Landmark case prompts UK buyers to make payment deal with Ballymore
Ballymore Properties has agreed payment arrangements with almost 60 of its UK housing customers following legal action taken by the group.
A spokesperson for Ballymore said people were realising the binding nature of a residential purchase contract "and if they default, they must pay a penalty".
Ballymore took legal action against 120 of its UK housing customers, after they bought houses off the developer's plans but then reneged on contract by refusing to pay the agreed price for the property.
The spokesperson was commenting following a recent UK court case taken by another developer in which the judge imposed penalties on prospective purchasers who were refusing to complete the purchase.
"The case has definitely helped as some people felt a property transaction should somehow be different to all other commercially binding contracts," the Ballymore spokesman added.
According to a report in the UK property magazine 'Estates Gazette', UK developers and investment intermediaries are currently pursuing hundreds of legal actions against buy-to-let investors many of whom had bought off plans.
It also reported that a Dublin-based fund adviser, Strategic Property, had lodged around 50 claims against purchasers who reneged in deals. Strategic bought properties as an intermediary from Telford Homes which is building residential units near the Olympic Village in London. Calls to a number for Strategic were met with an answering machine yesterday.
Referring to the Ballymore action, a spokesman said: "Many of them (customers) had mortgage problems and we worked with them to help. The purchasers were from a very wide demographic with only a few being Irish."
The landmark UK court case imposed penalties of £130,000 (€144,000) on a buyer who reneged on purchasing two apartments. This was on top of having to pay the full house prices. The Ballymore spokesperson said: "It doesn't mean that in all cases delinquent purchasers will suffer extra costs as well as legal costs but they are now more likely to have this decided against them." He also reported a pick up in sales recently: "Interestingly, the City banking and financial executives are back buying, particularly in Pan Peninsula," a large high-rise luxury apartment development by Ballymore near Canary Wharf in London.
According to the gazette, between August 2008 and December 7, 2009, eight parties lodged close to 300 claims in London alone against buy-to-let investors who had not completed on off-plan purchase contracts. Others to take action include Imagine Homes which filed some 40 claims.
However, some private buyers are fighting back by taking legal action against the vendors. Steven Dowd has formed the Berkeley Homes Collective to represent people who have been unable to complete on purchases of homes at Berkeley's Caspian Wharf, Royal Arsenal and Chelsea Bridge developments in London.
Investors Roy and Patricia Assersohn filed a claim against Morgan Sindall subsidiary Muse Developments, accusing it of fraudulent misrepresentation over the sale of six flats in Reading, Berkshire.