Did you buy an investment property in a development such as high-end student accommodation, or apartment hotel and things have not gone as planned?
If you can answer ‘YES’ to any of the questions below, you are not alone, we are acting for many clients like you and can help.
- Have you purchased an investment property off-plan, only for it to languish indefinitely in development?
- Do you believe that you were misled by sales representatives or not properly advised by your solicitors about what exact type of investment property you were buying?
- Did your solicitors fail to warn you about any unusual risks connected to your investment property purchase?
- Are you being chased for payment of a service charge while you have failed to receive guaranteed rents or returns from a developer or their property management company?
- Have you had problems selling or re-mortgaging your investment property because of problems with the development?
- Are you worried your savings or even your retirement plans are at risk because of a problem with an investment property?
Buyer Funded Developments were a way of obtaining monies to develop a property without having to approach reputable lenders. This type of development has exploded since the 2008 financial crisis.
In effect, you (and your investment) replace the banks. Monies were paid up front and the scheme would only work if the developer had a robust business plan, sold all the units in the development and built the properties on time and on budget.
High rates of commission were paid to the estate/sales agents at the stage that the reservation deposits were paid. Your money was being used to pay the estate/sales agents fees up front.
Thereafter, the developments were poorly funded, badly managed and it was unlikely that the development would ever be finished. Many schemes have collapsed without a brick being laid and the investors being out of pocket for tens of thousands of pounds with nothing to show for it.
The properties were typically marketed to overseas investors with little knowledge of the UK property market. The properties were marketed at less than market value with guaranteed rates of rental returns. They were made to look as attractive as possible and given the veneer of being a safe investment.
Far from being a safe investment, these were not normal property purchases and were incredibly high risk. Typically an investor was asked to fund up to 80% of the purchase price by way of a deposit.
What should the solicitors have done?
The body responsible for regulating solicitors is the Solicitors Regulation Authority (‘SRA’). The SRA became so concerned by Buyer Funded property developments that they issued a Red Flag notice, in 2017 to solicitors. The Red Flag notice warned solicitors that these developments were extremely risky and that clients were likely to lose substantial sums of money.
The SRA has since prosecuted many solicitors for failing to properly warn their clients of the inherent risks of investing in such developments. Ultimately this has led to proceedings at the Solicitors Disciplinary Tribunal where some solicitors have been heavily fined for failures relating to Buyer Funded Developments.
It is estimated that claims arising from solicitors failing to properly advise investors will amount to £1.5 billion.
What can you do?
If you feel you were misled into purchasing an investment property that was not suitable for your needs or fit for purpose or feel that the solicitors who were supposed to represent your best interests failed to properly advise you about what you were buying and the potential risks involved, we can help.
All solicitors have insurance which covers them for failures (i.e. negligence) relating to advice given to clients. If you fail to recover your investment, your solicitor may be liable for failing to properly advise you about the risks associated with such an investment.
We may be able to help you claim compensation, recover your deposit, protect your interest in the property or make a claim for the rents or returns that were guaranteed to you.
Some of the developments we are dealing with include:
Fox Street Village – Liverpool
Pinnacle Angelgate – Manchester
Windsor Point – Luton
Daniel House – Liverpool
Nile Street – Sunderland
Our expert knowledge on these types of cases means that you are in safe hands.
Call our specialists on 0333 200 4232 for initial legal advice at no cost.
Speak to one of our team on 0333 200 4232
We are dedicated to providing businesses of all sizes with straightforward and effective legal advice. No matter which legal service you require we are here to help and advise you.
When you need a lawyer, you want to turn to someone you can trust. Whatever your situation, WE Solicitors understand what you are going through and have the experience to help.
We have been where you are now and we understand what you are going through. It’s all too easy to be overwhelmed, but it is crucial that you take advice straight away if your regulator has contacted you.
Telephone: 0333 200 4232 Email: firstname.lastname@example.org
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