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Guest rigsby II

Why Would A Developer Buy His Own

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Guest rigsby II

I've seen a couple of properties that have just appeared in the land registry data, looking as if they have been sold, yet they are still up for sale by the developer.

http://www.rightmove.co.uk/viewdetails-4463404.rsp

http://www.rightmove.co.uk/viewdetails-4463401.rsp

I offered £160k on number 3 because the LR data said number 1 sold for £160K last year, but this month number 2 has appeared in the data and apparently sold for £232K (It was not there when I offered - thats probably why I was turned down flat)

http://www.houseprices.co.uk/e.php?q=Mason...S****horpe&n=10

But number 2 is still for sale by this developer. Why did he apparently buy it and then try and sell it again ?

Same with this one

http://www.dezrez.com/DRApp/Search.ASP?WCI...ar&WCE=00263491

These prices have been up and down like a yo-yo, they offered it me at £132K for the one in the middle, the developer lied and told me a youngle couple had bought number 1, but actually they were renting it and now he's trying to sell it again. The one in the middle, he is trying to rent it because it wont sell.

http://www.houseprices.co.uk/e.php?q=S73+0PL&n=10

Is it a tax or accounting dodge, transferring profit/loss between financial years, a way of releasing equity giving him some cashflow or a way of upping the LR values ?

I don't know, I think something dodgy is going on and these are just a couple I know of.

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It's very common Rigsby.

Developer builds 10 flats worth £100K each at valuation.

His granny "buys" 2 for £150,000, his sister-in-laws cousin buys one for £160,000 and then his mates dog buys another for £165,000.

He then advertises "last few remaining plots available this weekend only at 20% discount just £128,000"

That's how they work it I'm afraid.

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Guest rigsby II
That's how they work it I'm afraid.

Suppose so.

Very expensive with stamp duty though.

And they arent selling either :D

I felt like saying to the EA, please keep plot 3 nice and warm for me through the Winter, but wasn't quick enough, they hung up after my derisory offer.

:)

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Developers may also be using expensive commercial loans for the build - ones which may also be time-locked with penalties, if the properties don't sell the easiest way out maybe to whack a few of them on personal morgages to put money into the business clear the loan(s).

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Guest rigsby II
Developers may also be using expensive commercial loans for the build - ones which may also be time-locked with penalties, if the properties don't sell the easiest way out maybe to whack a few of them on personal morgages to put money into the business clear the loan(s).

I thought it would be something like that.

A kind of MEWing to buy back their own unsaleable houses.

So they have to pay admin fees for taking out the new loan, solicitors & survey fees and stamp duty - ouch, and as its been bought, presumably reduced rate council tax as well every month. And the mortgage. :D

Nice plan.

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I have been very tempted to expose andrew grant, the hop warehouse near where i live in worcester is a converted warehouse, with all apartments starting at 149k.... There are two left starting at £179,000!!!!

http://www.andrew-grant.co.uk/new_homes.ht

Eden Ventures, The Hop Warehouse

Southfield Street, Worcester

SHOW HOME OPEN SATURDAY AND SUNDAY 10AM - 5PM

AND AT OTHER TIMES BY APPOINTMENT

A UNIQUE DEVELOPMENT OF TWELVE EXCEPTIONAL APARTMENTS WITHIN

EASY REACH OF WORCESTER CITY CENTRE

ONLY 2 PLOTS REMAINING INCENTIVES AVAILABLE

This high quality restoration and refurbishment of one of Worcester's finest examples of Victorian commercial architecture provides One 1 bedroom, Eight 2 bedroom and Three Penthouse apartments with luxury fixtures and fittings and a contemporary feel.

Prices from £179,000

For more information contact the New Homes department on - 01905 734736

or email new.homes@andrew-grant.co.uk

Nethouse prices tells a different story...

Flat 4, 35 The Hop Warehouse, Southfield Street

Worcester

Worcestershire

WR1 1NJ

£109,000

Flat

Leasehold

Build status not stated

25 Apr 2005

Map(WR1 1NJ)

Flat 12, 35 The Hop Warehouse, Southfield Street

Worcester

Worcestershire

WR1 1NJ

£130,950

Flat

Leasehold

Build status not stated

21 Jan 2005

Map(WR1 1NJ)

11 Flat, 35 The Hop Warehouse, Southfield Street

Worcester

Worcestershire

WR1 1NJ

£100,000

Flat

Leasehold

Build status not stated

12 Flat, 35 The Hop Warehouse, Southfield Street

Worcester

Worcestershire

WR1 1NJ

£110,000

Flat

Leasehold

Build status not stated

1 Flat, 35 The Hop Warehouse, Southfield Street

Worcester

Worcestershire

WR1 1NJ

£44,000

Flat

Leasehold

Established Property

06 Aug 2000

Map(WR1 1NJ)

This is a new development, with prices starting at 149k but nethouse prices shows a different story. It angers me that the developer and his cronies can buy the appartments at knock down prices and flog the last two at silly prices.... It also annoyes me that one appartment was bought in 2000, 5 years before completion of the project and before building had started. I can only assume this was the best appartment, the penthouse as it is number 1!!!!

Its also interesting that this project only started about 6->12 mounths ago, when it was obvious the market was peaking... smart money getting out?

Edited by moosetea

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It's very common Rigsby.

Developer builds 10 flats worth £100K each at valuation.

His granny "buys" 2 for £150,000, his sister-in-laws cousin buys one for £160,000 and then his mates dog buys another for £165,000.

He then advertises "last few remaining plots available this weekend only at 20% discount just £128,000"

That's how they work it I'm afraid.

I must say this sounds surprising. Others have already pointed out that the cost of such strategy would be high even before the developer compensated everyone who takes part for their risk (they would be stuck with an overpriced house if things went wrong) and somehow found a legal way of paying the interest on their mortgages that would not fall foul of the tax laws. Admittedly, the payment of interest would only be a problem if a lender could be found who would lend against a grossly overvalued asset.

I certainly do not doubt Rigsby's evidence, not least because others have already suggested plausible reasons that would make such course of action just about sensible in unforeseen circumstances where it would avoid other, even larger, losses. [1] There are, however, much easier and cheaper ways of giving the impression that a development is nearly sold out as detailed in other threads on HPC.

classixuk: I would be grateful if you could please explain in more detail how you believe developers sell houses to themselves. It would be especially helpful if you could explain how every participant in the transaction covers their costs, and what profit they derive from it. Also, I used to believe it was usual for new-build properties to sell at a premium to previously-owned ones. Shall I take it that your claim above shows this is not, in fact, true.

Many thanks,

MoD

[1] I suspect that the buyer is more likely to be another company than an individual. The basis for this guess is that at least one instance of a developer selling a development to another company owned by the same owner was mentioned in the papers a few months ago. The property in question was a block of flats in London that were on sale to the public but failed to sell.

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Anecdotes are like trains, just a matter of time till one turns up. Here's one scenario.

http://boards.fool.co.uk/Message.asp?mid=9556896

Some developers are also getting caught out. There's a project going on in the south of the city where two large detached Victorian places are being converted into two flats each and some new properties being built in the grounds. After trying to sell these for well over a year, it is rumoured that one of the directors of the development company has been forced to buy two of the proeprties himself in order to keep the bank happy.... And according to people who have seen these conversions, the finish is rough at best.

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Haven't got time now - will post some links later.

A block of flats near me was completed almost two years ago. 8 flats. The big For Sale board, after about a year, had the 8 flats for sale crossed out and changed to 3 flats for sale. (They literally crossed out the '8' and added a '3' next to it.

This is a clear attempt to convince the public - other people have bought so why don't you?

It seems to be a con. Looking at the Land Registry figures only 3 of the 8 have ever sold.

The big For Sale board is now gone. There are a number of To Let signs outside. Has the developer let the flats instead of selling them?

There is another block near me - 24 flats I think - I am going to find out this weekend. The sign outside keeps changing - 50% sold, 70% sold, 80% sold and, just this morning, 90% sold.

I think they are lying. When I have time to get the facts I am taking this to the local Trading Standards people. The developers are trying to rig the market. I would call it fraud.

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Indeed, I think the latter is the former  :P

Now, now, now :lol: . As with all places, Milton Keynes has its plusses and minusses. It's a new town, so very little character or soul. On the other hand, it's a very green town (though I suspect that this will change with Mr. Prescott), and until very recently a very low-rise town, which was nice.

Peter.

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I've seen a couple of properties that have just appeared in the land registry data, looking as if they have been sold, yet they are still up for sale by the developer.

There are a few houses virtually identical to that going for sale in my part of the World - one is 650K and the others have an advert 'starting at 700K'...

In fact, in the ones you show both the kitchens and the bathrooms look far more classy IMPO than my local ones.

Edited by The Masked Tulip

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