Debate House Prices
In order to help keep the Forum a useful, safe and friendly place for our users, discussions around non MoneySaving matters are no longer permitted. This includes wider debates about general house prices, the economy and politics. As a result, we have taken the decision to keep this board permanently closed, but it remains viewable for users who may find some useful information in it. Thank you for your understanding.
We'd like to remind Forumites to please avoid political debate on the Forum. This is to keep it a safe and useful space for MoneySaving discussions. Threads that are - or become - political in nature may be removed in line with the Forum’s rules. Thank you for your understanding.
Losing your deposit on a new build if.......

lypsey
Posts: 201 Forumite
It appears that many mortgage providers are saying 75%/80% deposit on NEW BUILDS.
I suspect that seeing as Persimmon declared they were shutting sites and today Redrow are in deep trouble that without a shadow of doubt we will see one of the top 5 builders in the UK going bust. It will happen because not many people will be able to afford deposits
My question is this:- If one does go bust would the buyer who has paid a deposit (sometimes weeks/months in advance) LOSE their deposit???
Can anyone see people losing thousands of pounds if this happens
I suspect that seeing as Persimmon declared they were shutting sites and today Redrow are in deep trouble that without a shadow of doubt we will see one of the top 5 builders in the UK going bust. It will happen because not many people will be able to afford deposits
My question is this:- If one does go bust would the buyer who has paid a deposit (sometimes weeks/months in advance) LOSE their deposit???
Can anyone see people losing thousands of pounds if this happens
0
Comments
-
I,m not actually convinced that there is any immediate danger of a major builder going under.
These firms are very canny with cash flow and I would imagine that most are currently ignoring contractual obligations and hanging onto cash for as long as possible.
It is the smaller sub contractors and suppliers who will go under first. Some of them will simply not be able to cope with having their payments seriously delayed.
IMHO only once a glut of smaller suppliers and subbies have gone bump will we see the big boys starting to stagger0 -
johnycoldears wrote: »I,m not actually convinced that there is any immediate danger of a major builder going under.
There is a heck of a lot of talk of a big builder in serious trouble. They are exposed due to high land prices, finance through property clubs in advance (now going bankrupt) and the end of buy to let.
Till they name the company speculation on all companies will be in the spotlight.:exclamatiScams - Shared Equity, Shared Ownership, Newbuy, Firstbuy and Help to Buy.
Save our Savers
0 -
There is a heck of a lot of talk of a big builder in serious trouble. They are exposed due to high land prices, finance through property clubs in advance (now going bankrupt) and the end of buy to let.
Till they name the company speculation on all companies will be in the spotlight.
I agree with what you say. I just don't think that any bankruptcies will be in the immediate future ( I have heard a rumour that a major bankruptcy will be declared before the end of the month).
I know of instances where sub contractors on 30 day payment terms are not receiving money for up to six months.
I just think that the warning flags for the big boys will be flying when a noticeable number of their sub contractors start to fail.
* sorry, none of the above answers th OP's original question.0 -
Johney
Redrow have said,reservations down 50%, cancelations up 20%, there shares in 2007 were 725 , today 271. They said in their annual statement "Any further loss of market share will lead to a severe weakening of the groups financial capacity to fight back into the market, with gearing at 40 pct"
Barratt now needs to refinance 700 million pounds of its debt in twelve months. The shares were 13 quid and today 259p. If NR can go bust.......
Persimmon were in 2007 - 1550p and today 562p, already discussed their problems , closing sites etc
Taylor Wimpey in 2007 were over 5 quid and today 140p. There net debt is 1.9 bln stg
If any company is losing money hand over fist and is fighting to repay massive massive debt do you think a land bank will save them. NR had massive assets on their mortgage book , did that make a difference
Coming back to my question is deposits cover in any way??0 -
To answer your original question:
All mjor builders are covered through the NHBC
The NHBC is the leading warranty provider in the UK and the majority of new properties are covered by an NHBC policy. The policy applicable to private buyers of new build homes is known as Buildmark. This policy provides the following:
The NHBC will pay for the house to be completed if the builder goes out of business. This is limited to £100,000 or 10% of the purchase price, whichever is the least.In the first two years of the warranty period snagging defects are covered, which currently exclude defects caused by normal drying out. If an NHBC registered builder does not deal with these defects within a reasonable time period then you can use the NHBC resolution service.
A 10-year warranty against structural defects, although this is primarily an insurance policy for the housebuilder
So although you won't get your deposit back you might at least get your house finished - assuming a £250k house consists of £100k land, £100k build cost and £50k margin, then you would get £25k's worth of finishing work. You'd better hope that the house is at least 75% complete!
And I do agree that builders are on dodgy ground and if things continue as they are we are likely to see major failures before the end of the year - I jsut don't think we'll see any in the next couple of months0 -
Both Persimmon and Redrow are building houses within 200 yds of us and still seem to have a steady flow of potential buyers through the door, but we are in a good area, but although the area is good etc there are no school places as there is so much development which I believe is putting some families off, I have just managed to get a space for DD for September after 18 months of trying.Personal Loan: £11,488 3.7% Credit card: £5,946 0% Total = £17,4340
-
I thought deposits were held by solicitors in client accounts!0
-
johnycoldears wrote: »To answer your original question:
All mjor builders are covered through the NHBC
NHBC WARRANTY
The NHBC is the leading warranty provider in the UK and the majority of new properties are covered by an NHBC policy. The policy applicable to private buyers of new build homes is known as Buildmark. This policy provides the following:
The NHBC will pay for the house to be completed if the builder goes out of business. This is limited to £100,000 or 10% of the purchase price, whichever is the least.In the first two years of the warranty period snagging defects are covered, which currently exclude defects caused by normal drying out. If an NHBC registered builder does not deal with these defects within a reasonable time period then you can use the NHBC resolution service.
A 10-year warranty against structural defects, although this is primarily an insurance policy for the housebuilder
So although you won't get your deposit back you might at least get your house finished - assuming a £250k house consists of £100k land, £100k build cost and £50k margin, then you would get £25k's worth of finishing work. You'd better hope that the house is at least 75% complete!
And I do agree that builders are on dodgy ground and if things continue as they are we are likely to see major failures before the end of the year - I jsut don't think we'll see any in the next couple of months
How is the NHBC funded?0 -
Could one major failure wipe out NHBC?0
-
How is the NHBC funded?
Builders pay a registration fee and an annual premium based on how many houses they build.SouthCoast wrote:Could one major failure wipe out NHBC?
Good point. I presume that the NHBC would offset their liability in the form of insurance. In which case the cost of the failure would be underwritten by,say, Lloyds of London. If they don't insure then yes I reckon a big failure could wipe them out.0
This discussion has been closed.
Confirm your email address to Create Threads and Reply

Categories
- All Categories
- 348.2K Banking & Borrowing
- 252.1K Reduce Debt & Boost Income
- 452.4K Spending & Discounts
- 240.8K Work, Benefits & Business
- 617.1K Mortgages, Homes & Bills
- 175.6K Life & Family
- 254K Travel & Transport
- 1.5M Hobbies & Leisure
- 16K Discuss & Feedback
- 15.1K Coronavirus Support Boards