Investors in a failed Liverpool property development spoke of their financial nightmares after putting money into the project before anything was built.
Buyers at The Rise on Low Hill used their savings to pay for the ‘off-plan’ investment as nothing had been built to secure a mortgage against. They were told that at the site’s completion there would be 400 brand new apartments close to the city centre.
More than 100 people subsequently made an off-plan investment in the development. They were told by the developer that they could expect “an assured 8% annual return on their money”.
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However, the firm behind the development, Hill Top Rise Ltd, fell into administration in 2020. The company is linked to Primesite Developments which went into compulsory liquidation in 2019.
An administrators' report revealed that as well as the impact of the pandemic, one of the main reasons for its collapse was "contractual issues" - involving "losses on a number of contracts". The biggest of those, the report said, was seven-storey The Rise.
Works stopped in April 2019 on the site where the Gregsons Well pub once stood. Two investors, Mike and Billie, spoke to BBC Radio 4’s You and Yours programme about losing their savings after buying apartments at The Rise with cash. Another investor said she had lost £700,000 trying to buy eight flats at The Rise which were never built.
Mike, from Cheshire, invested in the property using his final salary pension to try and provide an inheritance for his five children. He said: “I wanted to provide something for them but that's gone now - my planned inheritance for my kids has gone.”
He added: “My wife wasn't particularly happy with me. And eventually that led to us getting divorced. I've now probably got to keep working for as long as I possibly can just to try and patch up and make things happen because I'm determined to try and be good for the kids."
Billie, from the south of England, hoped to gain rental income from the property to secure the future of her granddaughter who she cares for. She said: “I went up to Liverpool and looked at the site where there was huge rental opportunity from the local hospitals and universities that were there.
“I was getting involved in what they called an 'armchair investment' - that the price of the property when I was buying it would be far more by the time it was built. I thought: ‘Wow, this is fabulous, I can't really go wrong with this'.
“I didn't really know what an off-plan purchase involved to be honest. I paid my £5,000 deposit and it just went from there really. It never entered my mind that my money would be lost.”
Investors were told that their money would be kept safe in escrow accounts, however, these were emptied after the developer exercised its right to spend that money on the site. Their ownership of a plot at the development was also left worthless after the developer went bust.
They now have no legal claim on any apartments despite building work restarting at the site by unconnected developers. Some investors are now looking at taking a group action against the firms of solicitors who were supposed to give them legal advice over the contracts.
Kerry Tomlinson, who was managing director of Primesite Developments, told the BBC that he is “sorry for all the distress the collapse of The Rise under his leadership has caused”. He added that it was “the role of an independent solicitor to represent the interests of the buyers and ensure that they have a full understanding of their responsibilities, their risks and their liabilities in this kind of off-plan investment”.
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