Hard Times Ahead For Off-Plan Property Investors

The future is looking pretty bleak for property investors/homeowners who invested in off-plan properties during 2007. Hit by falling property prices, many are no longer able to get the mortgages originally agreed by lenders and are now facing the prospect of either defaulting on their deposits or having to fulfil the short fall from their own savings.

However, this doesn’t appear to be enough for some property developers who are pursuing homeowners and taking them to court for defaulting on their agreements.

It is believed that in London alone over 300 legal claims have been made by Berkeley Homes, Ballymore and Telford Homes against homeowners who have walked away from their deposits. Unsatisfied, these property developers are pursuing them asking them to either fulfil their contracts or pay them thousands of pounds in damages.


One such case involves Steven Dowd, who after securing two 90% mortgages on 2 flats (one a £415,000 flat, the other a £375,000 flat) is now facing damages of up to £100,000 after he tried to walk away from the deal when his mortgages fell through.

Reported to have dropped 40% in value the most lenders would give him was a 75% LTV.

Yet the most interesting aspect to this story is the difference in property price falls…

Compared to the rest of London which has dropped 14%, developers such as Berkeley are reporting property price drops of up to 40%, a clear indicator that many developers overestimated their property values back in 2007.

Faced with such hardship it is not surprising that Dowd has now started a collective campaign for buyers who have been confronted with similar situations. Aimed at supporting owner-occupier buyers who are facing thousands in damages, this campaign aims to offer companies such as Berkeley 13 options to help resolve this issue.

However, it is undeniable that hard times are ahead for homeowners who have been caught up in these schemes. According to Estates Gazette, Berkeley alone signed over 3,300 contracts with homeowners, 85% of which were off-plan.

Original Article

More About the Author

Fraser Stirling, Property Mentor Delegate

No matter what the media wants you to believe, property is still the only investment route where you can benefit from an asset that will NEVER go into zero value. Even when I was university I admired properties ability to withstand the economic elements and stay strong, even when other investment forms faltered or failed. X years on, I am now the proud owner of multiple property investments - one of which earns a passive income of £4,680 and my property portfolio is still expanding. Read more