UK Landlord Forum / Life

Dear all,

Me and my family have recently reserved two off-plan properties (for the sake of 1% discount) from London's mega no. 1 developer and encountered two issues:
1) For property 1, we have been enquiring and confirming with their representatives about the large balcony which became part of the purchase decision.  Subsequent to our signing of the exchange contract, we further examined the diagram and compared to other units and noticed that the measurement of the balcony indicated in the brochure should have been overstated.  The representing lawyer informed us that the contract does not include dimension of the balcony because we only have the right to use, not the ownership. The discrepancy is substantial.  We have raised our enquiry to the home builder for quite a while and pending for their response.   

2) As for property 2, we first enquired them about usage of the piece of land right opposite to the plot we were interested in.  Initially, all their representatives claimed that it was not related to them and they were not aware of the usage.  Somehow, I searched through the internet and found some documents relating to the Mayor indicating that the home builder will be building another 5 buildings right across the street.  When I confronted them the documents, they then did not deny. 

3) Still with property 2, we went into the reservation due to our intention to purchase a home for the sake of the slim 1% discount for the purchase of 2 properties at the same time...  however, 2 weeks after our reservation, they published in their official website listing of one floor above the unit we reserved with a price of 40K (over 10% difference) cheaper than the unit we reserved, with same view and same size.  When we raised our concerns, instead of responding to any of our enquiries, their representatives sent us an excel copy and paste with the price changed while their website was still posting the cheaper price!  3 hours later, they finally updated the listing price in silence subsequently while we were still waiting for their yet to reply feedback.

Right now, I am obliged to make my first 10% deposit payment by September 1.  However, with all the confusions and misrepresentations, why am I paying for all these?

Provided that they force us to make an offer and decide within 6 hours, they did not provide timely response to all our enquiries, the after service was extremely disappointing.
Frankly, I feel very frustrated and would like to know what are my rights over the above.  What should I do?
May I rescind the contracts and request them to refund my reservation fees as well as absorb any costs involved. (e.g. Legal fee)
The Sales Consultant/ agent merely told us to WAIT...

Many thanks and I am desperately looking for your prompt advice.

I have experience of purchasing an off-plan property and the Developer making substantial changes after the event.

In my case, 2007, it was just before the Credit Crunch and I had agreed to purchase 1 apartment at a discount of 5% (I am staggered by your 1% for 2 properties) and the building was expected to be complete in late 2008. Obviously events overtook everyone and an aggressive cost-cutting exercise was undertaken by the Developer which resulted in changes to the external cladding of the building, the fixtures and fittings and the loss (in my apartment) of 2 floor-to-ceiling windows. All of these changes were to save the Developer money, but savings would not be passed on to purchasers - they would be expected to complete at the price agreed. Buyer beware!

The completion time of the building also moved out to 2010.

Because the changes affected the whole building, I was able to get together with other purchasers who were in the same boat and we formed an Action Group. This gave us strength in numbers. Even though the Developer would not negotiate with us, so it was unclear what we were doing except offering each other moral support. However, that changed when we finally decided to employ a Solicitor firm ourselves. They assessed our collective case and we were assured our case was sound.

A meeting ensued with the Action Group, our Solicitor and the Developer and their Solicitor... a blanket offer of 12.5% was made. Some purchasers couldn't hold-out due to the fear of legal action and threats of things like bankruptcy, so they caved-in and took the offer on the table... some others held back. This ended up splitting the Action Group - difficult to herd cats like this. We spent around £10,000 on our Solicitor, but they were good, and when it was broken out across the Action Group it came to reasonable amounts for us all (there were around 40 parties).

The others that held out became targets of the Developer's Solicitor... threats and bullying and cajoling ensued for months and months... but never any Court papers or anything tangible... just nasty letters and emails... and then the silent treatment and the a flurry of communication - it was all an interesting game.

In the end, I completed in 2011 for the settlement price I had suggested to the Developer in 2009, 2010 and early on in 2011... that being a price 27% less than what I'd agreed. This is now achieving a very good rent... I'm not ecstatic, but I'm satisfied.

So, my advice...

   - your achieved discount levels seem terrible (but this could also mean you are suffering buyer's remorse)
   - you should find out whether this mis-selling affects you solely, or whether other people are in the same boat
   - don't roll over to have your belly tickled, if the Developer gets nasty, don't cave in, be prepared for a long road
   - you unilaterally rescinding the contract is probably not a good idea, that will definitely get everyone's back up

However, legal advice could be worth something to you... in our Solicitor's opening salvo to the Developer's Solicitor assertions like "discharge of obligations", "breach of contract", "misrepresentations", "rescind the contract", "notice to complete is void and ineffective", "refund of deposit", "damages" but then offering a "without prejudice" meeting as an "alternative form of dispute resolution" giving them 14 days in which to reply.

With regards prices... the Developer can sell their properties for whatever they want... because you negotiated a 1% discount on 2 properties and they then sold a property just above one of yours for £40,000 less is not relevant... each deal / negotiation is different... you just appear (sorry) to have done particularly badly. The Developer doesn't have to justify anything to you. In our Action Group we were especially confused by someone who appeared to have agreed to pay more than the published list price! Strange things do happen when people are drawn-in with shiny new property and the promise of riches. Again, if the 1% you achieved is correct, this could probably lead you to buyer's remorse... what I would say is that the salespeople will have an interesting impression of you for that deal.

I hope that helps, maybe just a little bit... I had real tangible changes made in an effort to cut costs and it was still a multi-year uphill battle.

Hi Hippogriff,

Many many thanks for your zealous sharing and advice.
We are still in the process negotiating and fighting the battle. 
However, the Developer's strong attitude and "all or nothing" and "love it or leave it" response seemed to give us no option other than accepting rescission at the developer's costs.   
Thanks for reminding me about the slim discount we got which we should not appreciate.
Let's see how the case moves...

Cheers,
Tam

I would re-iterate...

Although I was not overly ecstatic about the apartment I ended up purchasing (especially after the changes)... I did end up being satisfied with the price I got (made everything a lot easier) and it is now a property that just lets on the first day of viewings... I've even had people offering more than the people I chose to go with. It is desirable for Tenants and, because it is all brand new, there are no maintenance issues. It achieves a high rent. I'm sure the same would be the case with your properties. At the time of the purchase it was fraught with all sorts of worries and tensions... now, a few years on, I have learned a few things - the first is that I do not want to live the high life in the city centre myself (I tried it out for a while) and the second is that while it might not be somewhere I want to live, it is certainly a place that others want to live. If I knew then what I know now, I would not have been so worried at the time... I would have been more phlegmatic, but I would still have fought tooth-and-nail for the right discount.

What are the Developer's rescission costs?

Unilateral rescission is risky... if you agree to buy an apartment for £100,000 but rescind - the Developer can actually just sell that apartment for whatever they can get for it... say £50,000... and then decide that you owe them the difference... £50,000, but for nothing. That never actually came to it in our situation, but it was threatened. Those apartments were going on sale when the country was in the middle of the credit crunch, though, and they were overpriced... so people were concerned they would not sell - I doubt this would be the case with a new development in London. More likely they'll just go up and up...

Dear Hippogriff,

I am truly happy for your high yield and competitive investment after going through all the hardship and battles!

From your point of view, at this point in time, which area/zone would you recommend for a BTL property?
Currently, based on London2020 roadmap, going east is key...while locals prefer to stay closer to the west...

The niche of the premise engaged with dispute being:
1) "reputable" home builder with so-called high specification
2) closely linked to the Crossrail but price is less than 400k
3) mega residential development
4) long completion date...
However, I am skeptical that Crossrail fare might be overly expensive in future for people to afford.

I value greatly for your recommendation and sharing, many thanks.
Cheers,
Tam

Sorry, but I have zero experience of BTL in London. Everything I own is in my own city. I would not be able to [afford to] invest in the London area, I'm sure. I prefer to keep things close to me... I'd recommend this to everyone. Not sure where you are located, but I was expecting that it would be London anyway.

Will you make your payment on the 1st, or are you going to hold it back while this dispute is ongoing? My vibe is that it could be a good 'lever' to get them talking to you... once you've paid it I reckon their interaction with you will drop-off... as they've got what they care about, your money. At the moment, you have something they want more than them having something you want... probably.

Personally I think a buying off plan deal is too big a risk.

I like to wait for a more distressed seller situation. See the potential in something others cant.

Good luck to you though Tam. Questioning a decision once it's been made is always a good idea, there is a saying that your first loss is your best loss.

Quote from: boboff on August 31, 2014, 07:12:40 AMPersonally I think a buying off plan deal is too big a risk.

I would never do it again. Simply put - I will always want to see - in the flesh, so to speak - what it is that I'm buying. However, for me (at the time) it wasn't a BTL purchase, but something I wanted to experience for myself... hustle and bustle of city living, totally remove the commute, panoramic views across the whole city etc. ...I just decided (after almost 2 years) that it really was not for me. I prefer a house, with a garden and two old trees to put my hammock up in.

Nothing wrong with that my man!

I suppose also I would find big city life abhorrent after rural Cornwall.

It is natural to get frustrated. With the amount of money you have invested and the plans you have for that particular property, you are bound to feel mad.  I would suggest the best thing to do right now is to go to any property solicitors London who will guide you well in this matter and actually build a strong case on your behalf. you can consider consulting http://www.opencounsel.co.uk/area-of-laws/property-law/ in this matter.