Page last updated at 14:25 GMT, Friday, 4 September 2009 15:25 UK

Developer defends writ decision

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Kevin Magee reports on the developers' move

A developer who issued writs against people who have yet to complete on apartments they booked at the time of the housing boom has defended the move.

Barry Gilligan, who owns Big Picture Developments, said they had signed contracts for apartments, but failed to meet the deadline to complete the deal.

The apartments are in the Ormeau Bakery development in south Belfast.

"We have honoured our commitments and we expect purchasers to honour theirs," he said.

"In all the time I have been developing, I have never had a situation where I sold someone an apartment for £150,000, they sold it on for £250,000 and they have come back to me and said here is £50,000 back, thank you very much.

"Ok, the market has turned, but what people need to realise is property is not a short-term investment and in the medium and long-term the quality of the investment is going to come through."

PBN Property Limited , who built the Woodlands Manor development at Stockman's Way in Belfast, is also suing clients who have not completed on contracted sales.

Plummeting prices

Since the peak of the housing boom in spring 2007, when work on many new homes began, property prices have plummeted by about 30%, making them worth much less than the original selling price.

Many banks are now reluctant to agree mortgages for such properties, meaning some prospective buyers face losing large deposits and in some cases, being held liable for the total cost of the apartments as agreed at the height of the boom.

People are left in a very difficult position - they signed a pretty watertight contract two and a half years ago
Dr Robin Davidson

According to PBN's website, more than 95% of the properties in the Woodlands Manor apartment development were booked off plan.

BBC NI business correspondent Kevin Magee said other developers are taking similar action or are planning to, but PBN was the furthest down the legal route.

"The contracts for the development in question were completed in August 2008 so it's taken about a year to get to this stage," he said.

Our correspondent added that a legal procedure known as "an order of specific performance" could come into play.

"That means the developers would be attempting to have the ownership of the apartment revert to them and they could sell it at today's market price.

Titanic Quarter - Harcourt development
Some people who have booked apartments in the Titanic Quarter have formed an action group

"The person who had originally signed the contract for it then would be liable for the difference - that would mean they would be paying maybe £70,000 and have no asset to show for it."

Dr Robin Davidson booked an apartment at the Ormeau Bakery development back in 2007.

He said the apartments were finished in July, and within weeks Big Picture Developments had served writs on clients who had failed to complete sales.

He described the move as a major shock and said it had left many potential buyers frightened.

Dr Davidson said: "This is very difficult for buyers who simply cannot raise the money for a mortgage and who cannot make up the difference between the price they signed up for and the price the apartments are worth now.

"People are left in a very difficult position - they signed a pretty watertight contract two and a half years ago," he added.

"They were not to know what would subsequently happen and now find themselves in a position of great difficulty in getting a mortgage or not getting one at all."

Collapse

Some people who have booked apartments in the Titanic Quarter in east Belfast are also likely to find themselves in trouble as completion dates loom.

Around 100 purchasers have formed the Titanic Action Group, which is being coordinated by Brian Speers of CMG Solicitors.

He said the developers, Harcourt, have simply said that if the purchasers honour their obligations they will adhere to theirs.

"I don't think that's an adequate response in the exceptional circumstances we have in the market - an unprecedented collapse in valuations," he added.

"It seems to me more attention should be paid to resolving the dispute through discussion, dialogue - mediation if necessary - than by involving legal action."

In a statement the developers said that they had not started any legal action and were happy to speak to individual purchasers about any queries they may have relating to their property.

The statement added: "Contracts relating to the first residential phase were entered into freely, and in the knowledge that property values can rise and fall.

"Titanic Quarter, therefore, anticipates that those contracts will be honoured."

The first block of around 40 apartments in the development was physically completed in August and the first legal completions are due this month.



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