Hundreds of buy-to-let property investors are considering legal action after the firm they have invested with went into administration with debts of up to £100 million.
Around 500 investors fear they may have lost up to £20,000 each in deposits they paid to Dylan Harvey Residential, a sales agent firm for off-plan apartments in Manchester and the north west of England.
It is understood that around £6.5 million in depositor’s money may be lost. The apartments were in developments where work had not even started and the money had been handed over to developers who have since become insolvent.
The property investors are furious because last year in an online petition they had called on the company to return their deposits. Now their only hope is having their money transferred to other schemes.
Administrators CLB Cooper said all potential aspects to recover deposits are being examined. ‘In some ways, not having to contractually complete on properties valued at the peak of the market and for which mortgages may now no longer be available may have limited the potential losses to the clients,’ said spokesman Mark Getliffe.
He added that developments within the wider Dylan Harvey Group, the parent company of DHR, are unaffected by the collapse of the residential business.
But investors said that they saw the potential financial problems looming and the company ignored their fears. One, Darren Jones, who handed over a £6,000 deposit for a studio flat at the old Virgin cinema in Clippers Quay, Manchester, said that they were told the development would be completed in 2011.
When he realised that no work was taking place and he asked what was happening he was told that the development had been put on hold. ‘I asked for my deposit back and they asked me to put that in writing, which I did. Then they stopped returning my calls,’ he explained.
Manchester based solicitors Pannone said they are trying to set up a deal for investors to switch their deposits to projects with other companies in the Dylan Harvey Group which are not affected by the collapse.
A spokesman for Dylan Harvey Residential blamed the situation on the property market. ‘We have handed over deposits to contractors and some of them have gone into liquidation. We are trying to do everything we can for investors and switch their deposits to another scheme. By doing that we are wiping out our profits but we are happy to do it. We are just not in a position to give the deposits back because we’ve not got the cash,’ he explained.