracts for the purchase doesn't happen in 28 days.

If the buyer is making good progress with the purchase, often developers will be flexible with that 28 days.

But in this case, perhaps the developer was pleased that they could cancel the reservation after 28 days, because they could increase the price. (Or if you're a bit cynical, perhaps the developer changed their mind about selling to the OP at the agreed price, so deliberately delayed beyond 28 days.)