Plea for Pan Peninsula talks as legal letters arrive
Buyers at Pan Peninsula are desperate to re-negotiate their contracts with Ballymore after becoming overwhelmed by rising costs.
As reported in The Wharf last week, the sharp drop in property prices has hit the luxury development hard, with some units falling in value by nearly a third in just over two years.
Worried would-be residents have told the paper that lenders have withdrawn or revised mortgage offers, leaving them in fear of lawsuits if they cannot make up substantial shortfalls.
Wharf.co.uk received a message from Sean O'Neill, who said he is now "receiving legal letters" on the studio he purchased. He claims he has been unable to contact Ballymore by phone.
He said: "My current position is that I do want to complete on my development and move in as soon as I can, but I am finding it very difficult to do this when my valuation is down by nearly 20 per cent."
Apartments at the development - which boasts a spa, gym, private cinema and cocktail lounge - cost between a quarter of a million for a studio to £12million for a penthouse when they were sold off-plan over two years ago.
Ballymore has maintained that less than 10 per cent of purchasers are in difficulty, and pledged that its sales and marketing department will handle cases on an individual basis.
But many residents have formed the Pan Peninsula Buyers Association, which says it represents 170 people holding 300 units at the 762 unit two-tower scheme. Many are scheduled to complete this month, and at least one has been told he has forfeited his deposit.
A committee member said: "If they could just sit down with us and talk it through, that would be perfect.
"Potentially, people could end up losing their deposit, being sued for a lot of money and won't end up with a property."
Ballymore told residents in February that it reserved the right to "sue for any losses suffered" as the contracts were not "exchanged on a subject to mortgage basis".
When contacted by The Wharf, Paul Keogh, Ballymore's group director for Strategy and Communications, said: "The new group sales and marketing director Michael Meanley is the contact person for all buyers wanting assistance and his department will be then individually handling each case one by one."
Blackwall and Cubitt Town councillor Tim Archer has urged both parties to discuss a resolution to the problem.
He said: "It's a difficult situation on both sides. People have entered into a contract and they need to be bound by that. But now is the time to sit down at a table rather than squeeze someone until the pips squeak.
"There should be a halfway house where everyone can walk away from the table not feeling like they've lost out. If there's one thing the credit crunch has taught us, it is that you have to take a different approach sometimes."
Are you having similar problems at Pan Peninsula? Contact John Hill at The Wharf at john.hill@wharf.co.uk or the Pan Peninsula Buyers Association at panpeninsula.org
Older/Newer
« Review: Pericles, Prince Of Tyre | Rosey Dees: "We were never going to be The Doors" »
I was really keen on this development when I say it in August 2007 at the time the sales guys were so arrogant they would even return my phone call. The prices at the time for a 1 Bed (not studio) were £515k. Now if you go the Foxtons website you can see at least 20 units for sales with a 1 Bed (not studio) for under £295k.
Yes early investors are really struggling to get the finance; which bank in their right mind would lend at more than 60%/40% LTV. What I am hoping is that prices for this development start dropping rapidly now as it’s complete and people struggle to maintain their investments, buy the end of this year if it’s dropped 25%, which is likely (oversupply in CW).
It will be a good time for me to consider getting into this development.
Rajesh
I am sure that on behalf of all the GENUINE buyers that are having difficulty completing, We thank you for your arrogance and hope that we dont get you as our neighbour.
I suggest you spend your money elsewhere because its not welcome here at Pan Peninsular.
Steve,
I am just trying to make a good investment which your obviously not. All I am saying to thoughs struggling is don't hold on to something you CANNOT obviously afford you may end up loosing everything.
You need your head examined if you think these flats will be worth what you paid for them in the next couple of years.
It is already negative equity, renting it would be a problem cause of over supply and the banks are not going to lend anyone £500k for a 1 bed flat thats worth £280k now. Wake up.
Rajesh
I dont know where you obtained your facts and figuers, but I paid far far less than £500k for a 1 bed flat and the flat that Foxtons is advertising for £280k is in fact a Studio which they class as a 1 bed ( clever marketing and often used by Estate agents )
I have checked with Foxtons.
I have a portfolio of properties and apart from the fact that we are in a recession, this long term will prove to be a good investment.So I I suggest you should have woken up and bought one on launch day.
Apart from the fact we are in a recession..
How old are you??
Foxtons are accepting way below advertised rates on 1 bed (NOT studio) apartments on Pan Peninsula. Funny if you go to the website you can see all the floor plans they don't indicate studio. If I had bought on launch day i would be in the same sorry position as the rest of the so called investors who cannot afford to complete.
I guess your do not understanding that many investors have already had valuations drop by 30%.
I agree with one thing it is a good development but over priced. I know I will pick up a bargain in 9 months time.
This is the last time that I will deem to answer your comments. I find your language rather patronising as I am sure we do not consider ourselves "so called investors" FYI I am planning to complete soon but would just like to add that I am completely on the side of the PPBA and all those investors that find themselves in a no win situation due the the present ecconomic climate. Its funny but it was always the landlord who seemed to have the reputation, in some peoples eyss, of preying on the less fortunate but it would appear that there are others out there with a far worse agendas.
Interesting discussion
The people who bought at Pan Peninsula knew exactly what they were getting into at the time. The writing was on the wall these were the most expensive apartments in CW price per sqft. If buyers over extended themselves, got themselves into the hype and greed it’s not the developers fault. I don't feel sorry for them. Why should the developer lower the price? I say let the market conditions take care of the situation. If they cannot afford to pay, it’s like any other property investment they should give the apartment back and forfeit their deposit.
I agree the breakeven is at least 3 years away if not more, based on the current market conditions.
Charging deposits on credit cards and financing other loans will only make the situation far more worst for people and makes the day of reckoning even harder.
Prepare for a hard landing.
Personally, I do have some sympathy for those who bought in to this development 2 years ago. Even if property prices were vulnerable to a drop at the time, few would have imagined the series of events that have since taken place.
Unfortunately I agree with Dan that this situation can only get worse in the next few years. What are Ballymore going to do with hundreds of unsold apartments? I assume they will decide to rent them out, but with rapidly decining numbers employed in CW that could drive down the yield into uncomfortable territory for landlords.
Despite the development looking great, I can't see Pan Peninsula apartment values getting back to their sale prices for 10-20 years. Pan Peninsula may be looked back upon as the lastminute dot com of the property boom.
I do feel sorry for the buyers who are looking at substantial drop in value of their property, I heard 30-40% and cannot complete now. But when all is said and done can they really afford to complete on negative equity.
Stories of unemployed individual who borrowed to complete and maxing out credit cards is just foolish and show they guys are still caught up in the hype.
Surely the easiest thing would be to just walk away and forfeit the deposit rather than rack up even more debts.
I agree with the last 2 posts the situation is more than likely to get worst and with the media coverage its getting banks are more that likely to raise the deposits required which will make matters worse.
I also feel sorry for first-time buyers who bought into this development and now find themselves unable to complete due to banks withdrawing their mortgages offers. But I do not particularly feel sorry for investors who own many properties and now expect Ballymore to re-negotiate an existing contract so that they can make more money.
It is not easy to walk away and forfeit your deposit. The deposit was 20%. Ballymore will always Win.
For example, on a £400k apartment that £80k deposit Ballymore will then sell for that whatever the market will except they don’t care cause the will recoup the difference from the original buyer.
Assuming the following:
Flat: £400k
Deposit: £80k
Sell Price: £250k
Short fall: £70k
So the original buyer could end up losing £80k + £70k = £150k
Not a pretty situation. So the Developer will always end up better off.
Ballymore should not have to reduce the price of the apartments.
This is an exclusive development. Prices should be maintained.
Pan Peninsula - The Place To Live Above All Others
Could be more that £150k. They will also hammer the original buyers with legal costs!
DM
How can you say its exclusive there are 100s of apartments. It is this type of view that has got buyers in a mess.
They are the only ones Exclusively losing money!
What are the fundamentals these investors looked at??
£400k - £500k for 1 Bed Apartment in E14 - Regenerated East London!!
These flats are tiny, the developer threw in a restaurant, spa and cinema and these suckers fell for it. This area is completely dead. No one in their right mind would want to live here.
You could have spent the same and bought in Regents Park and it would have still been worth something today. Sorry to say these apartments will not be worth the price you paid for anytime soon. I would not buy in this area for half the price of the above.
As for buyers completing at any cost on negative equity, this is reminiscent of the dim witted property investors that have arisen over the past few years.
"What are the fundamentals these investors looked at??
£400k - £500k for 1 Bed Apartment in E14 - Regenerated East London!!
These flats are tiny, the developer threw in a restaurant, spa and cinema and these suckers fell for it. This area is completely dead. No one in their right mind would want to live here." - Anon
------------------------
In isolation that argument has some merit as East London is not an attractive place, BUT you are ignoring the fact that these apartments were within walking distance of some of the highest paying employers on the planet. That was the single biggest factor behind E14 apartment prices.
Unfortunately that factor has been severely damaged as banks contract and axe bonuses, so looked at in the cold light of day, it does make no sense that E14 trades in line with Chelsea or Regents Park. London is still a great city, but in the absense of huge payers perhaps E14 should expect to trade more in line with Acton or Balham.
Ballymore cannot give any discount to buyers on this development for the following reasons:
1. The original purchase price was agreed by both parties. The price could have gone up in which case the buyers would have benefited and wouldn’t be complaining now.
2. If they offered discounts to individual buyers others who have completed will also start asking for money back.
3. Reducing the price also reduces it appeal.
4. Finally they simply don’t need to. They are not running a charity. It is up to the Buyer to come up with the cash to complete. The purchase was not subject to any mortgage approval.
I for one do not feel sorry for any buyer on this development. It is like any other investment that has gone down in value over the past 6 months. This is not a special case.
The question of whether Ballymore should give discounts is easy to answer, by posing another question - would the purchasers have shared the proceeds of their profits with Ballymore, had property prices continued to rise?
I think not!
So, what we have here is a bunch of people who want to to guarantee their property investment.
I have some news for them - that doesn't happen in real life. You took a gamble and it didn't pay off - unlucky!
There comes a time where you need to look at the condition of both parties in a contract.
If say 60-70% of apartments do not complete where will Ballymore get the financing to hold on the apartments?
AIB will be looking for their money back. Have you heard about the state they are in?
If Ballymore reduce their prices slightly they will still be making a whopping profit - and quite right too.
If they don't - they stand to lose the whole business due to cash flow.
I don't think that both sides can afford to be too stubborn.
Best of luck anyway.
Ballymore holds 20% deposit and then can claim the rest of the money back from the original buyers.
Once the original buyer lose their deposit Ballymore can sell at any price (substantially lower £150k) it doesnt matter the difference will be claimed from the original buyer. It is all legal.
So Ballymore will never lose out.
"Once the original buyer lose their deposit Ballymore can sell at any price (substantially lower £150k) it doesnt matter the difference will be claimed from the original buyer. It is all legal.
So Ballymore will never lose out. - Anonymous"
_____________________________________
While that is correct in theory, in practice a high proportion of those that fail to complete, do so because they have insufficient funds. Ballymore have a right to sue for their full loss and would undoubtedly win their case in court, but their recovery is limited to the net worth of the debtors. The debtors will be forced to declare themselves bankrupt, so Ballymore will lose out as well.
I would say get out now.
Ballymore are also planning to build this around Pan Peninsula:
http://www.oraclegroup.com/News-and-Events/News/Ballymore-and-Oracles-1bn-Docklands-tower/
I bet they didn't mention that to buyers!
This means even more property at Millharbour, as if there isn't enough - Pan Peninsula, Icon, Indescon Court, various other developments and the Landmark just along the road.
Prices will go to around 400per sqft. Why not let the housing association have some more of the flats? I think some (around 40) have been sold to first time buyers where they buy 25% of the flat.
Also,
I walked by the management suite twice on Sunday, around 12noon and then at around 3pm. Both times this was shut with no sign of anyone. I ahve also noticed the fancy lights have been switched off on the outside of the building. They were on for a couple of weeks as I could see them from my flat at West India Quay then it all went dark.
Where has the Luxury gone? They switched off the lights to save electricity? :)
For anyone invested in early expect to see a substantial drop in price in the next 12months.
It’s all about supply and demand. There just isn’t any demand for high end luxury apartments in this area, anymore. If you look at any surrounding estate agent there are 100+ apartments up for let and sale with few takers.
Better to cut your losses.
I would agree with the previous post "get out while you can"!
Glad to see prices coming down now. Most of the buyers got greedy and bought 2+ apartments at the height of the boom, with a view of selling one to pay off the other.
Now they are complaining the prices have come down. You cannot have it both ways!
False confidence is their undoing?
I will be happy to see many more lose their deposits.
The market needs this to bring people back to reality.
Greed has fuelled the London house price boom so that ordinary Londoners on normal salaries cannot dream of getting on the property ladder. Where was the weeping and moaning of the City Boys then? No, they were quiet as they filled their boots with their bonuses and ramped house prices even higher.
Property speculation - not investment - is purely just like going to the bookies or playing poker.
When I lose on the National I don't go back to William Hill begging for my stake back. So you buy off plan thinking you are going to make a killing but then your gamble doesn't pay off. Live with it.
Normal Londoners have spent years paying the price for speculatoirs greed. Now we are having a market adjustment to bring some sanity back to the system and if the speculators have taken a bath then I, for one, will raise my glass for once to market forces.
It makes me laugh that people who have absolutely nothing to do with Pan Peninsula would want to spend time and effort bitching about a subject they obviously know zilch about.How sad are you lot gossiping like a load of quite honestly jealous billy no-mates.
Mike, would you like to enlighten us as to what you know about Pan Peninsula? A tad presuptious that nobody else apparently knows a thing!
Alan, you make an excellent point. The value of an investment can go down as well as up. If you don't accept that premise, you shouldn't be investing in the first place.
Andy
I live there so I think if anyone knows I do.Its a great place to live and will be sucessful.I am fully aware that property prices go up and down, so People such as myself do not appreciate train spotters like the guys commenting on this web site who obviously are consummed with jealousy because they will never be in a position to live there.If they were not interested in the building then why do they bitch and mock decent people.
What a joker. I am really jealous of your negative equity. I'm going to buy a flat on PP for half price!
Cheers for thouse losing money.
Mike
This is a discussion forum for all to contribute their own views.
Personally I would not have paid that much cash to live next to an ASDA.
I could have bought one but laughed at the original prices.
I assume you must be lonely in PP as its virtually empty. Rather than make comments on here perhaps you should be asking why the fancy lights are not working why the management office is empty and how long can the show go on with a lack of cash. The Irish bank requires its cash back.
Wharf Lad
Mike, out of interest and without wanting to cast aspersions, how much are the annual service charges in Pan Penisula and what % are they of your annual mortgage payments? You obviously did some calculations before investing in the development so if this is working out well for you, please let others know about it.
Mike
I have had a look at this development and the area you live in looks like a dump. No one in their right mind would want to live here. You got suckered mate! Quality is naff also - this is E14 east london, up market council estate style flats.
I feel sorry for you.
Well actually the majority of completions are happening over the next 6 weeks and the 1st load starting the end of this week. It is an exciting place to live and has a number of great services. It's sad that so many people have written such awful comments which come across to be bitter and riddled with jealousy. Yes there are a number of people who bought for an investment or a quick buck but that does not rule out the number of people who bought to secure a home. To wish what has happened on anyone no matter how big their bonuses have been is just rather sad. I have bought at a reduced price thankfully and have bought with the view of a home in an area that I enjoy living in but I am not laughing at the people who are struggling to complete. There is a lot of interest in the troubles surrounding this development but I am amazed at the vile messages written here by people who obviously cannot afford to buy here and so show what small minds they truly have on this forum.
I've been looking at Pan Peninsula and it seems like a great place to stay since I'd be working only a few minutes away. I was considering buying a studio since it (barely) fits into my budget.
I am largely ignorant of investing in the real estate market in general, esp in the UK. I have seen that studios in PP at Foxtons are going for 250k. Is there a possibility of getting a better deal? If a lot of the completions fall through is there a good chance of price reduction? Also, how much of the buying amount would I be required to cough up and how much would banks generally chip in for, assuming I have a fairly decent annual income?
I really hope Ballymore dont budge. Why should they? If the prices of the flats went up over the last two years then no one would be making such a fuss. Too many peple were trying to make a quick buck. Property speculation can and does go wrong. I say tough titties to all those who are losers now. Foxtons website is flooded with PP flats. Im waiting for a drop of another 15% and im there!! Someone's loss is my gain....yay!!
I'm with Rajesh on this one...people trying to make a quick buck and well, it all goes wrong. Tough titties i say because this is a great developement and I will buy an apartment here in 6 months time at 60% of the price the fools paid at the launch! I was at the launch, i waited 2 hours in the rain and i decided not to buy. How glad i am now to see all the greedy people lose...that's life i suppose!
Pride comes before a fall, Simon in Fulham.
Don't feel too smug and wish ill on others.