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January 25, 2010
Investors Fighting Back Against House Builder
Berkeley Homes is facing the prospect of a class action at many of its developments. The developer is pursuing 13 parties through the High Court for failure to complete their purchase of homes. Of these 10 have requested individual counterclaims be heard together in a class action on the grounds of “unconscionable bargain” and misrepresentation. The individuals allege that Berkeley substantially overestimated the value of these properties at the time agreements were made. The house builder has strongly denied these allegations.
With the prospect of further claims against the house builder, the implications for the industry could be substantial. Given that most house builders are attempting to strengthen their capital ratios and stabilise their balance sheets, this news could be very unsettling for many of them.
The Estates Gazette reported in December that in London between August 2008 and December 2009 eight companies made 300 claims against buy-to-let investors who failed to complete on off plan purchase contracts.