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Court’s ruling causes property investor panic

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A buy-to-let investor has been ordered to pay more than £130,000 in damages after the state of the economy forced them to cancel a deal for flats in Plymouth city centre.

Prestige Homes South West pursued the unnamed investor after problems began to mount for its plagued Zero 4 development in the Southern coastal city. So far, just 18 of the 122 units available on the Zero 4 site have been sold and Prestige is vehemently pursuing those that have reneged on agreements.

According to the Estates Gazette, 300 similar cases are building up across the country’s courts and the landmark ruling has caused a tidal wave of fear through the property industry, with investors that have failed to finalise deals due to the recession starting to fear more legal action.

Just over 50 contracts were initially needed to finance the Zero 4 project but, with investors pulling out rapidly, Prestige Homes claim it has no choice but to claw back costs through litigation.

“We had to keep the flats, re-let them and refinance,” said Prestige’s Matthew Hockin. “A lot of people think you can lose your deposit and walk away. But once you have exchanged contracts, you are obliged to complete.”

Landlords have been abandoning the buy-to-let market since the recession’s bite took a substantial 40% chunk out of agreed property prices, established when contracts were first negotiated.

Since winning its Plymouth case, Prestige Homes has seen a marked increase in clients wanting to settle any outstanding debts and sidetrack a trip in front of judges.

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Written by Andrew Hodges

January 18, 2010 at 11:04 pm

Posted in Comment, LinkedIn

Tagged with , ,

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