Ben Schofield reports on fears the property market in Liverpool could fall into a tailspin as buyers get cold feet

DEVELOPERS desperate to sell newly-built city centre apartments are slashing prices and dragging would-be buyers who threaten to back out of contracts into court, the Daily Post can reveal.

At one high-profile block of flats, one in three sales have stalled between exchanging contracts and completion.

At another, there has not been a single completion in six months.

The news has sparked fears the property market could fall into a downward tailspin as buyers wait on the sidelines waiting for further price drops and better deals.

The developer behind Alexandra Tower – the luxury 201-apartment block on Princes Parade – collapsed into administration owing £49m in December last year.

Six months on, administrators and turnaround specialist Zolfo Cooper admits it has failed to complete a single extra sale.

Cheshire millionaire David Hughes – who has pledged £2m to a planned boys’ academy in Birkenhead – and his Millennium Estates company had hoped to capitalise on the property boom through Alexandra Tower and a similar block in Salford Quays.

In 2005, the business moved from building luxury houses in the country to higher-risk city centre ventures.

But towards the end of last year, it discovered buyers were finding it increasingly difficult to get mortgages and its cashflow dried up.

Now, just 54 flats in the £34m block have been sold – but 126 buyers exchanged contracts, only for the sale to stall before completion.

All buyers were issued with notices to complete and only two said they were willing to continue.

As a sweetener, Zolfo then offered the buyers who had exchanged a 15% discount on the price of the apartments.

But in his six-month progress report, lodged at Companies House last week, joint administrator Peter Holder said: “The response to this offer was disappointing and we are in the process of rescinding all contracts where no expression of interest to complete at a desirable level has been expressed.

“The administrators will retain their rights under the contracts to sue for damages once the properties are ultimately sold.”

Last week, the company said 65 apartments were stuck in limbo between exchange and completion.

For the time being, they are dead investments because Zolfo cannot rent them out until the contracts are rescinded.

Another 58 apartments are being advertised to let.

Further along the waterfront, Grosvenor’s One Park West apartment complex is enjoying mixed fortunes.

There are just one three-bedroom and two one-bedroom apartments still on the market.

But it is a different story with studios and two-bedroom flats, of which there are still 25 and around 30 respectively remaining.

Guy Butler, Grosvenor’s senior development manager, said one-in-three potential buyers who had exchanged contracts are yet to complete.

He said the difficulty is the dearth of buy-to-let mortgages and the banks’ demand for large deposits.

Some buyers have also tried to wriggle out of contracts after the value of their flat fell below what they were due to pay for it.

Grosvenor has started litigation with 15 potential buyers at the development.

But before that process starts, Mr Butler said his “pragmatic strategy” is to work with the buyers on getting to completion.

He hopes that approach will mean the exchange to completion rate will rise from 67% to 86% by the end of the year.