Off Plan Developments – It May be Getting Harder to Walk Away

I see that some property investors who walked away from off plan deals face being prosecuted by the developers after a test case which a developer won.
In the last few years, lots of purchasers have tried to walk away from duff off plan property deals - figuring it was better to lose their deposits than complete purchases on properties where the values had fallen heavily (and they were effectively overpaying.)
In some cases, willing buyers were unable to complete their deals anyway as their mortgage lenders had pulled financing as prices of these types of properties collapsed.
(Not terribly bright valuations done in the first place then by the banks!)

High Court Case
The recent High Court test case was won by Prestige Homes and this case could lead to lots of other cases being taken to court by developers.
However, at least one group of investors is resisting, claiming one developer recommended customers use the developers own preferred solicitors who presented purchasers with lists of valuations supposedly carried out by other surveying firms which miraculously matched the sales list”.
Somehow, this all seems very familiar.
I have to say that it really is a case of buyer-beware in property, especially where new build was concerned.
Back in the early and mid Noughties, many new and green investors got mugged by so called "property clubs" into buying a lot of new build stuff that was way overpriced.
We are still seeing the fall out today.

Keys
When I buy a property I love it if the previous occupant leaves lots of keys behind.
Getting new keys cut seems to be getting rather expensive these days and even worse, takes up lots of time as the keys you get copied often don’t fit, necessitating extra trips back to the locksmiths.
This is one of the really irritating nitty gritty aspects of being a hands-on landlord.
If any locksmith can guarantee that he can cut an EXACT copy of a key that he guarantees to fit my locks perfectly, then he can have all my key cutting business.

BBC International – Why Bother
I’m just back from a lovely business -cum-holiday break in Mexico.
And as I always when I’m abroad I watched CNN to keep up with the news - not the much inferior BBC TV service.
If the BBC cannot put out a decent international product, maybe it would be best to shut it down completely.
The BBC Radio service overseas is great… but the TV…. Well, I wouldn’t bother.

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Are New Build Flats Good Investments? Lawrenson of Letting Focus Takes a Look

If you are thinking of buying a new build flat, be careful because it’s now clear that increasing numbers of properties bought off-plan as buy-to-let investments are being sold at large losses through auction.
Auction houses are reporting a steep rise in the number of new builds going under the hammer.
Many of these are flats bought off-plan two or three years ago with rental guarantees.
They were often bought on fixed-rate mortgages which came to an end at the same time as the rental guarantees finished, leaving landlords stuck on much higher borrowing costs, buy wth lower rental income and possibly no tenant.
It gives me no pleasure to say I have been predicting this for 5 years.
The situation is, of course, especially grim for flats where investors have bought in a block of hundreds of other investors who are in the same situation.

New Build Prices Going Down
New build prices have also gone down each month for the last three months, according to SmartNewHomes, while UCB Homeloans, part of Nationwide is one of the main lenders who has stopped lending to landlords buying new apartments. It's not the only lender to have stopped either.
Knight Frank research show that yields are now at their lowest levels on new build flats.
Chris Town of the Residential Landlords Association is quoted in “The Times” telling of one landlord in Leeds who has recently been forced to reduce his monthly rent from £1200 to £800. My message is to avoid areas where there is an oversupply or can be expected to be an oversupply of the same kind of property in the future- and where there are too many landlords chasing a small pool of tenants. This is the situation in many cities in the north and the midlands of England right now. And it will remain so for some time.

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Related Article
This article look at the credit crunch and how it is going to affect house prices generally:
http://www.lettingfocus.com/pages/myarticles_CreditCrunch.html

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Property Price Forecasts. How Can I Verify If They Are True. Letting Focus Has the Answers

Here’s a trick many property companies promoting off plan property use.
What they will do is sell the first few five or ten units at a low price to get initial finance in. Sometimes these units are sold to other companies that the builder has a “close relationship” with.
Of course, the next lot which is being sold to the public is marketed at a higher price.
They are then able to use the fact that the price “has gone up” in their marketing literature and that investors should “get in quick” before they miss the boat.
Watch out for this trick, which is especially common in property abroad.

ABOUT LETTINGFOCUS.COM

LettingFocus.com are the experts on landlord issues and I’m David Lawrenson, the author of “Successful Property Letting” – which has been the UK’s top selling property and buy to let book for the last 3 years.
We help landlords and property investors make money in property by coaching them in ways that work and which are of minimal risk.

I have been a landlord and property investor myself for over 25 years.
At LettingFocus we offer independent unbiased advice for property investors and landlords both on a one to one mentoring and coaching basis as well as through occasional group seminars.
Property syndicates and property advice in the UK is still largely unregulated and “advice” is more often more about making the promoter money than giving useful information
With no link to property firms, developers or bridging loan providers, at LettingFocus, we aim to give unbiased independent advice on where and what type of property to buy for investment, when to buy and how to buy property at a low price.
We also show you how to manage tenants properly and in ways that take up as little of your time as possible.

CHECK OUT THESE PAGES AT OUR SITE LETTINGFOCUS.COM:

THE HOME PAGE OF THIS BLOG click here: Blog
THE HOME PAGE OF OUR MAIN SITE click here: LettingFocus Home Page
NEXT SEMINAR AND NETWORKING EVENT for Landlords and Property Investors:
Next Property Investing Seminar and Networking Event
We have GREAT OFFERS on a range of products for landlords too; click here including landlords insurance, tenant referencing, tenancy agreements and more: Services and Products for Landlords
For general info on our SEMINARS AND CONSULTING click here: Property Seminars, Networking Evenings and Consulting
ONE TO ONE PRIVATE CONSULTING click here: Property Mentoring
CLIENT TESTIMONIALS from past customers click here: Testimonials
BUY THE BOOK click here: Buy the Book at Amazon

To JOIN our Free QUARTERLY NEWSLETTER simply send an email to david@LettingFocus.com - Please note we WILL NOT send spam or sell our mailing list to advertisers!

IF YOU HAVE A SITE WHY NOT LINK TO THIS BLOG OR OUR WEBSITE?

Selling services to landlords and property investors and have a national coverage? You could be a partner, please get in touch!
Copyright of Blog: David Lawrenson 2009. This blog is updated roughly once a week usually on a Monday or Tuesday.

Have you seen this article on a related topic: Buying Below Market Value

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