As originally posted in 2009 (Note: there have been many developments since the original posting below, and I will likely give an update in another blog article at some point in the future):
Home, UK 4 April, 2009 2am
Some readers will be aware of the issues I have had dealing with the developer called Ballymore on a property I purchased in 2006 – the iconic Pan Peninsula in London’s Docklands.
The following article appears in today’s Guardian
There were another two articles (along with various comments after being published) that appeared in ‘The Wharf’ newspaper, a local paper in London Docklands… the first one on 19 March, 2009
followed a week later by
The Guardian article is well written, however the caption does not give the full picture (I know the caption was not written by the journalist or the photographer). It is not the case that I am struggling to pay the mortgage. In fact it is near impossible to get a mortgage.
- This italicised section edited Monday 13 April It must be noted that on 10 April, The Guardian corrected the mistakes on their web edition of the paper. This is what they say about the corrections:
This article was amended on Friday 10 April 2009. The picture caption in the story above has been corrected as Denesh Bhabuta is not having trouble paying a mortgage, as the original caption said, but rather finding a willing lender at all for his Pan Peninsula flat. A phrase has also been inserted in the story to clarify that while developer Ballymore is in discussions with some individual buyers, Bhabuta has found it unwilling to talk to his buyers’ group collectively.
A down valuation of £65,000 on the property value means that the (60% LTV) mortgage if available will be £120,000. On a property purchased for £264,000, a 20% deposit is £53,000, and thus the shortfall will be £91,000 – and this is not an expensive apartment in Pan Peninsula either. There are 1 and 2 bed apartments in the development that have been purchased by members of the Pan Peninsula Buyers Association (http://www.panpeninsula.org) for anything upto £750,000
Simply walking away and forfeiting the deposit is not an option. Ballymore are taking this further and pursuing the remainder of the purchase price (they already have 20% as the deposit) via the courts. Despite Ballymore’s public statements of wanting to help purchasers, they are not entering into any dialogue to that effect.
I understand that newspaper articles are heavily edited and can not include everything relayed when interviewed. Now that the article has been published by the Guardian, and for the sake of completeness, I include the information I sent to the journalist in an email after a long conversation with him on the phone a couple of days prior to the email.
The beauty of this form of communication is that the print edition can be enhanced by reading something in more detail on a web site.
So, for your perusal:
===START OF EMAIL TO GRAHAM NORWOOD OF THE GUARDIAN===
To: Graham Norwood
Date: Saturday 28 March 2009, 1.23pm
Just to be clear, I am writing this as a representative and committee member of the Pan Peninsula Buyers Association (PPBA) rather than myself personally. The Pan Peninsula Buyers Association is a non-profit organisation formed by the people having difficulties completing their purchase within Pan Peninsula. The association quickly formed a committee to manage and guide the association. PPBA has a charter.
I would like to add that although I would like a resolution to the whole situation for myself, my main concern is that of the plight of the numerous members of PPBA.
When these properties were originally purchased, there were lots of mortgages around, even at 95% LTV. However with the economic downturn there are much fewer mortgages available, they are harder to get (even though the Government has pledged to help the economy by reducing interest rates) and are mainly a max of 70% LTV. Mortgage products are still advertised in the paper, but once you try and apply for them you will see them wither away into thin air.
From the few mortgage products currently available, the amount that can be borrowed as a percentage of the purchase price is down by 40-45% due to the fall in valuations.
“The buyers who have had their properties re-assessed by mortgage companies have had them down-valued by between 17% and 35%.”
“We’ve requested to Ballymore that we get around a table to discuss various options because it’s in everyone’s interest to resolve this.”
“About 300 of the 762 units are currently represented by PPBA and this is rising daily as awareness grows. I’ve spoken with my family to try to make up the shortfall. A lot of people who have bought have also spoken with their families, but in many cases those familes have also lost money on shares, so are unable to help much. Some buyers are even trying to put the shortfall on their credit cards, but as some of the buyers work in the City – and may now have lost their jobs – the situation is extremely difficult.”
“There are various options and avenues that can be explored. Other developers are discussing with purchasers and coming to an agreement on the way forward, which helps both sides get the maximum from a compromise. Ballymore are not entertaining any discussion and instead are now terminating contracts, keeping the 20% deposits and serving notices of legal action for the remainder”
Some other information you may find useful and may wish to use as quotes…
When PPBA started we did so with the aim to complete our purchases. However as Ballymore have been ignoring our numerous requests to meet and have started legal proceedings against PPBA members, we are now seeking legal advice on whether the members of PPBA should complete or not.
Ballymore have mentioned in the press that they have a special department dealing with those purchasers finding it difficult to complete. However people have been trying to get hold of Ballymore to discuss their difficulties and have had no success whatsoever over the past few months. I have too been trying to get hold of them and leaving messages, yet no one from Ballymore returns my calls or responds to email. When conveyancing solicitors write to Ballymore on behalf of the purchasers, they simply send a standard response letter reminding the purchaser of the terms of the contract and thet they are within their rights to terminate the contract, keep the 20% deposit and further claim interest and the remainder through the courts.
As the economy has nose dived, people have been losing their jobs, and mortgage offers and mortgage products are being withdrawn by the day, solicitors acting on behalf of the purchasers have reasonably requested more time to complete. However Ballymore are not prepared to offer any extra time.
These are typical comments from other Pan Peninsula Buyers Association members:
As a separate point, we received written notice from Ballymore in October 2008 advising of our likely completion date and stating that we would be given access for mortgage valuations no later than the end of the year.
In reality our surveyor was denied access until the very last minute. I received my valuation the day before we received notice to complete from Ballymore.
I understand that Ballymore were aware of the likely extent of down valuations and the problems it would cause late last year as they held a number of meetings with advisers on the issue. By delaying our mortgage valuation from what they promised in writing they gave us a very short period to deal with a big financial shortfall.
Ballymore was aware of the valuation problem and it could be argued that by denying the access they promised in writing they contributed towards causing us to fail to complete. If we had got the valulation in December 2008 we may have had time to deal with it.
Further to your request on the personal circumstances, I can confirm that we are unable to complete on Apartment xxxx. We received our second notice to complete so have to complete by 6th April or risk losing our deposit and face being sued.
I am also FSA registered so would lose my ability to work in my profession if I was sued and made bankrupt. We are about £30k short having faced a down valuation of £126k and increased gearing on our mortgage offer. We have maintained a mortgage offer throughout the purchase period with gearing falling from 90:10 to 75:25.
Interestingly, Colleys valued the property at purchase price for our mortgage offer dated 16th April 2008 but by Feb 2009 they valued it down 20%.. This would not reflect the stats for 10 months of price change.
I have repeatedly asked the conveyancing solicitor to make an offer of approx 95% of purchase price to Ballymore. He is insisting there is no value in doing this as Ballymore are rejecting all offers.
I am unable to complete on my purchase, however I recently found a buyer for my apartment, albeit at a 25% loss. This for me is a much better scenario than being sued for the full purchase price of the property. However Ballymore are blocking the sale. I do not know what else to do.
====END OF EMAIL TO GRAHAM NORWOOD OF THE GUARDIAN====
That’s it for tonight.
Always… fighting for what I believe in…