No need for Bank Guarantees with reputable Developers

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This topic contains 12 replies, has 4 voices, and was last updated by Profile photo of Paul Paul 10 years, 7 months ago.

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  • #51706
    Profile photo of Paul
    Paul
    Participant

    The big difference between buying off-plan in the UK compared to Spain and many other countries is the fact that in the UK Developers only require 5-10% deposit for exchange of contracts and nothing until completion. Most Developers in the UK can build out either because they are big enough (and reputable enough) to absorb the costs of development or their Banks fund the developments.

    Overseas and Spain is a good example the Developers want stage payments because they can’t or won’t fund the build themselves but rely on clients making payments, and too often some mickey mouse individuals set themselves up as Promoters using builders to do the work so more chance of someone going bust.

    If Spanish Developers were bold enough to copy the UK’s example there would be little need for Guarantees which buyers all too often cannot exercise properly.

    Apart from that, clean up the rogue agents and the rogue lawyers and people would gain confidence in buying again.

  • #61630
    Profile photo of mike
    mike
    Participant

    @paul wrote:

    Overseas and Spain is a good example the Developers want stage payments because they can’t or won’t fund the build themselves but rely on clients making payments, and too often some mickey mouse individuals set themselves up as Promoters using builders to do the work so more chance of someone going bust.

    Does this mean that Spanish developers take little or no risk?

    @paul wrote:

    If Spanish Developers were bold enough to copy the UK’s example there would be little need for Guarantees which buyers all too often cannot exercise properly.

    Given the above why would they care?

    @paul wrote:

    Apart from that, clean up the rogue agents and the rogue lawyers and people would gain confidence in buying again.

    I think that will take a generation but I’m interested in hearing what you think. Do you believe that a bit of good publicity and 18 months of honest salesmanship will bring buyers back to the market?

  • #61657
    Profile photo of Paul
    Paul
    Participant

    Mike, when I think back I don’t know why I was talked into buying under the stage payment scheme/Bank Guarantees etc nor the fact that most buyers end up doing this abroad. I wouldn’t buy under these terms in the UK and I doubt if anyone else would either. With hindsight it seems such a risky thing to do, maybe paying up to 75% before completion with the Developers then holding all the aces, the lawyers not pointing out in some cases that Guarantees cannot be exercised for ages etc, or Developers going bust etc.

    Personally I don’t think they take so much risk in Spain (the Developers), nor do I think quite a few of them are so trustworthy as well known housebuilders in the UK.

    I do think a LOT of good publicity and HONEST salemanship would tempt people back, too many are aware of the difficulties due to websites like this and loads of bad publicity, although I tend to agree with various findings that many parts of Spain are well overpriced re property, and commissions too high.

    Will things get better, I doubt it for a long time, I wouldn’t be confident of buying on the Costas del Sol and Blanca again?

  • #61659
    Profile photo of Anonymous
    Anonymous
    Participant

    I agree with Paul. Personally, we would NEVER EVER buy off-plan anywhere, except the UK. I would like to buy a property in Spain, my husband though has lost all trust in anyone to do with the property market there.

    If we were to buy,we would buy from someone selling privately rather than going to an agent, but I’m not sure if that is always feasible. Apart from a small deposit as a gesture of goodwill, we would not willingly pay anything upfront, until we were satisfied and our lawyer was satisfied with the legalities etc, of the property. The price would have to be investigated too.

    I think the Costa del Sol has shot itself in the foot. Because of the widespread publicity of the Marbella Town Hall fiasco, I think it will put many people off buying there for many years. There are many other lovely places to live/buy a holiday home/invest in. Why take the risk.? 🙁

  • #61693
    Profile photo of Paul
    Paul
    Participant

    Maybe British purchasers could have some influence re buying abroad and in Spain in particular by just refusing to accept Agents’ and Developers’ biased payment terms, we wouldn’t accept these in the UK so why abroad?

    It’s high risk in Spain especially when people like Claire and all those caught up in similar fiascos, cannot exercise their Bank Guarantees, and when the selling agents (Awful etc) did not provide a ‘duty of care’ to their buyers in the 1st place to ensure these developments had legal building permits before selling these developments as ‘exclusives’. The agents of course don’t want to know afterwards but should in fact be legally responsible to refund monies paid in these cases, and then make their own claims on the Developers/Banks etc, the clients should have protection if the agent was honest!

  • #61694
    Profile photo of Anonymous
    Anonymous
    Participant

    Ocean View Properties have lodged a compaint in the Malaga Courts against Aifos. Hundreds of their UK buyers have paid money for properties never built.

    Ocean claiming 20 Million euros.

  • #61695
    Profile photo of Paul
    Paul
    Participant

    dorothy, are Ocean View anything to do with Awful?

  • #61698
    Profile photo of Anonymous
    Anonymous
    Participant

    Hi Paul,

    Don’t know of any connection but would Awful have the integrity to lodge a complaint with the courts on behalf of their customers??????!!!!

    Let’s hope the courts come down hard on the developer, might make others think twice in the future.

  • #61699
    Profile photo of Anonymous
    Anonymous
    Participant

    I don’t think it has anything to do with OE.

  • #61726
    Profile photo of Paul
    Paul
    Participant

    Hi Dorothy, you are right of course about their integrity??? it was a bit of tongue in cheek on my part, maybe hoping that they would one day get a respectable after-sales in operation!!! Pigs might fly and fly and fly!!!

  • #61800
    Profile photo of Paul
    Paul
    Participant

    Question for Mark

    Have you heard of any Developments on the Costas where there aren’t stage payments but UK style off-plans of 10% down and nothing until completion? I think purchasers should try and insist on this method if they intend to buy off-plan and if they can’t, then walk away, that would shake up the Spanish property system.

    Also, people need to beware of Developments in Spain where the agent/developer is paying the mortgage for 2 years or so which I’ve heard of. Basically that 2 years is added to the original price, you get nothing for free, it’s another con!

  • #61802
    Profile photo of Anonymous
    Anonymous
    Participant

    Hi Paul,

    Some of the past Aifos developments only asked for 20% deposit and the rest on completion, so no guarantees with anything!

  • #61807
    Profile photo of Paul
    Paul
    Participant

    Thanks Dorothy, however I think 20% deposit is still too much compared to UK’s 10% and, I wouldn’t deal with Aifos personally having heard problems being aired about them.

    Purchasers should change Spain’s market by insisting on 10% and balance on completion, or if they don’t play ball then walking away, sooner or later the agents/developers would have to comply.

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