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Buyers Bow To Deposit Demands

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Buyers bow to deposit demands

Stephen Rowe24/10/2005 15:00

from Estates Gazette Interactive

A residential developer that took the unusual step of suing two purchasers to force through sales has dropped its lawsuit.

St George, part of the Berkeley Group has dropped two lawsuits relating to its luxury Imperial Wharf scheme in Fulham, SW6, after one of the investors agreed to go through with the purchase and the other was wound up.

This week St George confirmed that it was no longer proceeding with claims for unpaid deposits against the contracted buyers of two £2.5m flats in Fulham, west London.

However, the decision to take the case to court in the first place has been heralded as a sign of housing market gloom.

St George issued legal proceedings earlier this year, when private investors Christopher Potts and Hertfordshire firm Griffin Real Estate failed to complete their purchases.

In the face of a lawsuit, Potts paid a 5% deposit and completed the purchase over the summer.

However, Griffin, a company chaired by financier Terry Ramsden once the UK's 57th richest man has since been wound up, and St George has sold the flat to another buyer.

Jonathan Cavell, head of property at regional law firm asb law, said the decision to bring legal proceedings for specific performance of a purchase agreement was "indicative of a change in the market".

He added that, until recently, housebuilders would have been unwilling to sue for deposits because properties could be sold to another buyer at less financial cost.

"Such a lawsuit shows a lack of confidence in the ability to sell," he said.

Cavell added that the market would "probably" see more such actions. "Sales have picked up a little over the past couple of months, but they are still not in the 'easy come, easy go' position of a year ago," he explained.

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Like the man says, if suppliers (builders) are taking their customers to court things have changed. Clearly to property developers know the good times are over and they are trying to reduce the exposure. It would seem some are pretty desperate to do that. Over exposed perhaps??

Over exposed investors (in effect developers are investors) are the first to start the rush for the door. This looks like the first sign of panic selling.

It could be the visible real world manifestation of the financial pressures and movemen6ts that DrBubb has been highlighting just lately.

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