Buyers of apartments in the high-profile Titanic Quarter are seeking legal advice as they can no longer get mortgages to cover the original cost of their dream home, the Belfast Telegraph can reveal.
Completion of the first release of apartments is due next week and people who are contractually bound to buy at a price set two years ago before the property downturn now find themselves as much as £50,000 short thanks to low valuations by surveyors acting for lenders.
CMG Solicitors in Belfast confirmed they were acting for over 100 members of an action group of concerned buyers. A spokeswoman for the firm said they wanted a “commercial, viable and realistic” solution to the problem.
But purchasers are at a stalemate with developer Harcourt Developments, which maintains the contract for sale must be honoured at the original purchase price.
Buyers paid a 10% deposit two years ago for a sought-after apartment costing from £175,000 for a one-bed to £350,000 for a two-bed or £600,000 for a penthouse. Valuations are coming back an average of 30% short, leaving a buyer of the cheapest one-bed having to find around £50,000 to complete.
They are faced with having to raise tens of thousands of pounds from other sources after banks and building societies refused to pay out the full amount after carrying out fresh valuations.
One purchaser, who did not wish to be named, said: “Surely they could afford to reduce and certainly, they would still be in profit.”
Estate agent Nicky Brennan of Morton Pinpoint — not the agent acting in the sale of Titanic Quarter — said the problem was being repeated across the city, from the highly-anticipated Ormeau Bakery development to an upmarket development at Custom House Square, where valuations are also reportedly around 30% short.
Mr Brennan said he could see both sides. “Why should developers give up a contract on the one hand — but on the other hand, there should be some leeway even if people were prepared to walk away from their deposit. It’s a tough one.
“Maybe there’s some form of co-ownership which could be adapted for the situation.”
Dr Martin Haran, a research associate at the University of Ulster’s School of the Built Environment, said the problem of deficent valuations following pre-agreed prices was “widespread” in Belfast and Dublin. But he said solutions had previously been found in Belfast.
“It all depends on the developers’ own flexibility and their flexibility with their bank in particular. Some developers have negotiated reduced costs and in some cases, equity share arrangements with buyers.”
The Titanic Quarter is also the planned location of offices of Citigroup, a new Public Records Office and a campus for Belfast Metropolitan College.
Work on the Public Records Office has already started. There are plans for as many as 7,500 apartments.
In an interview with Bloomberg this year Mike Smith, Titanic Quarter chief executive, said around 400 apartments were bought in the summer of 2007, although demand for them has slowed dramatically with only a “handful” bought since then.
Mr Smith said: “The credit crunch has made a big impact. It’s a tough time.”
Meanwhile, Len O’Hagan, chairman of Belfast Harbour Commissioners, said last week that all but about 30 apartments in the initial phase of 500 had been sold.
A query to Harcourt Developments was directed to Mr Smith, but attempts to contact him for comment were unsuccessful.