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What are the risks of buying from a failing developer?

Ybe
Posts: 384 Forumite

I am still thinking of buying from Pocket Living but all their developments are doing terribly for sales. Only a handful of reservations across their 3 developments on sale at the moment and on one of their developments (Osier Forest E10), they have given up completely and sold off all 80 flats to the council who will turn it into a shared ownership block. They are also in their 5th consecutive year of net losses and are relying on their majority shareholder backing to survive.
What are the risks of buying from this developer?
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Comments
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You have already stated that one development sold off to become shared ownership therefor I would thin that the same thing might apply to the others.Whilst shared ownership comes with stability for others you as an owner occupier might have little say in future management of the development. If you are keen on this developmen in particular you could delay purchase until more properties sold or Pocket Living rescued by cash injection.1
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I wouldn't go any further with this - it can cause problems if the developer goes under while you are mid transaction - and particularly if it happens after you have paid your deposit, but before completion.🎉 MORTGAGE FREE (First time!) 30/09/2016 🎉 And now we go again…New mortgage taken 01/09/23 🏡
Balance as at 01/09/23 = £115,000.00 Balance as at 31/12/23 = £112,000.00
Balance as at 31/08/24 = £105,400.00 Balance as at 31/12/24 = £102,500.00SOA CALCULATOR (for DFW newbies): SOA Calculatorshe/her1 -
EssexHebridean said:I wouldn't go any further with this - it can cause problems if the developer goes under while you are mid transaction - and particularly if it happens after you have paid your deposit, but before completion.0
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gwynlas said:You have already stated that one development sold off to become shared ownership therefor I would thin that the same thing might apply to the others.Whilst shared ownership comes with stability for others you as an owner occupier might have little say in future management of the development. If you are keen on this developmen in particular you could delay purchase until more properties sold or Pocket Living rescued by cash injection.0
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From your posts before looking at these developments, they didn't look like a good investment before, if they're abandoning and selling off their developments then they're clearly not a good investment. I'm not sure what the hold is that these flats have over you but I'd let it go.0
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lika_86 said:From your posts before looking at these developments, they didn't look like a good investment before, if they're abandoning and selling off their developments then they're clearly not a good investment. I'm not sure what the hold is that these flats have over you but I'd let it go.0
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Ybe said:EssexHebridean said:I wouldn't go any further with this - it can cause problems if the developer goes under while you are mid transaction - and particularly if it happens after you have paid your deposit, but before completion.🎉 MORTGAGE FREE (First time!) 30/09/2016 🎉 And now we go again…New mortgage taken 01/09/23 🏡
Balance as at 01/09/23 = £115,000.00 Balance as at 31/12/23 = £112,000.00
Balance as at 31/08/24 = £105,400.00 Balance as at 31/12/24 = £102,500.00SOA CALCULATOR (for DFW newbies): SOA Calculatorshe/her1 -
Ybe said:lika_86 said:From your posts before looking at these developments, they didn't look like a good investment before, if they're abandoning and selling off their developments then they're clearly not a good investment. I'm not sure what the hold is that these flats have over you but I'd let it go.0
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EssexHebridean said:Ybe said:EssexHebridean said:I wouldn't go any further with this - it can cause problems if the developer goes under while you are mid transaction - and particularly if it happens after you have paid your deposit, but before completion.Administrations typically take 12-18 months to get to the point of a payout and it’s often pennies in the pound after priority debtors (HMRC, secured banks etc) and the administrators are paid.0
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So apparently their 1 development they sold off to the council was a council proposition which is different to what the news article is saying. That gives me a bit of comfort but implies the news article is quoting the council incorrectly. With the car free bit, there is street parking nearby which is uncontrolled and there are alot of young ftbs in london who don’t need or want a car. However, point taken about the reduced market pool to resell to. I think my main concern is paying more than I should pay.0
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