Flat developer gone into administration

ReadySteadyPop

TripleH said:

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.

It happened recently with commercial property, but yes a developer will just see it as profit if they can sell them.

ReadySteadyPop

eddddy said:

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.)

Ok, makes sense.

ReadySteadyPop

MeteredOut said:

ReadySteadyPop said:

Who would complete if the developer is bust?

Administrators will sell it to another developer.

Or the local council for social housing?

SarahB16

Aurbs said:

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

It is common practice for the kitchen and the bathroom to not be put in to the very end for a variety of reasons (which I fully understand why from a developer's perspective).  

From what you are saying it sounds like the scheme has been nearly completed?  

A question is due to them going into administration did they cut corners to save costs or perhaps they didn't wish to compromise on quality and they can ran out of money.  

If you like the development I wouldn't immediately walk away from this as you might get a bargain.  You will also need to confirm there is (highly likely there will be) a 10-year new build warranty (usually NHBC but there are others) and who would cover any snagging issues in the first two years as that is typically the developer and not the warranty provider.  

Keep posting and sharing more information as you find out more.  

Murphybear

MeteredOut said:

ReadySteadyPop said:

Who would complete if the developer is bust?

Administrators will sell it to another developer.

We moved to Milton Keynes a few years ago.  There were a row of terraced houses and when the developers went bust the MK Development Corporation took them over.  The houses were supposed to have pitched roofs but to save money they left them with flat roofs.  They weren’t the most attractive on the outside but were nice inside and were relatively cheap.  

The views were lovely, literally a few feet from the canals and opposite a park.  We bought one which was gutted and had nothing much apart from the bathroom and literally nothing in the kitchen but the proverbial kitchen sink  . It was a great place to do up and we sold it for a big profit about 5 years later 

ReadySteadyPop

Murphybear said:

MeteredOut said:

ReadySteadyPop said:

Who would complete if the developer is bust?

Administrators will sell it to another developer.

We moved to Milton Keynes a few years ago.  There were a row of terraced houses and when the developers went bust the MK Development Corporation took them over.  The houses were supposed to have pitched roofs but to save money they left them with flat roofs.  They weren’t the most attractive on the outside but were nice inside and were relatively cheap.  

The views were lovely, literally a few feet from the canals and opposite a park.  We bought one which was gutted and had nothing much apart from the bathroom and literally nothing in the kitchen but the proverbial kitchen sink  . It was a great place to do up and we sold it for a big profit about 5 years later 

Unlikely that someone could do that now, the glory years for UK property speculation definitely seem to be behind us now.

SarahB16

ReadySteadyPop said:

Murphybear said:

MeteredOut said:

ReadySteadyPop said:

Who would complete if the developer is bust?

Administrators will sell it to another developer.

We moved to Milton Keynes a few years ago.  There were a row of terraced houses and when the developers went bust the MK Development Corporation took them over.  The houses were supposed to have pitched roofs but to save money they left them with flat roofs.  They weren’t the most attractive on the outside but were nice inside and were relatively cheap.  

The views were lovely, literally a few feet from the canals and opposite a park.  We bought one which was gutted and had nothing much apart from the bathroom and literally nothing in the kitchen but the proverbial kitchen sink  . It was a great place to do up and we sold it for a big profit about 5 years later 

Unlikely that someone could do that now, the glory years for UK property speculation definitely seem to be behind us now.

I agree. 

The lender will most likely have step-in rights and might appoint a new contractor (who will charge a premium) and complete the scheme and the lender will hope to recoup their capital and interest as quickly as possible.  On the face of it, it would appear that it's very near to practical completion.  Alternatively they may seek to sell it how it is.  

The lender will want quick sales of the homes and they will be priced accordingly so OP stay close as you may get a bargain.  

ReadySteadyPop

SarahB16 said:

ReadySteadyPop said:

Murphybear said:

MeteredOut said:

ReadySteadyPop said:

Who would complete if the developer is bust?

Administrators will sell it to another developer.

We moved to Milton Keynes a few years ago.  There were a row of terraced houses and when the developers went bust the MK Development Corporation took them over.  The houses were supposed to have pitched roofs but to save money they left them with flat roofs.  They weren’t the most attractive on the outside but were nice inside and were relatively cheap.  

The views were lovely, literally a few feet from the canals and opposite a park.  We bought one which was gutted and had nothing much apart from the bathroom and literally nothing in the kitchen but the proverbial kitchen sink  . It was a great place to do up and we sold it for a big profit about 5 years later 

Unlikely that someone could do that now, the glory years for UK property speculation definitely seem to be behind us now.

I agree. 

The lender will most likely have step-in rights and might appoint a new contractor (who will charge a premium) and complete the scheme and the lender will hope to recoup their capital and interest as quickly as possible.  On the face of it, it would appear that it's very near to practical completion.  Alternatively they may seek to sell it how it is.  

The lender will want quick sales of the homes and they will be priced accordingly so OP stay close as you may get a bargain.  

Good advice.

ReadySteadyPop

Murphybear said:

MeteredOut said:

ReadySteadyPop said:

Who would complete if the developer is bust?

Administrators will sell it to another developer.

We moved to Milton Keynes a few years ago.  There were a row of terraced houses and when the developers went bust the MK Development Corporation took them over.  The houses were supposed to have pitched roofs but to save money they left them with flat roofs.  They weren’t the most attractive on the outside but were nice inside and were relatively cheap.  

The views were lovely, literally a few feet from the canals and opposite a park.  We bought one which was gutted and had nothing much apart from the bathroom and literally nothing in the kitchen but the proverbial kitchen sink  . It was a great place to do up and we sold it for a big profit about 5 years later 

Very hard for someone to do that nowadays.