House purchase issue

bullet13

Hello Everyone,

Myself and my partner are in the process of purchasing our first house and we’re now in a situation about the purchase and are looking for advise and maybe possible opinions from people who might have also been in similar situation.

So we've the house picked out we want to purchase, standard 3 bedroom semi & our booking deposit is down. It’s a new house (last house in this particular development - which means the estate will finished when our house is finished) and our house is part of phase 3 of this development.

Everything had been going smoothly until we met with our solicitor to sign the contracts. He had found one issue with the purchase. As part of the planning permission for the development, the developer has to give affordable housing to the council (this is standard for every development). Or the developer can offer to give the council a monetary contribution or land instead of a house(s). Nothing unusual about that either.

However for our particular house in question (I'm assuming all the houses in this phase are in the same situation) the council haven't received anything yet from the developer. There is a letter from August 2008 from the council stating the council are willing to accept money instead of a house(s) for this phase and asked that the developer contact the council to sort this out. However nearly 2 years later this hasn't been resolved. The developer is saying that they've made offers to council but no agreement has been made.
We're due to get the keys (if we decide to go ahead with it) at the end of August.
If we proceed with the purchase - according to our solicitor, if this doesn’t get sorted, the very worst case scenario that could happen down the line would be that the council would have the right to knock our house (however the chances of it going this far would be extremely slim).
The developer can only give their word that they’ll do their best to sort this as soon as they can but it’s not going to happen before we’re due to get the keys.
So our question is – do we go ahead with the purchase of the house and take the gamble that this will get sorted?
There are no empty houses (as far as we can see) – apart from the ones been built at the moment – in the estate. So either other buyers weren’t made aware of this issue or decided to take the builder’s word that it would be eventually sorted.
Has anyone ever been in a situation similar to this? And if so – what did they do?
As I’ve mentioned before – we’re first time buyers so we’re looking for as much advice as we can get before we tie ourselves into a mortgage.
All comments appreciated! Thanks.

ZYX

If your solicitor is saying:
if this doesn’t get sorted, the very worst case scenario that could happen down the line would be that the council would have the right to knock our house
then you cannot really go ahead can you? Even if you love the house other 3 bed semis will come up. Other houses from the other phases will probably come up in the near future in this development if you are totally sold on it.

TheCityManager

It's your first house together..it's the start of yoru life together..

Pull out of this ..there are thousands of other houses to be had..never take unnecessary risks with your money / houses !!

Treehouse72

bullet13 wrote: »

So our question is – do we go ahead with the purchase of the house and take the gamble that this will get sorted

Do not under any circumstances do this.

There is something known as a Black Swan event. The theory goes that people take reasonable precautions against somewhat likely events. So, for example, you might stress test your income to see if you could handle future interest rate rises. This is just good risk management of a somewhat likely future event. Another example would be taking out car insurance to hedge the risk of the unlikely - but very possible chance - your car gets stolen.

But, the theory continues, there are certain events that are infintesimally unlikely, but on the one occasion they do happen the effect is so profound that you should have planned for it all along. This is the situation you are in...the likelihood your house would be knocked down is very, very small. But if by chance that did happen, the result would be your and your partner's total financial ruin. That would be a Black Swan event. Very unlikely, but very large in its consequences if it happens.

So walk away. It is not worth the risk. Besides, prices are falling and I will bet you anything you like that you will see a house for sale in this estate within a year that will be cheaper than the one you are negotiating on. Quote this post back to me in 6 or 12 months and we can have a sigh of relief that you took this advice.

http://en.wikipedia.org/wiki/Black_swan_theory
^^ Just realised my explanation above of Black Swan isn't quite right, but it's close enough.

bullet13

Thanks everyone for your thoughts. After speaking with few different people it's looking likely that we are going to walk away from this house - not just because of the planning issue but also the mortgage broker is advising we're paying too much for this house.....so paying too much for house that has planning issue sounds like a recipe for disaster!! As we're not in any rush I'm fairly confident that if we wait a while longer - possibly a year or so - we'll get better value for our money. maybe even a house in this same estate for less money & planning sorted!!

ricman

and in 12 months time you,ll get house x for 20 per cent less.The developer is maybe going out of business or going into nama, so he may not see any point in paying 500k to the council .
we had a black swan event already,house prices went down by 50 per cent,only the government is keeping the banks going.