The case is a landmark decision which has left one landlord with a bill of £133,282. It came about when the investor decided to forfeit the deposit paid to Prestige Homes and totally renege on the agreement to complete on the purchase of two new build flats. This landmark case is set to unleash further action by developers during 2010. Over 250 claims by developers have already been filed.
This landmark ruling will cause problems for many potential property investors who believed they could simply walk away from their deposit and not face legal action from developers.
The Prestige Home development in Plymouth, like so many other sites up and down the country, experienced a significant number of buyers trying to renege on potential purchases. The Zero 4 development has seen a total of 30 people who had all paid their deposit subsequently try to cancel the deal.
Prestige Homes have managed to reach an agreement with some of the purchasers but are set to pursue a further eight investors via the courts.
“It’s very difficult for all parties involved.” Ann-Marie O’Neill of Money For My Business commented. “Many developers have borrowed significant amounts of money from banks that need to be repaid and they themselves are facing bankruptcy. We have seen a record number of developers go out of business during 2009.
“Meanwhile the potential purchaser faces difficulties in raising the finance needed to complete on the purchase of these new build properties due to a significant shortage of lenders willing to lend. The property market has also experienced a significant drop in property values over the past 18 months. It’s hoped by many that 2010 will be the start of a return of confidence from the lenders and whilst we won’t see a return to the old style of lending, any improvement will be welcomed.”