Saturday, Aug 08, 2009
They didn't see the crash coming.
Guardian: Berkeley Homes: Buyers trapped in mortgage nightmare
Dozens of young professionals say they face financial ruin because one of Britain's biggest housebuilders, Berkeley Homes, is threatening to sue them for tens of thousands of pounds after they signed up to buy new flats before being left high and dry when the property market collapsed. Some claim they face losing their life savings, being made bankrupt and even being made homeless because a lack of mortgages means they are no longer able to complete the purchase of apartments they agreed to buy at the height of the boom. In some cases the flats are valued at 40% less than the original price and mortgage offers have been withdrawn, leaving buyers in the near-impossible position of having to find perhaps £100,000 or £150,000 to plug the gap.
Posted by mytimeisnigh @ 11:29 AM (1681 views) Add Comment
18 Comments
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1. novice pete said...
What a racket the property market is! UK has been a fool's paradise for many.
2. bleakhouse said...
Berkeley Homes look like they will lose money. They will have already booked the profits on the firm sales off plan. Now they will have take these people to court, which is expensive,and quite possibly get nothing. Everyone in this property game seems to be sliding down the snake. I wonder how many of these people thought they could be successful flippers? Actually, I wonder how many of these people thought.
3. mark wadsworth said...
Oh dear. Complete the sentence: "If something looks too good to be true, then ..."
4. stillthinking said...
Evidently when the music stops you don't want to be holding the parcel.
5. paul said...
Hang on a minute.
There's a key word here which the article is very careful not to even mention (bleakhouse picked up on it):
"OFF-PLAN"
This has a special meaning which is that you commit to the sale before its even built. This allows you to pretty well instantly 'flip' the property after its built and people come round to view it. In a rising market its seen as an easy ticket to riches. When the market turns, well that's a different story but lets be blunt here there's only one motivation for buying off-plan:
GREED
For the article to 'forget' to mention these things is dishonest at best.
6. enuii said...
Tough. Be sued, take the hit on the chin and learn the lesson.
7. Mrmx9 said...
£450,000 for a flat in Bow. You could buy two houses for that a few stops down the district or central line!
8. mrflibble said...
Betting on any leveraged investment product offers a huge degree of risk... Housing is no exception... People need to understand this before they get involved and set their capital and leverage levels accordingly...
Sure it's sad that these poor saps have lost a pile of money, but it's equally sad that a huge number of young people are trapped in rented accommodation throwing good money after bad into the pocket of a BTL scumlord. That's what happens though when a home is no longer a home and instead in just a way to endless unearned riches...
9. will said...
Perhaps in the future a prospective Berkley client could add a clause whereby Berkleys will guarantee the high level of borrowing required.
10. icarus said...
If you get caught on the way down it's "we just wanted a roof....."
If you ride the wave it's "we've made ££££ since we bought in...."
11. vacuouspolitician said...
Yes a very very tough lesson to learn. But will they have the chance to learn again I wonder?...How long will it take them to pay this off, after all it takes an awful long time to earn the sums of money they are alluding to...
I just wonder who wins in all of this mess...?
12. gone-to-colombia said...
We need this kind of hard lesson to be learned, such experiences will form the psychological barricade that will stop others in the future from this foolishness.
13. Tyrellcorporation said...
'Buyer beware' ... It's a cliche, but cliches are there for a reason.
14. tyrellcorporation said...
'Buyer beware' ... It's a cliche, but cliches are there for a reason.
15. gone-to-colombia said...
These young 'professionals' cannot offer stupidity of lack of education for their poor judgement. How can anyone take so lightly decisions that are so clearly important?
God help anyone who relies upon such as these in their professional roles.
16. yorkshireman said...
I do have some sympathy for these people, but they entered into a contract of their own free will and a contract is a legally binding agreement. The value of your investment can go down as well as up, even if it is "property".
17. uncle tom said...
It's not difficult to feel a little sympathy for these people - they got caught by a 'what if..' scenario that they hadn't considered - or if they had, assumed that their liabilities were limited to their deposit, having not read the small print.
However, you have to ask, 'why did they contract to buy so long before the properties were completed?'
Answer: They were gambling on prices rising. And they lost the bet..
They are not dumb people who need protecting from a greedy developer, they are intelligent people who thought they were cleverer than they really were.
Tough.
18. europeanbear said...
I would not give them too much sympathy. I would need a mortgage to buy something of that price as did most of these buyers. I would never comit to a binding contract without an equally binding mortgage agreement from the bank. No they recklessly signed a contract, handed over the 10% deposit without ensuring they have finance for the balance on completion. But then as someone said they may have planed to "flip"....
Nope, a fool and his money are easily parted.