# Lose deposit or continue with purchase



## darren0071 (24 Aug 2007)

Hi 

I am looking for some advice

I purchased an apartment last year as an investment in killegland Ashbourne town centre.

Deposit paid (12K). Its now ready for signing (Aug 2007). Its gone up by 15-20k since last year and there is still another phase in the development to be completed.

I would break even with all the costs e.g stamp duty, fees as it has appricated by the above amount.

As property market has slowed I am thinking should I pull out and loose my deposit? or rent it and hope for more captial appreciation when the final phase is completed? I have an interest only mortage and the rent would cover this (just about!)

Also can I sell it straight away? or do I need to own for six months?

Any advise

Thanks


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## ang1170 (24 Aug 2007)

darren0071 said:


> Deposit paid (12K). Its now ready for signing (Aug 2007).


 
I don't understand this - are you saying contracts aren't signed yet? Any deposit paid before contracts is usually refundable. If you don't want to proceed, it shouldn't mean loosing anything.


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## darren0071 (25 Aug 2007)

Hi 

I ment completion of the pruchase

The contracts have been signed already. Sorry for confusion


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## ClubMan (25 Aug 2007)

Did you actually do any number crunching to assess the viability of this deal based on different realistic "what if" rental income and capital gain scenarios? If not then maybe you should as a matter of urgency in order to decide what to do now. Asking people to gaze into their crystal balls is pointless.

If you do buy it you can sell it immediately but since you are presumaby buying as an investor rather than an owner occupier then the normal tax treatment applies (e.g. stamp duty on purchas, _CGT _on any resale gain etc.). No offence but I am gobsmacked by your seeming naivety in this matter.


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## Persius (25 Aug 2007)

darren0071 said:


> Deposit paid (12K). Its now ready for signing (Aug 2007). Its gone up by 15-20k since last year and there is still another phase in the development to be completed.
> 
> I would break even with all the costs e.g stamp duty, fees as it has appricated by the above amount.


 
Just cause the builder is asking for 15-20k more for *new* apartments, doesn't mean that you will get an extra 15-20k if you try to sell your appartment, which would no longer be considered new. You may not even get an offer of what you paid for it. Perhaps consult an EA and ask them to value your apartment.

Remember also that you are _legally_ obliged to complete the sale. If you walk away not only will you lose your deposit, but the builder could also sue you for not completing the sale. Whether a builder would do this in practice is another matter. There are a few previous threads on this - a search should find them.


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## niceoneted (25 Aug 2007)

You say you bought it as an investment so did you think this would be short, medium or a long term investment where you are concerned? I would also think that buying a property as an investment is a long term thing so in that case I would keep it. Just because prices may not be the best at the minute or that they are not gaining does not mean they won't have in 15 - 20 yrs.


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## darren0071 (25 Aug 2007)

This investment is short term, 2 years max. But this will also depend on the market at that time.

Good to know I can sell straight away if I want though


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## Guest120 (25 Aug 2007)

darren0071 said:


> Good to know I can sell straight away if I want though


How do you know this?


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## CCOVICH (25 Aug 2007)

I think they mean that there are no tax issues stopping them from selling (if they can find a buyer) straight away.

But I wonder would the developer have a clause in the contract to prevent 'flipping', i.e. selling on prior to completion?

Maybe they won't care either way if there has been no increase in price?


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## Bronte (28 Aug 2007)

OP how much stamp duty did you pay? If you make 15 to 20 K profit on resale you have to pay capital gains of 20% less costs. 
How are you gaining. You will have paid the original stamp duty and legal fees out of your own pocket, you will pay capital gains and legal fees on selling. 
There is no guarantee that your property has gone up by 15K. You cannot know this or nor can anybody else tell this until you actually sell. 
Personally I don't understand anyone buying a property as a short term investment. It's risking too much.
If you hold onto it there is no guarantee of capital appreciation. Already you are in trouble if the rent doesn't even cover the mortgage (which is interest only) How are you going to pay the capital back?
Finally as far as I know if you pull out now they can go to court to force you to complete. 

Also auctioneering fees on selling


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