A property company has failed to return millions of pounds to buyers who invested in apartments that will not be built.
The Sourced Development Group is behind plans to build hundreds of apartments on land off Blackstock Street. The initial scheme marketed by the company was to build nearly 452 units, however this was later revised to a 310 unit scheme.
Sourced has offered investors in the scheme the chance to either exit the scheme or continue. Those exiting the scheme have been told that they can recover their deposits only when Sourced have re-sold the unit.
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However investors who have bought units that will now not be built under the revised scheme are confused as to how this will happen.
Emails from solicitors acting for the developer and investors have been shared with the ECHO, revealing:
- Sourced has not paid back some deposits to investors who bought apartments that will now not be built
- Sourced sold hundreds of units in the scheme before the Section 106 agreement ( money developers pay to benefit the surrounding area) was agreed with Liverpool Council Investors have paid in several millions pounds
- Solicitors acting for investors have made unsuccessful demands for the return of buyer deposits
- Sourced claim that they have now run out of funds
A spokesperson for Sourced said that the company had sold units worth in the region of £7m. The spokesperson said that development costs, agents fees, professional fees and interest had been taken from this sum in accordance with the contract. The remainder of the monies received are held in an Escrow account.
The spokesperson said that only a small number of buyers had declined to continue with the scheme of whom most have been refunded, and some had chosen to move over to the company's nearby Westminster Park scheme. Those buyers who are exiting have been assured they will be refunded on or before December 15 2022.
The spokesperson said that Sourced would have breached planning law if they started work on the scheme prior to the Section 106 agreement.
Changes to the Local Plan also delayed the scheme rather than any fault of the developer as can be evidenced by the other Sourced sites which are progressing rapidly. The spokesperson provided the ECHO with documentary evidence of the amended Section 106 agreement which was issued on October 3.
Sourced emailed investors on July 1 stating they were happy with the progress of the scheme, even though nothing has been built.
In the same email Sourced asked investors to contribute more money to help finance the scheme. The note requested an uplift payment of £29,466.47, which the company said was due to rising build costs and the increased size of the apartments
Sales information seen by the ECHO reveals that Sourced had nearly sold out the scheme , with just 13 units left. The ECHO understands that the average deposit was around £40,000
The ECHO has also seen a letter from solicitors Shoosmiths, who acted for Sourced, to Montecristo. Montecristo acted for the investors.
The letter, dated July 14, reads: "In the meantime, our client's only current source of funds is money it will receive on the exchange of future units. It does not currently have any other sums available to meet the sum owed to your client, having self-funded the entirety of the project so far. Monies for the project have been used for professional fees, interest and the design of the development."
An email from Montecristo to investors , dated September this year, reads: "We can confirm that we re-iterated your position and, have continued to chase the solicitor but are still awaiting firm responses.
"Just as a general update, we have not received the return of funds for any of the investors who have chosen to exit the project."
An email from Montecristo to investors from September this year reads: "We have raised the question with the developer/solicitor as to why any investor should have to wait until the resale for the return of monies in the light of the default by the developer, but are not receiving any firm responses."
The email also stated that the deposits should have been used only in relation to the cost of building the scheme. Montecristo said they were waiting for a full breakdown of what the buyers money was used for.
An email from an investor to Montecristo from July this year reads:
"How the developer can sell our unit when it has never existed , nor will it do in the new development, is simply an impossibility."
The email continued: "As we are pensioners, had we had any inclination or information that this was a speculative investment, we would not have got involved, and as stated at the beginning of this email we feel very let down."
An email from Sourced to investors dated July 1 read:
"As per our email last month, we are pleased with the progress made on our development Kingsway Square. However due to the increase in sizing, ( as per the new planning regulation) and the dramatic increase in build cost, we now require investors to make a decision on whether you would like to continue."
The original scheme to build over 400 apartments at the site were withdrawn by Sourced earlier this year. Council officers had raised concerns about how the scheme met the Local Plan. The new scheme proposes around 310 flats on the site, which is now branded as Grosvenor Square.
Speaking to the ECHO in April Joanne Karen Waller, managing director of Sourced Development Group Limited said: "We are beyond excited to be moving forward with this development and will have two live sites within walking distance of each other bringing jobs into the local economy and providing wonderful new housing options for the Liverpool population."
In February the ECHO revealed that Ms Waller was banned from working for solicitors in England and Wales.
Ms Waller is the subject of a Section 43 order handed down in relation to her conduct at a Wirral solicitors. A S43 order is the equivalent of a strike off for non-solicitors.
Ms Waller said that the matter was historic and had no bearing on her current role with Sourced. Ms Waller is described in glowing terms on the Sourced website, which reads: "Joanne has worked in the property sector since 1996 and initially coming from a conveyancing background moved into property development organically as she found her main passion is the creation of beautifully appointed homes from scratch."
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