£47k bill for new build that’s yet to file plans
Probes a world of scams and scandals
Ms H.V. writes: In January 2018, my son Michael paid a deposit on an off-plan new build apartment in Smithfield Square, Birmingham. The developer, Prosperity Wealth & Developments Ltd, promised a building time of 24 months, and Michael has dutifully paid instalments every month while renting accommodation and waiting for his new apartment. Last year, though, we discovered that there was still no planning permission for the scheme, so he put in a claim for the £47,000 he has paid so far. But the developer wants to retain £6,599, and has asked him to sign a document agreeing to this before it releases the remaining £40,000 or so. This is a shoddy way to treat a young man trying to buy his first home.
BIRMINGHAM seems to be going through a real regeneration as far as developments are concerned, and the Smithfield site is just part of this. You gave me a copy of Michael’s reservation form, showing that he was buying a two-bedroom apartment with an estimated completion date of January 2020.
By December last year he had paid a deposit and two years of monthly instalments, but was offered a refund of only £40,250.
The terms of the deal do not set a timetable for the development, but promotional material does indeed say the apartments should have been ready in January. In fact, though it is aware of the scheme, Birmingham council has yet to receive a detailed planning application, so work has not begun.
I was prepared to argue this made the deal one-sided, as Prosperity Wealth could have clung on to Michael’s cash for ever, saying the agreement did not set a rigid timetable. And if no planning application was filed, Michael would never be able to reclaim anything.
But no argument was needed. I asked Prosperity Wealth’s boss Joe Billingham to look into what you said. He and his company are experienced developers in a number of cities, and he told me: ‘Smithfield has been a longer journey than anticipated. But we have a live preapplication with Birmingham City Council. The primary delay has been around BCC’s desire for a single application for the project – a £1.5 billion regeneration to include the residential, commercial, retail and public realm – alongside the typical public-private sector collaboration delays experienced on projects of this magnitude.’
The off-plan prices were set at a discount to the expected values of the finished flats, making them more suitable to long-term investors hoping to rent them out, rather than first-time buyers keen to move in as soon as possible. According to Prosperity Wealth, an email to Michael in January 2018 explained there could be bumps in the road to development.
The bottom line is that Prosperity Wealth has given Michael three options. He can sit it out and wait for his flat. Or he can take back the instalments but leave the deposit, entitling him to an apartment at the discounted price when building is complete. Or he can take back all his money, surrendering his right to the discounted price.
Michael has chosen the third option, and I have told Prosperity Wealth, so he will now be getting £46,850. A good result all round.