About
about the ‘Collective’
The Berkeley Homes Collective was formed in January 2009. We are a large, organised, egalitarian, proactive and wholly independent group of homebuyers who have contracted to purchase ‘Off-Plan’ properties from one of the UK’s leading housebuilders, Berkeley Homes; part of The Berkeley Group Holdings plc, up to two years ago and before the global financial crisis began. Our membership comprises people who bought homes and we are not professional investors. The Collective was initially formed as a support group and open forum for people predicting completion issues due to rapidly deteriorating market conditions to meet one another as contact with Berkeley Homes had proved negative for most. It quickly grew as completions approached and we continue to verify/add new members daily seeking support and advice.
Buyer Awareness Campaign Photograph by: Teri Pengilley
The majority of members in the Collective are buyers of Berkeley Homes’ properties at Caspian Wharf, Royal Arsenal and Chelsea Bridge Wharf developments, all located in London.
aims
Our core aim is to coherently and pragmatically tackle the issues head on in an open and co-operative manner, put pressure on Berkeley Homes, the UK Government, RICS and the Banks to work together with homebuyers to address this critical situation, deal with the growing crisis whereby homebuyers are now forced into default through no fault of their own and find a sensible conclusion for all. This was initially to be a private conversation between developer and customer. Berkeley Homes have woefully failed in their stated desire to work with its customers so this has had to become a public discourse.
Our secondary aim is to educate and publicly raise awareness of the situation more widely questioning the very fabric of the ‘Off-Plan’ market, its sustainability and ethics. This is an inflexion point whereby this industry’s benefits and pitfalls should be deeply scrutinised and excised where need be if it is to continue as a business model at all.
history
The members of the group prudently secured homes at prices they could afford and could fund when suitable mortgage financing was widely available often using life savings as deposits on future homes. They became victims of circumstance as the financial markets crumbled, appropriate mortgage financing became inaccessible as loan criteria increased, Loan-to-Value ratios plummeted with max products being available at 75%, and property valuations tumbled particularly for new build properties (more than 40% in the case of Royal Arsenal and circa 30% at Caspian Wharf). Essentially, members have been forced into unwilling default on those purchases. Members were able to achieve mortgage offers, albeit at lower levels than the contract value but above the market value of the properties, however Berkeley Homes have taken a very uncommercial and aggressively unyielding stance that buyers must be held to the letter of their contracts regardless of prevailing market conditions to the bitter end. They are officially now actively pursuing those homebuyers forced into default despite having been told since early 2008 that this will make many, if not all, of their customers bankrupt. This will be a cost to the company, and consequently its shareholders, yielding a negative result.
double-whammy
Not only has the ability to complete disappeared but surprisingly default doesn’t stop with just the loss of the homebuyers deposit; a significant impact alone for the homebuyer as it often represented life savings invested in their future. A Berkeley Homes contract, it transpires, wants more. Tony Pidgley, Chairman of The Berkeley Group Holdings plc, confirms that defaulters lose their deposits and will then be sued for the difference between initial contract value and whatever Berkeley Homes can sell the property for in the open market. Fire sales such as this often equate to 50% or less so the ‘damages’ Berkeley Homes would seek can run into £100’000s on each property. They also attach ‘costs incurred with reselling’ including marketing etc and ‘interest’ on top. Although no doubt some of their customers are cash or asset-rich, this group exists for members who do not have this luxury and will simply result in bankruptcy.
welcome
We welcome new members or commentators that have a connection to this issue to speak up and become proactively involved on our open forums. We verify members who bought from Berkeley Homes for private forums within the site where they may share their story openly and get advice from others experiencing the ‘Off-Plan’ trap.