Flat developer gone into administration

poseidon1

Aurbs said:

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

The lack of a usable kitchen may well be a deal breaker for a lender like Nationwide, but lack of an idenfiable freeholder and intermediate block management company is more serious at this stage. 

TripleH

Our home came from a site where the original developer went bust and was taken over.

Can't advise about the transfer of contracts as we bought after the house had been built but from our experience,

1. The customisation / extras options may change / disappear.

2. Finish quality may decrease as the new party was after completing the site not 'maintaining the dream'

3. Depending on the stage of development, you may find the site layout changes, the new guys may well have paid more so may try and cram more on site.

4. Is the new guy a big or small firm, big firms may well want to maintain a reputation, smaller firms could collapse once a project has been delivered.

5. Some groundwork issues may arise, is drainage adequate, will roads get adopted?

6. If you are using the recommended conveyancers and want to continue with the purchase, change them.

7. Expect delays regardless as there will always be a lag in logistics.

ReadySteadyPop

TripleH said:

Our home came from a site where the original developer went bust and was taken over.

Can't advise about the transfer of contracts as we bought after the house had been built but from our experience,

1. The customisation / extras options may change / disappear.

2. Finish quality may decrease as the new party was after completing the site not 'maintaining the dream'

3. Depending on the stage of development, you may find the site layout changes, the new guys may well have paid more so may try and cram more on site.

4. Is the new guy a big or small firm, big firms may well want to maintain a reputation, smaller firms could collapse once a project has been delivered.

5. Some groundwork issues may arise, is drainage adequate, will roads get adopted?

6. If you are using the recommended conveyancers and want to continue with the purchase, change them.

7. Expect delays regardless as there will always be a lag in logistics.

Seems to be happening more and more now.

NameUnavailable

ReadySteadyPop said:

Who would complete if the developer is bust?

The administrator will be looking to sell the property on to another developer. As I said the OP needs to check what their contract says about failure on the developers side.

MeteredOut

ReadySteadyPop said:

Who would complete if the developer is bust?

Administrators will sell it to another developer.

ReadySteadyPop

NameUnavailable said:

ReadySteadyPop said:

Who would complete if the developer is bust?

The administrator will be looking to sell the property on to another developer. As I said the OP needs to check what their contract says about failure on the developers side.

Makes sense.

ReadySteadyPop

MeteredOut said:

ReadySteadyPop said:

Who would complete if the developer is bust?

Administrators will sell it to another developer.

If it is a fire-sale price will the new developer pass that on to the customer?

Aurbs

EssexHebridean said:

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?

I have no completion date just the searches have been done

TripleH

ReadySteadyPop said:

MeteredOut said:

ReadySteadyPop said:

Who would complete if the developer is bust?

Administrators will sell it to another developer.

If it is a fire-sale price will the new developer pass that on to the customer?

No, it is unlikely to be a fire sale price as since the crash in 2008, these rarely happen with something like property.

Even if it was, the new developer would see this difference between fire sale and market price as additional profit for them.

eddddy

ReadySteadyPop said:

MeteredOut said:

ReadySteadyPop said:

Who would complete if the developer is bust?

Administrators will sell it to another developer.

If it is a fire-sale price will the new developer pass that on to the customer?

The administrator will have a legal duty to achieve the best price reasonably possible.

So they're likely to start off by inviting offers for a few weeks, and selling to the best offer.  If they get no reasonable offers, the administrator might decide to auction the development.

Once the properties are finished, the new developer owner is likely to want to make as much profit as possible - so they'll aim to sell at the best prices they can achieve.

But the OP hasn't explained where they are in the process - pre-exchange or post-exchange.




Edit to add...

There may be problems for the new developer arranging the 10 year warranties that mortgage lenders will require.

In the very worst case, they might have to sell without warranties to cash buyers - which probably means mainly BTL landlords (at a knocked down price.)