Flat developer gone into administration

Aurbs

Hi all,

I started the process of buying a new-build property in 2024, and the developer went into administration in Feb 2025. So bank has taken over.

My question is this: How does this effect me? Do i pull out and look for somewhere else. Does the flat value go down? 

Kind regards

user1977

How far into the process did you get?

Gentoo365

Is it built? 
Is there a warranty?
Are there good plans in place for a company to manage the maintenance? 

My immediate concern would be how snags are dealt with if the building has issues..

No idea on value. But I would imagine the bank would want everything to be done 'by the book' and possibly just want a quick sale. So if course you can consider your situation.

Section62

Gentoo365 said:

Is it built? 
Is there a warranty?
Are there good plans in place for a company to manage the maintenance? 

My immediate concern would be how snags are dealt with if the building has issues. 

In additon to the above,

1) Are there planning conditions which haven't yet been discharged?

2) If the development is accessed via new roads which were to be adopted by the highway authority, is there any indication these roads will no longer be adopted, or could adoption be delayed?

DullGreyGuy

Aurbs said:

I started the process of buying a new-build property in 2024, and the developer went into administration in Feb 2025. So bank has taken over.

My question is this: How does this effect me? Do i pull out and look for somewhere else. Does the flat value go down? 

What has the bank actually "taken over"? Did they buy the company? Have they just claimed the assets? 

Has the bank not communicated with you?

gm0

It depends. Expect delay.

It is common for a 2nd developer to carry a project forward.  Either a reboot same brand - new "site co".  Or a different developer buys it from the bank.  The planning conditions remain as was.  The new developer needs to acquire the project at a value where it makes sense to finish it based on rework/construction needed and local sale prices, contributions to local infrastructure etc.  The debtors (suppliers, bank loans) of the old developer take a financial hit.

Little "agreed" with the now dead developer company can be assumed to be binding.  That depends on the next legal steps about whether the contracts lapse. Or are novated.  Many developments which are built with two sets of contractors have some construction issues arising from the pause open to weather/handoff.  But so do many built by one - where cost is the focus not quality.  Which is sadly normal UK building procurement and subbie culture.

Sometimes contracts are "novated" i.e. the old ones carry on.  And other times there are new contracts with a new provider.  It depends how the project moves forward financially/legally.

Valuation of flats later - once all are sold, snagged, settled - is not really affected by the birth pains and debts/financial stresses of construction.  Size. Outlook. Location. Quality.

However the reason the specific site has caused a developer failure - if it has been a big factor - is VERY IMPORTANT.   If there is a site specific reason that has caused a massive overrun.  An example of this would be ground works/planning and a much bigger than expected excavation / retaining wall / discovery of polluted land to clean up / lots of extra costs to get out of the ground - ruining the economics.   Some sites DO get stranded - half finished.  Because it is NOT economic (while meeting all planning conditions) to carry out the rest of the project and exit - at locally available house prices for the size of the units.

Losing a reservation fee or deposit on such a thing is a lucky escape. 

Ask the people who fully purchased units early on some estates during the Irish property boom - and then found the build out stopped when the financial crash happened.  And they had a house surrounded by an indefinite building site and shells of houses. Nothing happening.  Worth a lot less than before due to the estate context.  Local infrastructure and transport didn't show up (hardly anyone lives there after all).  With the full mortgage debt still on it.  And no prospect of sale other than at prices where the crushing debt remaining post sale would ruin their housing prospects elsewhere vs normal income for decades. 

A lost reservation fee of a few thousand on a troubled site is trivial by comparison.

You may be presented with an option to recommit with the new developer.    This is a choice between loss of the booking on the particular plot and the old fee. Vs being tied in to the situation going forward.  

The transparency and ethical behaviour of the new developer may be challenging as they may try to get you to sign on quickly and without full transparency of terms and other possibly changing aspects (cost cutting) / increased density of the project

They will say (sales) reassuring things.  What matters as usual - is the contract.  And you need to try and discover - if you can - what is driving this.  General construction cost inflation. Wideboy builder shedding debts deliberately.  An actual problem at one of their sites (which may be this one - or not).  History of the developer directors will be on CH (as in do they have a lot of failed site development companies).  Other issues require local knowledge and talking to people working on/around the project.

Aurbs

Just got a reply from mortgage adviser 

I have now heard back from my contact at Nationwide and she says that if you would still like to proceed then the information would need to be raised by your solicitor for them to consider.

 

Her thoughts on it were that it is “doubtful” that they will want to proceed but that’s not a complete no so I would say raise via the solicitor and they will review.

So not looking good 

Yes the building has been built but the kitchen etc has not been put in

ReadySteadyPop

Aurbs said:

Hi all,

I started the process of buying a new-build property in 2024, and the developer went into administration in Feb 2025. So bank has taken over.

My question is this: How does this effect me? Do i pull out and look for somewhere else. Does the flat value go down? 

Kind regards

The value will go down as the bank tries to sell off assets to re-coup as much value as they can, could it be your chance to get a much cheaper property?

EssexHebridean

What stage in the transaction are you at though - are you already committed with a long-stop completion date agreed? Or not that far in?

NameUnavailable

I doubt 'the bank has taken over'. The administrators are now in charge and they are their to obtain the best outcome for themselves, the tax man, secured creditors and then any other creditors.

You need to read your contract carefully. Depending on what stage you're at, if you had committed to purchase then I expect you are still obliged to continue, assuming that the flat will still be completed within the timeframes set out.

ReadySteadyPop

Who would complete if the developer is bust?