Aug/090
The worst property investments of all time
In recent months we have seen and heard of some terrible investments on the stock markets and by financial institutions in general but in terms of the property market we look at some of the worst investments, globally, of all time.
1. Hotel of Doom
The North Korean government is looking for $330 million from foreign investors to finish the pyramid shaped Ryugyong Hotel, which towers 1,083 feet over central Pyongyang (see picture, above). The massive concrete white elephant is known locally as the “Hotel of Doom”. It was conceived as a flagship project for the communist government, but embarrassed officials have since wiped it from official maps as building work floundered due to lack of cash.
Construction was eventually put on hold in 1992 when the project ran into financial difficulties, but work has reportedly started again. When completed, the hotel will boast 3.9 million square feet of floor space and seven rotating restaurants. North Korea has already sunk $750 million, of 2 per cent of its GDP, into the building, but it is unclear how many rooms the hotel will boast, or how many visitors are expected when it finally opens.
2. A place in the sun
The brochures were too good to be true. Buyers gazed in wonder at those shimmering golf courses - yet to be built; the beautiful beaches - only a short two hour drive away; the lively restaurants and bars - now abandoned; and those glorious villas - mostly unsold.
Thousands of British ex-pats, wanting to live the dream of eating a full English on their own patio gazing out over the Mediterranean, are facing up to a Spanish property nightmare. Prices have slumped by up to 65 per cent in the last year according to some websites, as the market is struck by a country-wide collapse in house values and massive overdevelopment on the Costa Del Sol. In the most acute cases, Brits who have bought off plan are now stuck with apartments in uncompleted developments they don’t want but can’t sell.
3. World’s largest shopping centre
Investors in the new shopping malls opening in west London, Liverpool and Bristol over the coming year will hope the centres prove more successful than the world largest and possibly emptiest mall, in Donguan, southern China. The gigantic centre opened in 2005 and is four times the size of Bluewater, in Kent, with 6.5 million sq feet of retail space. However, the owners who sunk millions of dollars into the project have persuaded only a dozen stores to open. Still, shoppers dispirited by the lack of retailers can instead take a trip down a Venetian canal leading onto a replica St Mark’s Square, enjoy a ride on the indoor roller coaster or grab some food under a giant 80ft mock-up of the Arc de Triomphe, all added in the vain attempt to increase foot fall at the mothballed mall.
4. The collapse of Nation Life
Thousand of private investors lost their life savings when one of the UK’s first property funds, Nation Life, collapsed in 1974. It was part of the property empire of tycoon William Stearn, who holds the title of the UK’s biggest bankrupt, after losing £118 million. When banks stopped lending Nation Life money, the holdings quickly ran out of cash and had to fold. The Policyholders’ Protection Act was passed in 1975 as a direct result of Nation Life’s losses, but there were no compensation schemes at the time to prevent thousands of small investors from losing everything. In April 2000 William Stearn was banned from serving as a company director after a second commercial empire worth £11 million collapsed.
5. Poor Barry Gibb
It may not have been the worst property investment, but it could certainly be the unluckiest. In 2006, Barry Gibb, one third of spandex-covered falsetto super group the BeeGees, blew £1.5 million on the one-time home of Johnny Cash in Nashville, Tennessee. The bearded former hunk sunk huge amounts of cash in the project, thoroughly renovating the three-storey timber house. Sadly, weeks before work was due to finish on his dream holiday home, tragedy struck when a devastating fire ripped through the property, causing wide-scale damage.
6. Canary Wharf
It was a squalid stretch of land home to an abandoned watery industrial estate, miles from any decent forms of public transport. But Michael von Clemm, chairman of Credit Suisse First Boston, spotted an opportunity. On a visit to the site in the early 80s he envisioned spending billions of pounds of private and public money building 12 million square feet of office and retail space. It was music to the ears of local developers. Welcome to Canary Wharf, one of the most audacious urban regeneration projects in Europe and a fitting monument to Thatcher’s free market revolution. It arrived complete with the tallest building in Europe (at the time) and even its own zippy transportation system. Sadly, just two years after its iconic office block was completed, the London property market collapsed. The gleaming towers of E12 stood half vacant and in 1992 the company behind the estate, Olympia and York Canary Wharf Limited, filed for bankruptcy, losing millions of pounds of investor cash.
7. Hamilton Palace
Notorious businessman and property owner Nicholas van Hoogstraten has sunk £40 million of his own money into Hamilton Palace, a spectacular vanity project sitting in the rolling Sussex downs near the small town of Uckfield. It currently lies abandoned and incomplete after reports of a disagreement with builders. Mr van Hoogstraten, who was one of the UK’s youngest millionaires, has also apparently been at war with the Rambling Association who believe they have right of way across his land.
8. New-build city-centre flats
Thousands of newly-built urban apartments have flooded the market in recent years, dominating northern city skylines, but now prices are plummeting by up to 70 per cent. New-build blocks attracted amateur buy-to-letters eager to earn a quick buck from the property boom. But now many fear they paid vastly over the odds. One report cites a three-bedroom apartment in Kelso Heights, a development near the University of Leeds campus in the centre of the town, which was recently sold for £71,000. It was bought in 2006 for £237,999. Flats in certain developments in areas such as Manchester, Newcastle and east London have also fallen in value by 40-50 per cent.
9. Land banking
Investors have lost thousands of pounds to “landbanking” firms in recent years. Dodgy companies buy tracts of greenbelt land, then sell chunks of it to individuals on the promise that when houses need to be built on their acres of countryside, the value of the land will soar. This will happen a couple of years after their purchase, investors are told to convince them to hand over cash. However, it isn’t that easy to get rich quick. It emerged that many of the schemes fell within areas that local authorities said would never gain planning permission for new homes, or at least not in the lifetime of the devastated investors.
10. Debbie does bankruptcy
Shy and retiring are not words usually associated with the Hollywood legend Debbie Reynolds, star of classic musical Singin’ in the Rain and mother of actress Carrie Fisher. In the mid-80s Debbie decided to open a hotel in Las Vegas, modestly titled the Debbie Reynolds’ Hollywood Hotel and Casino. The centre showcased her illustrious career and also contained her full collection of Hollywood props and costumes, including the headdress used in Cleopatra. Sadly, the world wasn’t ready for such a Debbie Reynolds extravaganza, and the project flopped. Debbie had opened the hotel with her then husband, real estate developer Richard Hamlett. But the couple divorced and she was left with picking up the bill for the failed venture. In 1997, poor Debbie was forced to file for Chapter 11 bankruptcy protection.
Aug/090
Claim back 3 times your tenancy deposit from your landlord
Calling all tenants! If your are letting a property from a landlord and are concerned that your deposit has not been placed into a tenancy deposit scheme you can now make a claim to the County Court to receive your deposit back in full. On top of this your landlord will owe you 3 times your tenancy deposit as compensation.
If your deposit is not in a safe and recognised tenancy deposit scheme within 14 days of you giving it to the landlord your assured shorthold tenancy agreement becomes unenforceable, which mean it is more difficult for a landlord to evict you. The usual 2 month rule will not apply and the landlord will need to revert back to the 17 grounds for eviction/posession (such as if the mortgage on the property was granted before the tenancy and dictates the date on which posession should be taken back by the landlord).
Your landlord has a duty and responsibility to follow the correct procedure. If he/she does not do this then you, as a tenant, are not being treated in a way which has been clarified by law. YOU ARE ENTITLED TO COMPENSATION!
Tell us a little about yourself by filling out the form below and our partnering firm of solicitors will contact you to discuss in more detail. THIS IS A FREE SERVICE AND THEY WORK ON A NO WIN NO FEE BASIS.
Update (24/08/09): We have recently learned that if your tenancy agreement has memorandums attached to the back of it you may be able to make numerous claims. The largest claim we have received so far is for a tenant who had lived in a property for 3 years and had renewed his 6 month teneancy 5 times. He is now in line to receive compensation totalling around £16,000 as a payout from his previous landlord.
Aug/090
Halifax: UK house prices on the increase
According to one of the UK’s largest mortgage lenders, house prices are now rising at a constant rate adding weight to the arguement that the housing market is undergoing a recovery. Halifax, conducted a survey of all their properties and results showed a 1.1% increase in July alone meaning the average price of a house has increased to £159,623.
Increases in average house prices have been hard to come by since October 2007 when the last quarterly increase took place. However, in the 3 months prior to July house price had already increased by 0.8% on the previous quarter.
It is one thing being told this by estate agents and mortgage lenders, but when large private housebuilders make similar claims we should take notice. Taylor Wimpey said it was seeing signs of a turnaround, with its sales rising in the first six months of the year. A company statement read: “there are signs that the situation is beginning to improve.”
Jul/090
Direct Mortgages - The best on the UK market
Mortgage brokers have been dealt a major as The Times Online report that 2 thirds of the mortgages on the market are available through the lender only and the previously commonplace practice of your mortgage broker contacting the lender on your behalf to negotiate a deal could soon be dead in the water. As if this news wasn’t bad enough, many of the deals are actually at a marginally better rate - especially if the consumer visits their branch to arrange it.
The statistics behind this story reflect a gloomy forecast for mortgage brokers. Last year over 70% of mortgages were only available through a broker but clearly the credit crunch has had a huge impact on the banking system and ideas and recommendations that would otherwise have taken years to come to fruition have now become the way of life.
Another reason why banks are doing this is to get a grip on the flow of mortgages being dealt out. They also believe that they can get a better feel over whether handing a mortgage to a consumer is a good idea.
Statistics from Moneyfacts.co.uk
Story from: The Times Online
Jun/090
Shared Ownership Mortgages
Shared ownership mortgages are aimed at people who normally wouldn’t be able to own their own home. This is because the consumer buys one half of the property and the housing association buy the other half and rent it back to the consumer. The consumer will have the option to buy back the half they don’t own at a later date if they wish.
Jun/090
Less Remortgages, More Repossessions
Homeowners whose mortgages run out over the next 12 months are going to struggle to remortgage due to lenders increasing the cost of borrowing. Higher interest rates are to be passed on to standard variable rates which in turn will increase, as will the number of repossessions. Consumers paying £576 a month could soon be paying over £1000 per month. And as the prospect of redundancies and unemployment rise, lenders are tightening their criteria.
Over a million consumers have a home loan worth more than the value of their home, and these are more likely to face repossession as the number of available deals is reduced increasing the price of remortgages. Those consumers who have missed payments on their mortgage also face a reduced number of deals available to them as lenders look more to financial and employment history. Steps can be taken to put you in a better position such as cancelling credit cards that don’t get used, overpaying on your mortgage and reducing unsecured debt.
Jun/090
HSBC to Give Homeowners Low Mortgage Rates
HSBC is giving homeowners the chance of low mortgage rates by matching the low standard variable rates of other banks and offering to fix those low rates for 5 years, and are hoping this will encourage more people to remortgage. This is only available to home owners with at least 25pc equity in their home and will be available for a limited period. Some consumers will be charged £4,699 to fix their rate.
Jun/090
Little improvements are better than expensive ones
Improving your home and ready-ing it for sale doesn’t have to be expensive, nor do you have to be ripping out old furniture / worktops / kitchens to replace them with new. The recession is a great time to make improvements because everything is reduced in price and there are lots of offers and sales.
There is no need to create a lot of work for yourself, when you are not going to see the benefits. Why put in a new kitchen for someone alse to reap the benefits. Instead, key advice to selling a home is to create additional space. This doesn’t have to be extensions after extensions, it can just mean moving the furniture to better accentuate the room. Decluttering rooms by adding extra storage will attract a potential buyer, as will energy saving insulation such as double glazing.
Another minor thing that costs very little to do and attracts buyers is keeping the garden in shape. A tidy garden that looks pretty will encourage potential buyers to imagine themselves in your garden.
Steer clear of things that are expensive to keep, such as saunas, as this will only deter buyers.
Stick to basics and prepare to lower your house price to just under the estimated value. Having a look at prices in your local area will give you a good idea at what your house will most likely sell at.
Jun/090
Property Selling Advice
Selling in the recession requires the extra mile. Selling a property in the current recession is extremely hard, but maybe not impossible. A good idea is to see what price other properties are being sold at in your local area and reduce the price of your house to slightly under that, giving you an edge on the rest from the outset.
Highlight your homes good points so that potential buyers can picture themselves living there. This will take away any emphasis on the bad points of the house. It would also be a good idea to throw a party for friends and neighbours so that people get to hear about your house through word of mouth. Close friends, family and neighbours are more likely to speak highly of you and your home and that can promote a sale.
Jun/090
First time buyers need a little help
Research shows that first time property buyers fear they may never be able to afford to buy their first house. Even though mortgage rates are lower, lenders still require large deposits for home loans. In the recession the deposit required is 25%. Compared with a much lower rate of 11% last year, and the fact the recession does not appear to be lifting anytime soon, most first time buyers are giving up hope of ever making it onto the property ladder.
The Government has done little to aid the situation and this will only detriment the housing recovery. A healthy housing market needs first time buyers, but with rising unemployment and credit crunching first time buyers are less likely to make it onto the property ladder anytime soon.
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