FREE tenancy agreement
FREE landlord software
According to Property Week some property investors have taken a massive hit on a luxury Leeds residential development. This is because many investors are defaulting on the purchase of 52 flats at the tower.
Bridgewater Place, a joint venture between St James Securities and Landmark Development Projects, teamed up with residential developer KW Linfoot in a 50:50 joint venture to develop 200 luxury flats at the 32-story tower.
The JV has completed the sale of 148 flats but several investors cannot complete their purchases on the remaining 52 flats.
The buyers, many of them buy-to-let investors, have failed to secure mortgages after the banks demanded larger deposits.
The 360 ft tower comprises 236,000 sq ft of offices and 200 flats arranged as 103 two-bedroom and 71 one-bedroom apartments, as well as 26 ‘smart pads’.
If all 52 flats had been sold at the originally agreed contract price it would have generated around £10m for the developers.
Chris Gilman, a director at Landmark Developments, commented:
‘The sale of 50 flats hasn’t been completed because the purchasers can’t or won’t complete. The buyers can’t get mortgages, particularly the buy-to-let investors, and need a much bigger deposit. We recognise this is a genuine problem and we are trying to work with them.
‘We have looked at selling the flats to other investors and we have had several offers from vulture funds who wanted to buy them at a heavily discounted price. We are not prepared to accept those prices and we are turning to a medium-to-longer-term view in which we plan to rent them out and then sell them at a later date.’
He said they would retain the investors’ 10% deposits and might, in some situations, pursue compensation payments.
Property Hawk comments
This case just highlights to landlords the dangers of buying off plan. Having placed a 10% deposit a property investor is effectively placing a bet on the health of the housing market 9-18 months out from completion. This is great when prices are rising and many investors made good money particularly in London 'flippin' investments. The 'Flip' side is when prices fall and investors have to walk away from their 10% deposit and then risk the developer coming after them for further funds because of breach of contract.
Posts
5 comments:
I am not involved in this devolopment but I have placed a number of deposits on some apartments in the Lumiere devolopment.
My worry is that the same will happen here and that on completion in 2011 investors will not be able to secure mortgages to complete their purchases as these property values will be far less than they were when the devolopment came to market.
I understand that work has re commenced on the site. . . Personally I think this is not a wise decision in the current climate.
I imagine there are a lot of others like me !
John,
I'm a journalist on Property Week. Will you talk to me about this?
My email address is: lstockdale@cmpi.biz
Lydia
I also purchased. My worry is that the developer will sell the remaining of the apartments at a discount. I know a good few people that will not give the next installment. I think it is a unfair that the developer can take as long as they want to build the development. What if won't be built for another 5 or 6 years
I also purchased. My worry is that the developer will sell the remaining of the apartments at a discount. I know a good few people that will not give the next installment. I think it is a unfair that the developer can take as long as they want to build the development. What if won't be built for another 5 or 6 years
Hi,
Me too, deposit placed but unlikely to get funding when / if complete.
I have heard recently that new developers are trying to get planning for another floor.
Does anyone know of a forum / website where all who have placed deposit can share thoughts / contacts etc ?
Rgds cwwalters@btinternet.com
Post a Comment