Former customers file complaint after developer demands damages for failed sales completions

A group of homebuyers who claim they face bankruptcy at the hands of Berkeley Group has filed a complaint with the Trading Standards Institute that accuses the developer of mis-selling homes.

The complaint has been made by about 20 former customers who bought off-plan flats in three London locations from the developer. The group alleges they were told by sales staff that, should they be unable to complete the deal, the most they could lose was their 10% deposit.

However, the standard contract they signed meant they were responsible for completing the sale. When the market collapsed, the buyers were unable to get mortgages and Berkeley demanded damages for breach of contract plus interest on its losses and costs.

About 40 former customers claim to have received letters informing them of Berkeley’s intent to sue. Some of these are facing bills of up to £100,000, to reflect the sharp fall in value of the properties that they had agreed to buy for up to £450,000.

According to Andrew Leakey, managing partner of consumer and social welfare at solicitor Stephensons, Berkeley could face a financial penalty for misrepresentation if the complaint is upheld. However, he added: “It would be hard to prove a criminal penalty due to potentially disputed evidence.”

Stephen Dowd, who heads the customers’ group, said Berkeley told him he would only be liable for his deposit: “As a layman, you believe what you are told at the point of sale.”

Berkeley would not comment on the claim of mis-selling. In a statement, it said that fewer than 5% of off-plan contracts signed between November 2006 and October 2008 remained to be completed and that it only issued legal proceedings where buyers “refused to engage” in talks that attempted to ensure contracts were honoured.