Tuesday, Sep 08, 2009
But, but ... it's not gone up 10%!
The Telegraph: Buy-to-let investors backing out of off-plan deals face court action
Oh dear, fingers burned.
Buy to let investors who bought off plan a couple of years ago are horrified to discover that they had signed contracts. These pesky bits of paper did not entitle them to guaranteed carpet bagging profits through brilliant investment insight, but have obliged them to buy properties worth less than the face value at the time, let alone what was expected.
After a series of judgments, it seems that the courts can enforce these contracts and, without funding in place from tricky to find BTL mortgages, the would be BTLers face debt action.
Posted by jonathan @ 08:54 AM (658 views) Add Comment
9 Comments
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1. growler said...
The courts are right to enforce the contracts from the developers. Tough - should ahve read the small print. the intersting thing will be if any investers can sue agents for false advise. This will be good. If the "investment opportunity" was missold with guaranteed returns or some such then we could have som fun. Eitehr way, the lesson people need to know is properdee can hurt.
2. little professor said...
OUCH!!!
3. uncle tom said...
In a world littered with small print that no-one has the time to read (who has ever read the full text of a software license, or a hire car rental agreement..) - one has to take quite a lot on trust.
I can well understand someone paying a 10% deposit on an unbuilt flat believing that the deposit was the limit of their liability - the extent of their risk.
Yes, they were gambling, yes, they were foolishly playing a big numbers name without getting proper advice on the possible downside of the deal.
Yes, they were speculating in a market that we would rather was not the subject of speculative investment.
However, I have a tiny bit of sympathy for the difficulty they are facing when trying to get out of the mess. If they could raise the cash to complete the deal, and then suffer the negative equity in an orderly manner, then that would seem just and fair.
As it is, I suspect many will end up wringing concessions from the developers, against the threat that they would otherwise be forced into bankruptcy..
4. need-a-crash said...
UT I agree. I'm sure most of these investors have very few assets to fund these purchases unless they can secure bank finance and it's not likely that developers want the negative headlines of bankrupting hundreds of amateur BTL investors.
After all it's these peoples pension and that's FAR more important than allowing the next generation somewhere to bring up a family!
5. phdinbubbles said...
UT,
I might not read the small print on a software licence or on a hire car rental but I'd damn well read it on something that costs 200-300k. Slightly less than a tiny bit of sympathy from me I'm afraid.
6. mark wadsworth said...
What PhDinBubbles says.
7. the number cruncher said...
UT - your compassion seems selective, why should we be generous to people who recklessly speculate, yet less generous to say a single mum in a bedsit who is temped by a dodgy loan company.
Tough on BTLers and tough on the causes of BTLers that's what I say
The whole problem is that these idiots thought they where smart investors - when they where chumps. The more stories we have of these idiots going bankrupt, the more they will be put off property investment. They can then turn their labours to something that will help the economy instead of destroying it.
We need more debt written down so we need more bankruptcy, if we are to build our economy anew.
8. uncle tom said...
Somehow, I prefer the thought of a BTLer having a negative equity millstone round his neck for twenty years, than of him going bankrupt, only to come charging back into speculative property investment in five years time.
The thought of the invester threatening bankruptcy in order to force the developer into giving him a soft landing is even less appealing..
9. the number cruncher said...
Mmm... like your thinking UT... Use the spoon-Not the knife