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Banker forfeits £500,000 in property deal
Rebecca Lowe24 Nov 2008
A CITY financier has lost half a million pounds after having to forfeit his deposit on a £3.25million property.
The banker, who did not want to be identified but is managing director of a City investment firm, signed a contract to buy the north London house earlier this year. He pulled out of the exchange when he failed to receive an expected bonus and saw his stock options fall by 70 per cent.
He said: "There is no way I can complete. I did not realise the market would collapse when I made the exchange."
He and his wife, who worked at the same bank but lost her job, may be sued for the cost of remarketing the house because failing to complete after exchange is a breach of contract.
Another buyer, in Chelsea, is believed to have lost a £1million deposit when he failed to complete on a £12.75m home.
Richard Gutteridge, partner at Knight Frank, said: "Six months ago this would have been unheard of. Deals have fallen through more and more. If someone's lost their job, or their situation has changed, they have to take a bitter decision on whether they should go ahead."
Reader views (6)
Yes.If you assume property prices will fall by 25%, that's a drop of about £800K on a £3.25 mill property so he would potentially have lost another £300K (on top of his £500K) if he had gone ahead with the purchase.
However, given that said businessman looks likely to be sued for Breach of Contract, he may end up losing rather more than the £500k.
- Rs, London, UK, 25/11/2008 13:15
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Now before all you small minded people like Fred and Richard start indulging in gleeful ignorance, think for a wee minute. If these City financiers had completed on their property deals, they would have bought houses that had diminished by a far greater amount than the deposits they forfeited...they've made money by forfeiting their deposit. Think they would have the last laugh.....but then who's laughing anyway?
- Dc, Belfast, 25/11/2008 10:00
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You would need a heart of stone not to burst out laughing.
- Richard, London, London. UK, 24/11/2008 18:41
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I've worked with city people like this before, they put down a huge deposit on a new car or house and then when their "performance related" bonus fails to materialise they end up whining about how they've been shafted, seemingly believing that the company owes them.
- Bob, Cheam, 24/11/2008 15:48
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What sad mood overcomes me upon hearing of yonder banker's predicament!
- Frederick, London UK, 24/11/2008 12:53
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Good peace of advice in today’s market always exchange and complete in the same day. Remember it’s the buyer who makes the rules now days. And also they may be an argument that if you pay more then a 10% deposit that you should be able to get it back, ask your solicitor for advice.
- Peter, London, 24/11/2008 12:46
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