In what has been described as a “landmark” ruling by newspaper The Mail, a judge has awarded damages of over £130,000 to a property developer after an unnamed buy-to-let investor pulled out of a deal to buy two flats in a Plymouth city centre new-build.
The 122-unit development has been plagued with troubles since the onset of the property crash, with just 18 flats sold so far and the remaining having to be let out by the developer, Prestige Homes South West.
However, the group’s victory in court has no doubt helped their plight. Since Prestige Homes won the case they have reportedly been contacted by a number of investors looking to complete contracts that were supposed to have been settled by last summer.
The case could have far reaching consequences for the 300 similar cases that are piling up in London courts.
Scores of property developers in the UK were left in the lurch as new-build values plunged by more than 40% over the last eighteen months and investors who had put down a deposit fled, finding themselves unable, or unwilling, to complete on the deal.
In the past 15 months alone, 130 claims have been filed by Irish developer Ballymore, whilst Trelford Homes has filed 50 and the now-collapsed Imagine Homes has chased 40 defaulting buyers.
Jeremy Raj, the head of residential property at law firm Wedlake Bell said the ruling, though significant, may not mean the end of these types of cases. He added: “This court ruling will have clarified matters for developers, but it is not a green light that all actions against defaulting buyers will succeed.”