How buying a part-exchange property can turn into a nightmare

Sleeping on her daughter’s sofa for four months and suffering from acute stress with the threat of a £22,000 penalty payment hanging over her wasn’t what Janet Walters envisaged after she exchanged contracts on what she thought would be the perfect home in Harrogate.Her experience lays bare the potential perils of buying a second-hand property that has been taken in part exchange by a developer.Part-exchange schemes are popular and can work well for those who want to buy a brand new home. If it fits the criteria, the house builder agrees to buy your existing property for a set price, often slightly below the market value, and will then put it up for sale to recoup their money.One of the most enticing aspects is that you get to stay in your old home until your newly-built one is ready for occupation.There are few problems when new-build developments are on schedule but when they are delayed it can cause major issues, mostly for the person who is contracted to buy the part-exchanged property.This is what happened to 74-year-old Janet. She spotted the part-exchanged house for sale after deciding to move from Leeds to Harrogate to be closer to her daughter Karen.In May last year, she agreed to buy the second-hand house from Harron Homes, who had taken it in part-exchange for a new home on one of their new developments.

Commitment made

Documents were signed and Janet paid £250 to commit to the purchase. The completion date for the occupants to move out and into their new home was given as August.“My mum was assured that the house in Harrogate would be ready to move into in August last year. It wasn’t but Harron Homes put pressure on her to pay £1,000 and exchange contracts in September and that meant she had to complete on the sale of her house in Leeds, even though her buyers were happy to wait.“At that point, Harron said that the part-exchanged house would definitely be empty and ready to move into in October.“So she moved in with me for what she thought would be two weeks.”

Hefty penalty

The exchange contract had a long-stop clause of April 2020 stating that if Janet broke the contract before that date and refused to go ahead with the purchase, she would be liable to pay Harron 10 per cent of the purchase price, which was £22,000.“Alarm bells rang when I saw the long-stop date and we questioned it but the person we were dealing with at Harron said it was just a formality and was absolutely nothing to worry about and to ignore it,” says Karen.The completion and move-in date in October came and went. Another promise of November 29 and then December 29 also proved false.“We drove up to see the development that the family in the part-exchanged house was supposed to be moving to. That was in December and there were no windows in the houses and no plaster on the walls.“I knew that it would be at least March this year before it was ready. The person we were liaising with at Harron must have known that the dates he gave us were completely unrealistic,” says Karen.“It felt like Harron was holding my frail, elderly mum hostage. It has been a very difficult time. My mum has been effectively homeless as she couldn’t afford to rent in Harrogate while waiting for the house to become vacant and the stress and worry has had a big impact on her health. It has also cost her a lot of money.”Janet has had to pay the cost of storage for all her furniture and belongings. New furniture ordered to arrive at what she thought would be her new home in Harrogate had to be sent back and she was penalised financially for that too.

Apologies

After being contacted by the Yorkshire Post, Harron Homes has now agreed to refund the £1,000 deposit and allow Janet to pull out of the contract with no financial penalty.A spokesperson for Harron Homes Yorkshire said: “Due to unforeseen circumstances in the construction of one of our new-build homes, we have been unable to meet the estimated timescales for the purchase of the part-exchange property.“We would like to apologise to Janet Walters for the inconvenience this has caused and despite the contract being legally binding, we have been able to meet her request to rescind and have now initiated a refund.“Unfortunately, the construction of new homes does sometimes encounter delays and in this instance it is not a delay that can be dealt with quickly.”Paula Higgins, of the property advice website Homeowners Alliance, says “Our position on contracts with long-stop dates is that they favour the developer. Buyers should be compensated for any expense caused by delays after exchange of contracts and we hope that this something that the new homes ombudsman will take up when he or she is appointed.”