Over the last decade there have been numerous developers selling off plan with buyers paying a modest deposit to secure purchase as a fixed price on completion of the development. In the rising property market this has been great news for many investors who managed to sell on their contracts for a tidy profit without ever buying the property. But now the tables have turned.
Property developers who sold almost anything off plan from hotel rooms through to luxury houses are now following through on build completions only to find that many buyers no longer want to purchase, willing to forfeit their deposits rather than purchase today at prices set in the peak of the property market. It seems like a good idea, just lose your deposit of say £10,000 rather than buy a property at £50,000 over value?
Unfortunately for many who purchased off plan they did not read the small print, in many cases there were clauses such that if another buyer was not found for the purchase price agreed then the original off plan buyer becomes liable for the shortfall. Today there are cases of legal action being pursued against off plan buyers who walked away from their commitment to buy. Developers are suing for the losses incurred from reduced selling prices and marketing fees.
Not a pleasant situation for the off plan buyer, but on the positive side we are near the bottom of the property cycle (no one knows for sure), but buying off plan today with two years to completion may not be a bad deal – that is assuming you know you can raise the required bank finance when the property is completed.
