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Young homebuyers face legal action and bankruptcy after off-plan flats plunge in value
Mira Bar-Hillel and Sri Carmichael8 Sep 2009
Young Londoners are facing financial hardship because they can no longer afford homes they agreed to buy off-plan during the boom.
One of Britain's biggest housebuilders, Berkeley Homes, is threatening to sue customers for up to £100,000 each after they failed to honour sales contracts.
The developer has already taken their deposits of up to £60,000 a time, meaning many have lost their savings.
Now 83 buyers say they will be forced to make themselves bankrupt if they are pursued for more money.
The buyers are paying the price of a gamble they took when property values appeared to be rising inexorably.
In 2007, as the market soared, hundreds agreed to buy flats from Berkeley Homes at Caspian Wharf in Docklands, and Royal Arsenal Riverside in Woolwich, that had yet to be built - known as buying off-plan.
They bought these homes, now finished, for set prices of up to £600,000 and each paid a 10 per cent deposit.
They hoped the properties would have risen in value when it came to paying the balance two years later.
But as the credit crisis sparked a slump in the housing market, the finished apartments are now being valued at up to 40 per cent less.
The problem has been made worse by banks pulling 90 per cent mortgage deals and refusing to lend the buyers enough to complete on the original deals.
As a result, 83 of them have been forced to default on their contracts. Most are private homebuyers, not investors.
Berkeley Homes is legally entitled to keep their deposit and sue them to recover the difference between the original price agreed and the price at which the property can now be sold.
Berkeley chief executive Tony Pidgley has now written to housing minister John Healey urging him to lend buyers government money to buy the flats - or, alternatively, force nationalised banks to make larger loans.
The Government has refused to get involved in what it sees as a contractual dispute.
Many buyers claim they have been asked for financial information which they fear the company is using to assess how much money they could recoup from suing them.
The Standard has seen letters Berkeley has sent buyers, suggesting they ask richer family members to remortgage their homes to raise the cash.
Steven Dowd, 30, and Helen Glanfield, 43, were forced to default and forfeited their £80,000 life savings.
In 2007 they paid deposits on two two-bedroom flats in Caspian Wharf valued at £375,000 and £415,000.
Berkeley has now put the properties on the market at much lower prices, and written to them warning it will pursue them for as yet undecided "damages". Given current market values, this could total £160,000.
Mr Dowd said the stress has ruined his health and left him struggling to hang on to his job. "We have no more savings," he said.
Nick Raynsford, former housing minister and MP for Woolwich, where many of the buyers live, said he had discussed the issue with Berkeley.
He said: "While homebuyers have legal obligations, it is unreasonable to expect them to bear the full financial loss without assistance from the housebuilder.
"I sincerely hope Berkeley Homes will seek fair solutions which do not harshly penalise individuals who bought in good faith more than a year ago."
A Berkeley Homes spokesman said all buyers had received legal advice about their obligations before exchanging contracts and the firm was continuing "an open dialogue".
He added: "Berkeley Homes has asked purchasers to appreciate they cannot be released from contracts or offered price reductions.
"Manifestly, this would be unfair to those who have been able to complete."
'WE TRIED EVERYTHING TO REACH A COMPROMISE'
Euan Robertson and Catalina Robertson-Aguirre, both 30
The couple bought a three-bedroom flat at Caspian Wharf for £450,000. It is now worth £310,000 and the couple face being sued by Berkeley for about £120,000.
It means the IT consultant and his translator wife have been forced to put their plan for a family on hold as they cannot move from his studio flat in Ealing.
Mr Robertson said: “Having never missed a payment in our lives and carefully managed our finances, this will probably leave us bankrupt. We tried everything to reach a compromise with Berkeley.
“But they kept telling me they didn't think I'd tried hard enough to find the money', although my existing flat — which I bought from a Berkeley subsidiary in 2004 — is now worth around £50,000 less than the mortgage... and they know it.
“They suggested I take out £25,000 as a personal loan and max on my credit cards. Then they suggested borrowing on my parents' house and didn't believe me when I told them it was worth only £50,000. Bankruptcy is not something we ever imagined but we have no other exit strategy.”
Gian Carlo D'Urso, 31
The project manager with Hakkasan Limited restaurant group agreed to buy a studio flat in Caspian Wharf for £215,000 at the peak of the boom in September 2007. He put down a 10 per cent deposit of £21,500.
But by July this year, when Berkeley Homes asked him for the remainder of the money, the property was valued at just £185,000. The banks would only lend him £140,000, so he was missing more than £50,000.
“I tried to talk to Berkeley Homes to come to some kind of compromise but they just ignored me. It was a horrible situation and I had to ask my family for money, but it still wasn't enough.
“I had to default and Berkeley Homes kept my deposit. Now they could sue me for whatever they lose on a future sale as well, which looks like it could be £30,000.
“I have been living a nightmare. I'll have to start from scratch all over again, which is so depressing, but I suppose at least I'm young.
“There are so many people in my position all over London and other cities in Britain, some of them are families and people who have saved up for years to buy a home. It's really sad.”
Reader views (62)
Could anyone tell me how this situation ended?
- P. Eim, Amsterdam, 20/08/2010 08:24
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I know so many people in this boat. They are being pursued for the loss in market value however I know many of them found No Win No Fee legal representation through a company called MyAccess2Justice. There are so many horror stories and I reckon there will be lots more. Lets hope 2011 is a better year.
- Evan Williams, radlett, 18/04/2010 04:13
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This has happened again with Galliard Homes. Many investors who invested in Westminster Park Plaza development can't get mortgarge and are about to be handed completion notices. If purchaser can't complete, investors will lose their deposit and a further 4% for 10 days after completion date. Galliard maintained thorughout that the mortgage will be available through their approved financiers. Galliard are advising purchaser to look for the balance elsewhere.
- Hp, london, 07/02/2010 13:15
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I think so many people not getting the point, its a recession, the prices have dropped and lending scrapped, so how is this the fault of the buyer, if it was a drop in price alone and people were not entitled to mortgages, it would be risk of an individual, is a nationwide issue, if not a global one, the government should have stepped in earlier..drop in price and no lender, how can this be in favour of the seller??!!!!...
- Kish,, Ilford, UK, 22/01/2010 01:05
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I purchased a 1 bedroom flat in the Landmark at Marsh Wall for 335,000 I put down my deposit and owe 292,000,
at the time of purchase, banks lent 85% for buy to let mortgages but now they only give 75%, I can not find the rest of the deposit
I hate to walk away, is anyone out there interested in coming in with me as partners or willing to lend me the rest of the deposit
- M, WALES, 18/01/2010 22:16
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I think the builders should return the deposits and go to the government or the bankers for there money, some peoples comments are so jealous I feel sorry for them, these people did not take a gamble the banks took the gamble with there money and yours, and it is because of them everyone in the uk has suffered with money, property or redundancy,
- M, WALES, 28/12/2009 15:07
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These property companies are being (as usual) greedy and unreasonable, off plan properties are marked up at point of sale by 30/40% and although they say they cannot re-negotiate the price of these properties they are prepared to sell them at a lower market price to others, so what is the difference in accepting a lower price from new buyers or accepting a lower price from those unfortunate enough to put down deposits before the sands shifted? No difference at all, but to the developers they can walk away with the deposit and then re-sell at a lower price, making more money for themselves into the bargain. The government should threaten to ban off plan property sales and then maybe they would have a re-think. I am a small property investor and nothing would entice me to part with money on a property as yet un-built (then or now) as anything can happen and in this case did. I feel immense sympathy for these people who were trying to do the right thing and to provide for themselves and their families. Real speculators with money to burn are the ones who can shrug their shoulders and walk away, the honest purchaser is left between a rock and a hard place trying to find an enormous sum of money for property that's value has fallen or to apply for bankruptcy which is a stigma that will stay with them for life, plus of course (in many cases) the loss of their life savings.
Gill London
- Gill, London UK, 11/10/2009 22:25
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I invested in a 700K off plan flat near canary wharf, paid 10% deposit, had a mortgage at the time of exchange a year and half ago, can't get one now and have been made redundant, so can't complete. Being pressed by developers solicitors to complete, if it wasnt for the fact that i will lose my life savings of £70k i would have just gone bankrupt, and started over in a years time. Can anyone lend me £630k + stamp duty and solicitor fees?
- Thomas, London, 08/10/2009 14:49
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I think that the developers are trying to ruthlessly rinse these people. Sure, some have clearly speculated and understood the risk involved but advising your 'clients' to load themselves with more debt is scandalous. You just have to read the marketing blurb on these things to understand that these risks were never explained - and potential rewards over-emphasised (just google off plan london). Surely, to sell a 10x levered financial product you have to prove that you are dealing with financial experts - like trading an OTC derivative. For those that were not financially astute and were given the hard sell, these contracts were awful and I think possibly illegal.
- Stan, London, 05/10/2009 17:19
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These people took a risk and it didn't pay off, but if the govt bailed out the banks, the car industry and the MP's then surely at the very least they should force the banks to hold the lending criteria that was in place at the point of exchange of contract. I totally believe they should lose their deposits but if the govt will help those who lost their jobs pay their mortgages then why won't they help these people?
- Mo, London, UK, 28/09/2009 12:52
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Personally,I take no pleasure in seeing so many people lose money and forced into bankrucy. I agree with comment already made. Who could invisage 40-45% drop. Not to mention the Banks. For many it was a way of creating a better life for them and their children. Teachers, nurses, amongst many more whom could ill afford to take a chance but did will now lose everything and be made Bankrupt. Life goes on for any whom can take a lose, but these are few. MP's return 1 duck house and a few grand and it's all over, not for many of these people. Its ok to plug banks pension shortfall with tax payers money. When things go wrong on such a massive scale no one except MPs walk away. Can you imagine how these people must be feeling and how hard it is to move forward. Well, i can imagine what labels people will give me but a world without understanding and compassion is worthless. I care about your losses and hope no matter what it all passes and you are twice as strong. Talk about put the boot in. Anyone who takes pleasure in seeing these people suffer are sick. Ok they wanted to make money. That really so bad ? Main thing is to move on, and keep your health and family together. Speak to people who can empathise, and support you. Negativity is not what you need or deserve. You are one of thousands of people whom are going through this, and you will cope and survive. It's not cancer, you have people whom love and care about you. I have seen what debt can do. Stay well!!!!!!!
- Darren, manchester, 18/09/2009 06:18
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Seems to me very much like taking on a high expense item then losing your job. Even if redundancy is no fault of your own, you can't expect the government, through the taxpayer, to bail you out. Up and down the country there are many, some with families, who have lost everything; homes, jobs, car. Let's hope these 'London would be high flyers' and luxury property developers, don't set a precedent by having special financial dispensations made just for them?
- Oliver, West London, 18/09/2009 05:18
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These people aren't trying to pay less for their flats - if they could obtain mortgages (or another reasonable alternative) they would happily complete on the original price. No-one could have predicted the value of flats in London to fall as much as they have or banks to have cut their lending so drastically. Why can't Berkeleys meet them half way - prehaps offer shared equity like Barratt Homes do? What is Berkeleys going to accomplish by bankrupting up to 100 people? And what exactly was these buyer's original deposit for?? - surely this is the cost of the risk they took if they could not complete.
- Kn, Bath, 18/09/2009 05:18
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I am flabbergasted Mira Bar-Hillel, is finally getting round to this issues.
I wrote to her and pleaded for help with the Berkeley Group and the way they treat their customers.
Mira Bar-Hillel did not want to know then, so, what changed Mira?
- Snrmo, United Kingdom, 18/09/2009 05:18
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I went to the casino yesterday and placed a $40,000 downpayment on roulette black 16. I lost my money! Can someone please dig me out of this hole its not my fault.
If you cant stand the heat stay out of the kitchen as my Dad used to say
- Toughtitties, Melbourne, 18/09/2009 05:18
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"Steven Dowd, 30, and Helen Glanfield, 43, were forced to default and forfeited their £80,000 life savings. In 2007 they paid deposits on two two-bedroom flats in Caspian Wharf valued at £375,000 and £415,000"
They bought two!!??? They were probably mouthing off at dinner parties at how they had managed to buy another 700k plus of property and how smart they were. Sorry, you gambled (through pure greed) and you got burnt. BH have very right to enforce a legal contract.
- Ipd, London, 18/09/2009 05:18
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Hats off to Berkeley Homes for what seems a master stroke. Cosy relationships with toothless local councils, gullible customers to boot. The Woolwich development in particular shows how goal posts can be moved to help nullify cold commercial winds for the big boys. With a third of the development original earmarked for affordable housing, this porportion was doubled, an effective contingency plan which no doubt will be subsidised by the tax payer and not exactly assisting in valuations.
- Mick, London, 18/09/2009 05:18
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The situation of the couple buying not one but two flats in the £400K bracket shows that greed or at the very least, the prospect of expected financial gain was the motivation for people's actions. I suppose the assumption was buy one to live in, rent out the other at a healthy profit and service both mortgages. If you speculate, you should be prepared to ride the rollercoaster down as well as up. It's a shame for the people seeking to buy a home. Speculators got what they bargained for.
- Edward Thompson, Bedfordshire, 18/09/2009 05:18
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Tough !! it's a gamble and that is the risk you take. If you can't afford to play, then don't.
- Tony, Barnet, 18/09/2009 05:18
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Should we have sympathy for these poor speculators, sorry, I mean home buyers, after all, as the properties are in the £600,000 range, they must all be first time buyers, must'nt they?
- Kevin Sullivan, Roehampton, London., 18/09/2009 05:18
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I'm confused here. If prices were going up then I presume that the buyers would be happy to borrow from their grannies if necessary to complete. Now that prices have dropped they are trying to wriggle out of the contract. Hats off to Berkeley Homes I say.
- Lloyd, Barnet, 18/09/2009 05:18
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Quite right Berkley Homes. Anyone who signed on the dotted line was accepting a risk. The market moved against them. Tough. If it had gone in their favour, they'd have flipped the flats on to a third party purchaser, pocketed the difference and then told anyone who'd care to listen how canny they were at playing the property market. Only an estate agent or a mortgage broker would have any sympathy for these people
- Max, london, 18/09/2009 05:18
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They gambled. They lost. End of
- Seenitall, London, 18/09/2009 05:18
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Max,London.
'Only an estate agent or a mortgage broker would have any sympathy for these people'
In my experience both of these scummy types have no regard for anyone or anything save their commissions
- Andrew Nicholls, Ely ,England, 18/09/2009 05:18
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There's a saying, 'don't count your chicks before they hatch'. These homebuyers knew the risk they were taking; buying off-plan property is far too risky unless you are a property investor and not a home owner.
That said, I hope the selling party find it in their moral obligation to try and come to a fair solution with their debtors.
- Simon, Leeds, UK, 18/09/2009 05:18
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Tough on the buyers. They chose to gamble with property prices and then hoped to make a killing, either selling on or renting at high prices. Get on with it and stop moaning. Too many people think it is easy money in being a landlord these days. Too many TV programmes explaining how to buy for rental.
Amber in Mitcham
- Amber In Mitcham, Mitcham Surrey, 18/09/2009 05:18
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Why can't Berkeley just sell the flats to the depositors at the value they have now put them onto the market? Seems like a sensible solution. Berkeley have a buyer without marketing costs, plus they don't incur any legal costs, or any other costs, etc. Yes they won't make as much money as they thought but that was only a paper exercise and this is now turning into a PR disaster for them. In the current market they will struggle to find anyone else to take these now-tainted flats on.
- Trevor, London, 18/09/2009 05:18
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When I bought my first flat in 2007 it wasn't with a view to make money it was to have my own home, not some grotty rental. And this will no doubt be the case for many of those 83 mentioned. However when I bought I did so well within my means and considered the risks, which is why 2.5 years on I can still afford my flat.
Clearly in the case of the 83 individuals who now evidently feel victims to the credit crisis and housing crash they didn't carry out the same due diligence.
Sad and life destroying as this will be for many hopefully others will learn. There is a lot to be learnt from our Grandparents generation.
- Caroline, London, 18/09/2009 05:18
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This is a very painful situation for those involved but call me old fashioned -your word is your bond - and if your word is not good enough then a contract will do.
I don't suppose many of the people who bought property from developers in 2003 walked back into the office in 2007 and offered to give the developer a share of the money that had made since 2003??....why should it be any different now that the situation is reversed?
There are a lot of lawyers making money from giving bad advice to desperate purchasers who have entered a watertight contract with the developer.
- Dc, London, 18/09/2009 05:18
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What suprises me is that people who are obviously intellegent spend so much money on an speculative adventure without going to see an accountant for advice. Did nobody realise that one day the "bubble would burst"or perhaps they could become redundant or be able to fulfill their commitments.
- Jim Allan, Lake District, 18/09/2009 05:18
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Funny how little thought people put into what is the most expensive purchase they will make in their life.
- Dannyp, Egham, 18/09/2009 05:18
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Who's doubting their "word is their bond"? They appreciate they have a contract and want to complete but now can't through external factors. If you make a prudent decision to buy a home at a price you can afford using instruments that are available from every lender (backed up by BH sales staff at point of sale) but the rug is unexpectedly pulled from under your feet, then what are your options? It's CAN'T PAY not WON'T PAY.
Remember, these people didn't buy futures on Berkeley Group shares. They're not investors. They bought into homes for their future. Bullying developers using customers as an insurance policy over and above the deposit they forfeit and uncommercially bankrupting them through pointless legal action rather than find a compromise simply cannibalises their industry and NO-ONE (outside of cash rich investors) buys new homes. Well done Pidgley?! I think not! I dare say the other developers that have seen the issue and HAVE tackled it head-on would agree.
- Steven, London, UK, 18/09/2009 05:18
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This housing madness is truly a parable of our time.
- Ted, London, 18/09/2009 05:18
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Berkeley Homes has been subsidised by the taxpayer at Royal Arsenal through their (some might say very, very cosy) relationship with the London Development Agency who owned the land and sold it to the developer. At that time, the LDA had a reputation in the industry for being a very weak and naive public sector negotiator up against a ruthlessly commercial one so taxpayers should have little doubt that we came off worst from that deal.
BH should therefore not be treating naive buyers in this manner, not least because they are deterring future buyers from buying their properties.
- Rupert, East London, 18/09/2009 05:18
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(Mr Raynsford) said: "While homebuyers have legal obligations, it is unreasonable to expect them to bear the full financial loss without assistance from the housebuilder".
If instead they'd bought Marks and Spencer shares with the money, gambling that they'd rise in price, would he argue that M & S had a duty to help them if the price fell instead? The stock market wouldn't last five minutes on that basis!
As DC says, they weren't about to offer the developer a share of any subsequent profit: perhaps profit-share deals could become a sales device in the housing market in the future, but it would just be another level of speculation in a key commodity.
It's sad to see people get into difficulty,but people who make a contract should stick to it, or nothing works.
- Mdj E10, london uk, 18/09/2009 05:18
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I am sure all of these purchasers have looked at all options but a large company asking them to get relatives to re-mortgage their properties to help out is unbelievable. Whilst many close relatives are likely to try and help if they can who in their right mind, in this climate, would remortgage their home and risk losing it if the purchaser defaults on what is likely to be high interest mortgage on a new flat.
- Andy, london, 18/09/2009 05:18
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The credit crunch has been severe, no one could really plan realistically for such widespread losses. Its across the board. Even woolworths MFI Allied Carpets couldnt
- Michael, London,UK, 18/09/2009 05:18
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I follow this development in earnest as I almost paid a deposit on a £300,000 two bed flat in the Royal Arsenal development in 2007. After several visits to the show apartments and development, I was constantly told prices would rise with the olympics, crossrail, dlr coming to woolwich,yada yada yada. They even showed me a borad with all the contracts already exchanged.
However one thing I could not get my head around, having owner other property in the area, I could not fathom why pay £300,000 for a flat when you can get a freehold 4 bedroom house for less, less than a mile away. My doubts continued and needless to say, I dithered. Sales staff probably viewed me as a timewaster as so many others were paying their deposits.
As the mortgage crisis developed, I again called, just to see if they reduced the prices, as I expected at that time it was too late, they could not now reduce prices as others already signed contracts for full asking, and as we can now see are unable to pay. The apartments are now complete and look nothing like the promo material, painted in a dull grey which looks like a prison.
Sour grapes? maybe, but I still have my hard earned cash.
- Wolf, Woolwich,UK, 18/09/2009 05:18
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the point nobody has picked up yet is that the two schemes in question are poorly located and were hideously overpriced in the first place, especially to off plan buyers who should have enjoyed a discount on the market price at the time to offset the risk of investing in the future. There are many other off plan investments in superior locations which now reflect the current market values. Judging people for being 'greedy' when you have no idea of how hard they might have worked to gather the original investment money is typical of the 'chip on the shoulder' attitude of the doom mongers who are delighted with the current situation as they feel it vindicates them for not getting on the ladder during the boom times. The irony is that they probably can't get on the ladder now either as the credit markets are in such a poor state. Unfortunately the poor souls at Berkeley homes are slaves to the banks just like many of us, and they are just sending the bad news down the line.
- Kieran Sherlock, brighton, 18/09/2009 05:18
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My name is the kind of comment that I had to listen to when a double digit growth in house prices in a low inflationary environment finally failed, and not before time. People need to take a bit more responsibility and stop wingeing about their lot.
I decided not to buy and save my cash for the reasons outlined, to now find myself suffering rubbish interest rates and my currency devalued by quantative easement, as government attempts to prop up housing values artificially to keep votes.
Prices here have not fallen anywhere near to where they should be; look at other countries and 50percent drops; let's see assets return to their true price, and not ramped up by people always believing that certain assets only go one way
You pays your money you take your chance; we have crippled this country for the next howeverlong with ukPLC and its deficits
The term fire sale prices is pure supply and demand, that the same people crowing now for govt support used to explain to me why I should own my own house
I don't want to pay for anyones mistake, so sac up, take the loss and learn, doing your homework a little better next time.
- You Dont Own Your Own House; Are You Mad?, london, 18/09/2009 05:18
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I’m not saying these buyers should be bailed out with the tax payer’s money or Nationalised banks should be forced into lending them money… but from Berkeley’s point of view (which is to make as much money as possible), how is suing a load of people for money they don’t have the best option? It doesn’t change the fact that they will have to considerably drop the prices from the originally agreed to resell these properties now tainted with this stigma. Along with seriously putting off potential future buyers for their business (particularly off-plan buyers) what are they going to gain? So buck up Berkeley – it’s in your interest to solve this outside of the courts!
- Kn, Bath, 18/09/2009 05:18
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I think some people who have commented are missing the point and just focusing on the fact that those who gambled deserved to be burnt.
Sure, those who were betting for prices to rise and loaded themselves with 2 flats had taken a risk and unfortunately it failed so they have no one to blame. However, there are many off-plan first time buyers like the last story of Giancarlo who put in his life savings for the deposit in hope to live in it in the future.
I too bought a flat off plan and at the time, I simply did not want to load myself with such a big obligation yet as I'm still young and went with something that would complete in 2 years time. I wouldn't have predicted by that time, it would be impossible to get a mortgage! The major problem is the fact that mortgage providers, for new builts would only lend out a much lower percentage of loan-to-value than if you are buying a non-new built. Some people like Giancarlo are earning and can pay the interest but they simply can't make up such a large difference between the original price and the loan they can get!
Therefore, people should stop attacking the home buyers who are suffering from the consequences of the market and instead should demand the developers to be more flexible on selected cases with those who may just be slightly short in meeting the obligations.
- J, London, 18/09/2009 05:18
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They obviously didn't read or believe the bit on the mortgage T&Cs that says "The value of your home may go up or down..."
- Peter, Harrow, UK, 18/09/2009 05:18
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Why didnt they just realise the market in 2007 was unsustaineable and stupidly bought at the peak. Its a no-brainer. The market was heading for a crash, sooner than later. Anyone buying property in the last 3 - 4 years has unfortunately been stung, but it was so obvious, except those with rose tinted specs and some spare cash.
- John, london, uk, 18/09/2009 05:18
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They knew what they were doing at the time.
They chose to live above their means and add to the burgeoning London population instead of looking for a more manageable property elsewhere
They failed to realise that property has not been a stable 'investment' for a while, they should have been looking for a 'home' instead.
I have no sympathy for anybody moving into London to make money from property.
- James, London UK, 18/09/2009 05:18
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Their only hope is if they did not get independent legal advice at the time. If they used solicitors chosen by the builders or estate agents there is always this possibility. Any advice should have been in writing.
- Jack Spratt, Richmond, Surrey, 18/09/2009 05:18
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And if prices had rocketed again, how would the buyers feel if the developer, said they had to cough up more for them?
You gamble on the UKs still insane property market and you have to take the rough with the smooth. Tough. As for the developer asking the tax payers to help; sit and swivel!
- Rich, London, 18/09/2009 05:18
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Another case of seeking to privatise the profit, but socialise the loss. If someone commits to buy something for in the future for £400k+ (or two of something for £400k+ in the case of one couple above) and isn't aware of the risk that it might fall in value they are a fool. If they were aware and took the risk then that's just life.
Horrible if you've made that mistake, but why should someone else pay for it?
- Niko, London, 18/09/2009 05:18
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If the value of their flats leapt in value after purchasing them would the buyers think it acceptable for Berkeley Homes to demand some of that profit? Let me think...
- Steven, London, UK, 18/09/2009 05:18
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Anyone who had a modicum of intelligence would have known the housing boom was false. The buy to let bubble was bound to go bang eventually and buying off plan was the ultimate expression of greedy gullibilty.
Whilst I take no pleasure in seeing people ruined, the truth remains that they only have themselves and their shortsighted greed to blame. A very fitting finale to the era of the Brown Clown and all his works.
- Andrew Nicholls, Ely ,England, 18/09/2009 05:18
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You pays your money you take your choice. Values of properties go up AND down!
- Sue, Orpington, Kent, 18/09/2009 05:18
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Most buying off plan is driven by greed and the desire to make a profit. After years of success, this time it went wrong. I have sympathy but there are more deserving causes out there.
- Sa, London, 18/09/2009 05:18
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It is becoming clearer by the day that the property market has a long way further to fall.
- Simon Ellis, London, 18/09/2009 05:18
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Hilarious! Property goes up for ever. Phil and Kirsty said so! Wrong. These greedy people have been caught out. Had they rented somewhere instead of plunging into the housing market at the top of the biggest boom in history (like most sensible people in need of a place to live) they not be so badly out of pocket.
- Neil, London, 18/09/2009 05:18
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greed is not good! sucked in spat out.
- Jas, paddington, 18/09/2009 05:18
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when you buy a flat/home these people where buying a home, unfortuanately the housing market did crash but to be fair these are ordinary people so how could they know. Also they probably had the mortgage agreed in principle and would have had a bank valuation at the time so again not the buyers fault, these things happen and i do truly feel sorry for the buyers as for berkely homes they could be more understanding and drop the price so they at least get the sale instead of bankrupting these buyers i feel it is pure greed on there part.
- Simon, HEMEL, 18/09/2009 05:18
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Berkley Homes is acting disgracefully. This is an accounting trick. They are using every device in an attempt to drain their buyers of every penny they have, after which the buyers will be forced into bankruptcy. The bankrupts' assets will be put up for sale at a knock-down price and Berkley Homes will probably buy them, using the cash their buyers have already paid them. The properties will then be sold again, probably on a rising market at their full prices.
This is how a ruthless developer like Berkley Homes can sell the same properties twice over and be paid for doing it, while at the same time shifting all the risk of a falling market onto their less savvy customers.
- Kate, London, 18/09/2009 05:18
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It does seem relatively short sighted, and I have no sympathy for people buying 2 or more properties. They knew the risks, and that risk is bigger still if you are greedily buying two properties.
Having said that, I think it is wrong that Berkley Homes are persuing them for the money. It is quite obvious that they will never be able to find a lender willing to give more than the property is worth (not anymore anyway)
they should re-negotiate the price and create some sort of tie in with a mortgage provider to provide the loans needed (the rates could be higher to offset the higher risk represented) at least it would give these buyers a way of staving off bankruptsy.
Berkley homes have created themselves a complete PR nightmare with this one.
- Alan, London, 18/09/2009 05:18
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The reason the places are plunging in value is because they are all in east london - the crime ridden immigrant ghetto side of our city. It was Livingstone's idiotic idea to put new ugly tower blocks there under the guise of 'regeneration'. It has obviously failed and Boris should tear them all down immediately.
- Sarah, London, 18/09/2009 05:18
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Own goal for Berkeley, Id say.Used to work in housebuilding -VERY cutthroat..but what buyers are going to go back to Berkeley in future when all they needed to do was offer fractional ownership or sim....having all your personal savings taken off you, for nothing at all, is the stuff to make these buyers v bitter and they will spread the poison.....NOONE wins... except lawyers, again!
- Mary, london, 18/09/2009 05:18
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Some of the comments here are pretty naive and one-sided in my opinion. Why do British people have such a craving for beating down those who are a little adventurous and take risks which don’t pay off. It has paid off for many people and many people will lose also. Anyway my main point is this: Essentially the problem faced by these unfortunate people is not merely limited to Off Plan or Buy to Let investors. If an individual or even a "sensible" family purchased a pre-built property in 2007 (of similar nature)and two years later needed to remortgage, they would be in exactly the same weak position! Yes people shouldn’t expect house prices to keep rising but come on who would have predicted in 2007 that Lehman Brothers would be gone today and AIG would be on its knees. Contrary to what people are saying here, I’m sure many investors considered that their investments could drop as well as increase, but 40% falls – you can’t blame anyone for not expecting that. So come on, stop being British and criticising people for trying to get ahead in life; if it wasn’t for early investors where would developers source their initial seed money to start projects in this country.
- Charlie B, London,UK, 18/09/2009 05:18
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Greed it's wonderful! All the signs were there to be seen by all. Only those with a vested interest in pie in the sky could not would not look beyond rose tinted spectacle's.
Let me tell you folks for when the next boom bust comes. When you meet a friend who says hello how are you and with the next breath says how much is your house worth "SELL" because its gone passed critical.
- Mike, London, 18/09/2009 05:18
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