Viewing 18 posts - 1 through 18 (of 18 total)
  • Any one able to offer some advice regarding a building developer and insolvency?
  • ashleydwsmith
    Free Member

    Looking into buying a new house but having done some research alarm bells have been set off. The developer is apparently in voluntary insolvency since January 2016 and due to be wound up by December 2016. However the directors of this company have it seem a number of companies all with similar names some which are currently still trading and some which aren’t.

    I’m confused as I don’t understand the possible implications and it all seems a bit dodgy to me. But it might be nothing. Obviously we are waiting for the estate agent to come back to us but that will be tomorrow now. So thought I might get some useful info from the knowledge that is on here.

    Thanks

    Ash

    m0rk
    Free Member

    Is it a new house? Therefore warranty obligations?

    If it’s sold as seen, then it doesn’t matter – the conveyancing process will hold onto your momey

    ashleydwsmith
    Free Member

    It Ian a brand new build. As yet not completed. My concern is around the developers who appear to start businesss Andy close them down quite regularly all with similar names but generally putting the name of the area they maybe working in is the only difference.

    slackalice
    Free Member

    Personally, I’d take the view that you have a choice as to whom you give your hard earned money, plus interest, to.

    An ethical dilemma.

    Maybe you don’t mind lining the pockets of the morally corrupt?

    Maybe you do?

    Your choice. Live with it.

    Happy days 😀

    bails
    Full Member

    Sounds iffy to me (not an expert). Why are they shutting down companies and then starting new ones so often? To get out of warranty repairs? To not be liable when faulty wiring burns the house down? Because they’re not paying staff or suppliers?

    big_n_daft
    Free Member

    Sounds iffy to me (not an expert). Why are they shutting down companies and then starting new ones so often? To get out of warranty repairs? To not be liable when faulty wiring burns the house down? Because they’re not paying staff or suppliers?

    To limit liabilities, even the big boys do this trick, SPV for each development, and close it down asap once complete

    ashleydwsmith
    Free Member

    Cheers slack just the advice I needed.

    Haven’t paid any money as yet, just doing abit of research. Not knowing anything about this was trying to understand if common practice. And therefore perfectly legit.

    samunkim
    Free Member

    They do it all the time round my way with any large development

    Saves having to payoff the subbies and builders merchants.

    Acme 2001 ltd goes bust. Gets in friendly accountants.
    Sells assets to Acme 2002 ltd.

    pop-larkin
    Free Member

    If it’s a new build check it’s got nhbc or similar guarantee which gives 10 years cover- there may be an issue to get the company back to fix minor snags so you need to consider whether you can live with this

    brooess
    Free Member

    Good spot OP.
    I’m amazed this is even legal.
    How did we let housing get so corrupt?

    I know this is nothing to do with the OP, but just to drop it into the discussion… this is how so many people in the UK got ‘property rich’…

    More than £170bn of UK property is now held overseas

    big_n_daft
    Free Member

    this is how so many people in the UK got ‘property rich’…

    That and 1066

    revs1972
    Free Member

    As said above it’s usually the suppliers who get stitched up in the process.
    My old boss got caught for £40k when the developer played this game.
    It didn’t end well for them , but that’s a different story

    thegreatape
    Free Member

    A story we’d like to hear though!

    tillydog
    Free Member

    … a brand new build. As yet not completed.

    Run away…

    If they’ve got no cash, they won’t be able to buy materials, and probably owe all their suppliers and tradesmen money, so it may never get completed. It ends up being a sort of pyramid scheme where your deposit is used to finish off the last buyer’s house, etc.

    (IMHO)

    hammyuk
    Free Member

    Its called a “Hive down” – 100% legal.
    Certain liabilities can’t be got away from doing it though so check.

    ashleydwsmith
    Free Member

    hammyuk do you have knowledge you can pass?

    hammyuk
    Free Member

    Nor specifically to developements but google will give you the details of how a Hive down works.
    Its used to move assets away from debtors, taxman, etc, write off tax debts but still use them as a liability to reduce owed, etc.
    What happens a lot of the time is the companies will actually already have 10-20 companies set up.
    All owned by each other by shares.
    The name either gets flipped each time so everyone assumes the same one is still trading or they just fold it and move to Acme2, 3, 4, etc.
    The NHBC will be your point of call over this though for guarantees on a new build regardless of what the company is doing in the background

    pedropete
    Full Member

    When companies do this, as well as suppliers getting shafted quite often the sub-contractor trades are getting shafted too. If the subbies get wind of this during the build, quality can drop considerably – morally wrong but understandable. I’ve heard of drains being plugged with concrete, roof tiles laid without a single fixing. Yes the NHBC would be the backstop, but do you want a potentially protracted claim & it’s only a structural warranty, so there’s potential for a lot of issues that aren’t covered by any warranty.

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