Buy-to-let investors sued by developers
Published ¤ 09/09/2009
By Tanya Powley 09.09.09 12:41
Hundreds of buy-to-let investors have been sued by developers after they tried to back out of off-plan property purchase contracts in the mistaken belief they could merely forego their deposits.
Buying off-plan involves investors agreeing a price for a new build property before construction had finished, and assumes the value of the property will rise before completion.
New build flats, popular with buy-to-let investors, have been among the worst hit in the UK housing market crash, with values plummeting by as much as 40% in some areas. The collapse in UK property prices means many off-plan property buyers are trying to avoid completing if they feel they are no longer getting a good bargain.
Meanwhile, buy-to-let buyers have found it hard to get funding for their investments as UK banks clamp down on mortgage lending. Market research reveals that the number of investors looking for a new buy-to-let mortgage has increased by 50% in the past year, but the number of available mortgages has dropped by 70%.
Jeremy Raj, head of residential property at law firm Wedlake Bell, claims that hundreds of investors have already been pursued through the courts for trying to wriggle out of off-plan contracts...
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