UK investors warned after Irish property deposit ruling
Wednesday, 17th February 2010
Investors hoping to renege on development contracts established before the recession have been told to watch their step after a landmark case in Northern Ireland’s High Court.
Stephen McKenna had hoped to reclaim his deposit for a luxury Belfast apartment after launching a case against property developers, Big Picture Developments.
But the High Court dismissed his claim and he has been forced to settle the remaining £391,000 balance on his purchase within six weeks.
Big Picture Developments has experienced fallout from investors in recent months following the collapse of Ireland’s property market. But writs issued in the last year against dozens of disappearing clients have pushed through a number of purchases, highlighting the dangerous practice of cancelling investments.
Spurned developers can apply for “Specific Performance” from the courts. The order, used against Mr McKenna and others, forces a buyer to complete their purchase agreement.
But the fragile nature of the housing market throughout the UK and Ireland means that many homes being built at the peak of the boom are worth less than their original selling price, leaving some banks reluctant to agree mortgages and freezing out investors.
Those struggling should seek legal advice before withdrawing from expensive development contracts as the consequences could prove more damaging to the wallet than initially feared.
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