Solicitors in Sheffield are advising investors in the new Park Hill development, which has now opened some show rooms; to be aware of the risks with buying property off plan. Upon completion the iconic development will comprise of office, retail and leisure space as well as 874 apartments available to rent and buy. Associate in the litigation and dispute resolution for Wake Smith LLP said: "The Park Hill Flats are a true Sheffield icon. The ongoing redevelopment of the flats by Urban Splash into a multipurpose facility, including residential apartments with views across the city, will no doubt rival the St Pauls Tower development in terms of impact on the Sheffield landscape, and the levels of interest it will lead to from prospective buyers. "However, as has been highlighted by the recent publicity surrounding the St Pauls Tower development, embodied by the "St Pauls Tower Action Group", prospective buyers need to be wary when purchasing property off plan, particularly in the current economic climate." Wake Smith LLP is urging buyers to be prudent and consider, amongst other things, the following issues before exchanging Contracts on any new build purchase, and so committing to buy a property.
- It is not uncommon for the projected completion date on development projects to be put back. Does the Contract provide the buyer with any remedies if the completion date of the development, and so also the property being purchased, is delayed? If not, how problematic will a delay in completion, significant or not, be for the buyer?
- How certain is the buyer that, in the current economic climate, the purchase price for the property will constitute good market value, both at the time of exchange of Contracts, and once the development is completed?
- If the buyer is purchasing the property as an investment, is the buyer confident that once completion takes place, he or she will obtain the expected return from the property, either through re-sale or via the "buy to let" market?
- Even allowing for the fact that valuing a property is an inexact science, obtaining at least one independent valuation survey prior to exchange of Contracts is the best way for a buyer to protect their interests.
- If the market value of the property falls between exchange of Contracts and completion, is the buyer prepared financially if the mortgage company reduces the value of the lending it is willing to provide? This is a particular risk when purchasing off plan, when there can be a big time delay between exchange of Contracts and completion. The prudent buyer will have a safety net in place if there is a reduction in available funding levels.
- Does the Contract provide the buyer with rights if the specification of the property as built does not correspond to the specification according to the advertising particulars and the contractual documentation? It is not unusual to find minor changes to the specification of the property, which may not be unreasonable in a legal sense; if however the specification changes to a degree that is unacceptable to the buyer then this is clearly problematic. The best way to avoid this happening will be to regularly monitor the progress of the build and to seek to engage with the developer, as far as possible, in respect of the specification of the property as the build progresses.
Dax said: "By thinking carefully about the potential issues involved before committing to buy, buyers can do their best to ensure that they protect their position to the fullest degree, and so that they can be part of the new chapter in the life of a Sheffield landmark." For more information and legal advice about buying a new build property off plan, please contact the Litigation and Dispute Resolution team on 0114 266 6660.
