Developer Closing Utilities Before Completion of a Sale - Any Advice?

annetheman

Hi all,
This is on behalf of my dad - looking for advice!

Dad had signed a Heads of Terms to sell to developer Peabody, who are “regenerating” the area. He is a widowed freeholder, mortgage paid, and the deal he chose was to be paid below market rate for the house as he cannot afford the new freehold homes without adding debt.

The house is a 5 bedroom, 2 living room, 2 bathroom, garage, garden house in London zone 4, 10 minutes walk from Elizabeth Line station. They offered £300,000 + inconvenience fee and all moving costs paid.

Dad has sat on the Heads of Terms since signing in January 2024 because he can’t find an appropriate freehold property to move to.

The 1 place he did offer on, his offer was rejected. He obviously will never find a house in London for the amount offered so he has been finding it hard to find somewhere and will probably end up leaving the country but that’s irrelevant to the problem.

Problem: 

Dad has been receiving letters to “Occupier” and “Homeowner” from his utility companies for weeks. He finally called the utility companies today only to find out PEABODY have been closing his accounts, including his water, gas and electric and council tax accounts on his behalf stating the owner has moved out.

The sale hasn’t even begun, let alone completed!

Is anyone able to advise if there is any legal recourse for this? He has spent hours today reopening his accounts and is very annoyed, but not sure if there is anything more we can do?

Thanks for any advice at all! 

P.s. I have also sought the advice of specialist CPO lawyer who facilitated the Heads of Terms agreement (Sawyer Fielding), but they work for Peabody so keen for further advice, too!

user1977

What "recourse" does he want to have? I presume nothing's actually been cut off and there's just been some mild hassle to sort it out?

annetheman

user1977 said:

What "recourse" does he want to have? I presume nothing's actually been cut off and there's just been some mild hassle to sort it out?

He has spent hours today reopening his accounts and is very annoyed, but not sure if there is anything more we can do?

I am hoping for advice such as "there is nothing that you can do" or "you can do XYZ."

I'll pass on to him and update this thread also after speaking to Sawyer Fielding to find out why this was done (if it's helpful for anyone else in future, too, as I couldn't find much!)

fullyrendered

What is the benefit to him of accepting a below market value offer? I don't see the upside for him. 

Surely if he holds out or negotiates he should get market value even under a CPO, and home loss compensation and expenses. 

As to the bills issue, sounds like one part of Peabody has jumped the gun. Raise a formal complaint.

penners324

Surely a 5 bed house in that area should be £1 million+?

user1977

annetheman said:

user1977 said:

What "recourse" does he want to have? I presume nothing's actually been cut off and there's just been some mild hassle to sort it out?

He has spent hours today reopening his accounts and is very annoyed, but not sure if there is anything more we can do?

I am hoping for advice such as "there is nothing that you can do" or "you can do XYZ."

Well, I can't see that there is any legal remedy in itself, but he could try asking for a gesture for the inconvenience, and/or throw it in as part of a negotiation of a better deal. As others say, not clear why he would accept an offer below market value - in this sort of situation one would expect better than market value. Has he not had any advice about the price?

annetheman

fullyrendered said:

What is the benefit to him of accepting a below market value offer? I don't see the upside for him. 

Surely if he holds out or negotiates he should get market value even under a CPO, and home loss compensation and expenses. 

As to the bills issue, sounds like one part of Peabody has jumped the gun. Raise a formal complaint.

Thank you, that's helpful - we will raise a formal complaint.

Someone else on the UK Legal Advice subreddit advised we could also send a cease and desist letter from dad's solicitor to stop them closing his accounts again. They implied Peabody could be trying to intimidate dad since they have been chasing him via Sawyer Fielding to close the deal for almost a year (last email was in October/November time); that would be hard to prove and reasonably could just be a clerical error of some sort...

Dad isn't interested in a protracted battle but does want to get some proper legal advice to get them to stop this, so we're going to speak with his solicitor (not Sawyer Fielding) as well.

I should have added that there was no time limit on this Heads of Terms (i.e. a date by which he must complete), but they plan to demolish and redevelop in 2026.


Edit to add: penners324 said:

Surely a 5 bed house in that area should be £1 million+?

Regarding worth, I've linked the development in the initial post, but the current house is probably not worth much more than £330-380k - it's in Thamesmead, London and going to be demolished (on the Southmere estate, concrete jungle made famous from Clockwork Orange and Misfits!). We will pursue our own RICS surveys as the sale amount agreed is out of date now, anyway. 

Thanks for the advice!

user1977

annetheman said:

We will pursue our own RICS surveys 

Get the developer to pick up the cost of that...

Emmia

I don't really understand why he'd sell at below market value, unless there was some deal for Peabody to rehouse him and pay him some cash.

annetheman

As some have been interested, I'll post what they offered, I know it's a crappy deal but I guess it's the best choice of the offerings... Really open to opinions on these as well, very open to hearing any advice on this! Sorry in advance for the bad formatting (it's bad in the email as well!) - dated July 2023, based on a valuation undertaken in June 2023:

Upped in January 2024 to: 

Statutory Loss compensation: £26,500

TOTAL: £291,500

+ disturbance compensation (detail not provided in the offer)

+ your solicitor’s reasonable fees for the sale and ours for representing you

+ full SDLT on onward purchase

As you are aware, we were recently able to inspect your property, in order, initially to be able to provide you with or valuation advice.

 

Our report to you was delayed due as you’re aware due to some additional evidence that we wanted to secure and also hear back from estate agents to verify.

 

I am now pleased to be able to provide our valuation and tactical advice for taking your case forwards. Our Valuation report is attached to this e-mail but for ease, I have summarised some of the issues below along with associated advice.

 

When negotiating with the Council, our role is put a position forward as best we can argue it, to your advantage. We shall do this. When reporting to you, as we are doing here, our role is to provide you with an impartial opinion, highlighting both the strong points we can argue for you and also the weaknesses in any arguments or counters that the Council may provide.

 

The property was reasonably well maintained but a hypothetical buyer would be likely to modernise it in parts. A detailed description is provided in our attached report.

 

There is a lot of information for you to digest and I recommend that you first read this e-mail before looking through the report. I am of course happy to answer questions if you have any.

 

It is worthwhile being aware of both the strengths and weaknesses in any arguments that we shall put forward to Peabody.

 

Properties on the Lesnes Estate are very large compared to many others in the area. With Covid having altered buyer demands, additional space is at a premium which is a benefit that your property and others has. Similarly, the estate is very well connected to transport infrastructure. These are benefits that we shall focus upon in our arguments.

 

The primary negatives are that values on Council estates tend to be lower than in private areas and principally, that the construction type holds back values. Large Panel system builds have long been unsuitable for mortgages except at prohibitively high interest rates. They are unlawful to build and in many places across London are being demolished as they are structurally unsafe.

 

Wolvercote Road and Lensbury Way

 

Our involvement on the Estate recently restarted with a number of homeowners instructing us. Previously, we had only represented one owner, at Wolvercote Road. A floorplan and external photograph is below. Ground floor rooms on the Lesnes Estate have to be classed as bedrooms because of low ground levels being a flood risk.

 

The house was freehold and in fairly basic overall condition, albeit with a modern kitchen.

 

The price agreed (excluding compensation) was £248,000 and the sale completed on 3rd August last year.

 

Our one negotiation has been at a higher price than any similar property nearby that has sold on the open market since.

 

 

 

We have concentrated our search on properties of the same construction type nearby, with a focus on those not directly affected by regeneration proposals.

 

These comparables are not quoted in our Valuation report as when we negotiate with Peabody, we shall be selective in what evidence we put forward as tactically, this will help support a higher price for you. We are providing all of the relevant evidence to yourselves as part of our reporting requirements. The floorplans are those provided by the estate agents who marketed the properties. We do of course expect that 4/5 bedroom properties would ordinarily sell for more than 3 bedroom properties. Both are provided for illustration.

 

43 Holstein Way, Erith, DA18 4DQ due to exchange contracts in August 2021 for £235,000

 

 

43 Holstein, is situated to the north of Abbey Wood and benefits from proximity to Southmere Park, Crossway Park, Abbey Wood Station, and the wider road network.   Externally, the property benefits from a large private garden and double garage accommodation. Internally, the property is arranged over the ground floor, first floor and second floor. The property benefits from an open plan kitchen and diner which leads to the balcony The property also benefits from an additional ground floor shower room. The property is in an extremely dated condition throughout with damp apparent in the bathroom

 

 

1 Seacourt, London, SE2 9UW has exchanged contracts (legally committed sale) for £240,000 in August 2021

 

 

1 Seacourt is situated to the north of Abbey Wood and benefits from proximity to Southmere Park, Crossway Park, Abbey Wood Station, and the wider road network.   Externally, the property benefits from a large private garden and double garage accommodation. Internally, the property is arranged over the ground floor, first floor and second floor. The property benefits from an open plan kitchen and diner which leads to a large balcony. The property also benefits from and an additional W.C. The property is in an average / dated condition throughout albeit the reception appears to have been modernised in recent years.

 

77 Hartslock Drive, London, SE2 9UU about to sell for £236,000 (exchanged contracts in June with completion delayed)

 

 

77 Hartslock Drive, is situated to the north of Abbey Wood and benefits from proximity to Southmere Park, Crossway Park, Abbey Wood Station, and the wider road network.   Externally, the property benefits from a large private garden and double garage accommodation. Internally, the property is arranged over the ground floor, first floor and second floor. The property benefits from an open plan kitchen and diner. The property also benefits from an additional W.C. The property is in an extremely dated condition with what appears to be the original fixtures and fittings.

 

45 Portmeadow Walk, London, SE2 9UN sold for £230,000 on 16th March 2021

 

 

45 Portmeadow Walk is situated to the north of Abbey Wood and benefits from proximity to Southmere Park, Crossway Park, Abbey Wood Station, and the wider road network.   Externally, the property benefits from a large private garden. Internally, the property is arranged over the ground floor, first floor and second floor. The property benefits from an open plan kitchen and diner which leads to a large balcony. The property also benefits from an additional W.C. The property is in a dated condition throughout.

 

171 Mangold Way, ERITH, DA18 4DB sold for £230,000 on 11th March 2021

 

 

171 Mangold Way is situated to the north of Abbey Wood and benefits from proximity to Southmere Park, Crossway Park, Abbey Wood Station, and the wider road network.   Externally, the property benefits from a large private garden. The garden appeared to be poorly maintained. Internally, the property is arranged over the ground floor, first floor and second floor. This property is fairly dissimilar due to its town house style. Kitchen is on the ground floor. Balcony is accessed via main bedroom. The property also benefits from an additional W.C. The property is in an average condition throughout

 

40  Lensbury Way, London SE2 9SY sold for £245,000 + compensation on 16th February 2021

 

 

This is the only sale that came up in our search which was to Peabody.

 

40  Lensbury Way is situated to the north of Abbey Wood and benefits from proximity to Southmere Park, Crossway Park, Abbey Wood Station, and the wider road network.   Externally, the property benefits from a large private garden and garage accommodation. Internally, the property is arranged over the ground floor, first floor and second floor. The property benefits from an open plan kitchen and diner which leads to a large balcony. The property also benefits from an additional W.C. The property is in an average condition throughout albeit the kitchen and bathroom appear to have been modernised in recent years.

 

16 Seacourt Road, London SE2 9UW – sold for £230,000 on 29th January 2021

 

 

16 Seacourt Road is situated to the north of Abbey Wood and benefits from proximity to Southmere Park, Crossway Park, Abbey Wood Station, and the wider road network.   Externally, the property benefits from a large private garden and garage accommodation. Internally, the property is arranged over the ground floor, first floor and second floor. The property benefits from an open plan kitchen and diner which leads to a large balcony. The property also benefits from an additional W.C. The property is in a good condition throughout albeit the kitchen and bathroom are considered dated.

 

36 Mangold Way, Erith, DA18 4DE sold for £195,000 on 22/12/2020

 

 

36 Mangold Way is situated to the north of Abbey Wood and benefits from proximity to Southmere Park, Crossway Park, Abbey Wood Station, and the wider road network.   Externally, the property benefits from a large private garden which is laid to lawn. Internally, the property is arranged over the ground floor, first floor and second floor. This property is fairly dissimilar due to its town house style. Balcony is accessed via the kitchen. The property also benefits from an additional shower room. The property is in an average condition throughout.

 

Under offer

 

131  Mangold Way, ERITH, Kent DA18 4DB under offer for £250,000

 

 

 

 

131 Mangold Way is situated to the north of Abbey Wood and benefits from proximity to Southmere Park, Crossway Park, Abbey Wood Station, and the wider road network.   Externally, the property benefits from a large private garden which is part paved. Internally, the property is arranged over the ground floor, first floor and second floor. This property is fairly dissimilar due to its town house style. Balcony is accessed via the kitchen. The property also benefits from an additional W/C. The property is in an average condition throughout albeit with  modern kitchenette.

 

Sales have been marketed by –

 

• Your Move Abbey Wood (4 properties)
• Able Estates (2 properties)
• McHugh & Co (2 properties)

 

As you will see from the report, I have valued the property at £245,000. This means that the statutory loss payment (10%) is £24,500. Disturbance compensation does not comprise part of the valuation report as it cannot be accurately assessed at this stage. I would recommend an up front payment, payable on the date you sell based on estimates is taken, in lieu of a separate claim being made. The acquiring authority pay disturbance compensation based on an evidenced route where you first incur costs and then reclaim them. I shall provide further advice on this at a later date, but for the time being attach a useful guide.

 

If we are able to secure an agreement based on our valuation, (with up front disturbance compensation to be discussed separately), we would be aiming for at least -

 

Purchase price: £245,000

Statutory Loss compensation: £24,500

 

TOTAL: £269,500

 

+ legal and surveyors fees for the sale also payable by the council

+ Disturbance compensation

+full stamp duty to be covered for the onward purchase

 

Ideally, I would like to try and achieve a more than the above valuation for you.

 

Given the number of recent sales, there is likely to be limited room for negotiation. However, as the highest sale in the last year or so has been the one we negotiated, I have some confidence that we can secure a favourable deal for you.

 

My suggestion is that we open negotiations at a price of £255,000, with the other sums to be paid in addition. This level is not so high that we are seen to take an unrealistic position which could deter any increase being made and not so low that we risk losing out on a potentially higher price. My suggested opening position is based on tactical experience. We shall prepare to do this in two weeks time from now but can start earlier if you wish.

 

We shall also discuss disturbance compensation with the Council’s Surveyor to see if they are open to an up front lump sum payment, which may prove worthwhile for you. They were not previously when we only had the one client but given that we are now acting for 7 more, perhaps our collective negotiating position is a little stronger. If you know any of your fellow homeowners who we are not representing, we would also appreciate being put in touch please.

 

 

Attached to this e-mail along with my report are the following –

 

1. Entitlements explained guide
2. Disturbance compensation guide
3. Valuation supplementary booklet

 

 

We have created a webpage full of lots of helpful videos. Please check out our Videos page

 

A particularly helpful video that explains your entitlements can be found by clicking here

 

A video on disturbance compensation can be found by clicking here

 

If you know any of your fellow homeowners affected by same regeneration scheme, I would also request please that you put them in touch with us. Strength in numbers can made a significant difference, helping you and them, as illustrated in our video which you can find here

 

 

 

To allow  time for you to digest our report and for me to prepare arguments at the higher figure to submit to the Peabody, my intention is to open negotiations once we have received an offer from them at the higher figure suggested above.

 

However, I can open negotiations on that basis earlier if you would like me to. If so, please do let me know.

 

I would also encourage you to now start considering your budget for buying elsewhere. You may want to now start looking for somewhere to buy but I should urge caution that we do not yet know how quickly and realistically the acquiring authority will negotiate.

 

With experience of negotiating close to a thousand sales on Compulsory Purchase terms, being by far the most experienced team helping homeowners affected by Regeneration in the Country, please rest assured that you are in very safe hands.

 

Kind regards,

[Sawyer Fielding Lady]

annetheman

So I did get some progress on this. Director of the regen project apologised, "will investigate further" and assured it was unintentional. If it's helpful for anyone else in such a situation, I sent the below:

I am supporting my father Dr XYZ, homeowner and owner occupier of London Address, with the prospective sale of the property to Peabody.

My dad has received letters from B Council, Thames Water and OVO Energy (electricity and gas suppliers) who have all stated that the accounts he had with these bodies were closed and liability for the property ceased on various dates in November 2024 - upon investigation, dad has found out that these closures were instigated by Peabody.

Assuming that these closure requests happened as the result of a genuine clerical error on Peabody's part (and they are not, for example, an attempt to intimidate or harass given that Peabody has been chasing my dad to proceed with the sale over the past months via [Sawyer Fielding person] - see emails below), please consider this the first and last polite request from us directly to cease and desist in closing his utilities and any other accounts immediately.

To confirm: Dr XYZ is still the owner occupier at London Address, still lives in the house and has not completed any sale to Peabody or anyone else. The signed Heads of Terms agreement is not a sale contract or legally enforceable as such, as I am sure you are aware. 

Peabody have no legal basis to close his accounts for any reason.

We are also minded to withdraw from the Heads of Terms agreement if this continues. We will discuss via Sawyer Fielding in due course.

Thank you for your attention and cooperation with this request.
--

We are happy that they have acknowledged it and hopeful it won't happen again. It has made dad want to leave ASAP though, so I guess whether intentional or not, it worked in their favour. We will pay for RICS surveyor valuation and increase the sale amount in the new year.

Thanks for everyone's suggestions.