No Deposit, No Return? The courts examine off-plan purchases and stage payments in the residential property space

There is a clear upturn in disputes where buyers who contracted, sometimes many years ago, to purchase off-plan properties are now coming to completion and looking to exit the deal and get their money back. Three recent cases in this area have provided useful insight into the courts’ approach to such disputes.

Deposits and stage payments

Amaal Ventures Ltd & Shievon Ventures Ltd v Eros Ltd [2026] EWHC 870 (Ch) concerned contracts for the purchase of two very expensive flats in an exclusive London development. The buyers had bought off-plan and, as is common, paid a deposit equivalent to 10% of the purchase price and then further stage payments over the ensuing months. In the meantime, the developer was to get on, build the development and then notify the buyers when the flat was ready, at which point the transaction would complete.

The buyers did not complete on time and disputes ensued.

The case was decided around matters relating to termination rights and specific performance, but as arguments around deposits and stage payments were made, the judge gave his views.

Whilst those views are non-binding, they are illuminating.

The buyers argued that pre-payments amounting to 30% of the purchase price were unjustifiably large and amounted to an unenforceable penalty.

However, the judge had no difficulty in finding the sums justified and there was no penalty.

Whilst he considered many arguments, the factor that seemed to trump all others was that the developer seller had taken on substantial commercial risk in having to construct and deliver the development. Those circumstances, so thought the judge, justified a deposit above the conventional initial 10% deposit (in this case being the total 30% paid by way of the initial deposit and subsequent stage-payment deposits).

The judge was also mindful that the parties were properly advised and had reached a clear agreement on the terms of the written contracts.

It is tempting to wonder whether the decision would have been otherwise had this element of the decision been binding with real-world consequences.

It remains non-binding, and some of the more technical legal arguments are worthy of further consideration, but it’s an illuminating guide to legal thinking and should serve as a cautionary tale to buyers who expect the return of large pre-payments when contracts are terminated for non-completion.

Similar issues were considered in the context of solicitors' negligence in Niprose Investments Ltd v Vincents Solicitors Ltd [2026] EWHC 2320 (Ch). The case did not centre around the operation of the contracts (again, off-plan sales of apartments yet to be built), but rather the advice given about them. In considering that advice, the court examined the nature of off-plan transactions.

Properly advised parties who have agreed to such a contract can expect to be held to the terms agreed.

The judgment emphasised that off-plan sales are not standard conveyancing transactions. Where contracts provide for the buyer to effectively contribute towards the development cost by way of additional stage payments, practitioners should be careful to properly advise their clients as to the risks involved in such contracts.

Buyer liability for failure to complete

Of course, a buyer that does not complete may risk losing more than its deposit.

In Regal BA Ltd v Zhang [2026] EWHC 1446 (Ch), the High Court considered how a developer’s losses should be assessed after a purchaser failed to complete and the property was subsequently resold at a lower price.

The court emphasised that the key question is the developer’s actual loss. Where a property is properly marketed and sold through an arm’s length process, the eventual resale price may provide the best evidence of loss. The judgment also recognised that developers carrying significant finance obligations should not necessarily be expected to delay a sale indefinitely in the hope of achieving a higher resale price.

Key takeaways

It is tempting to summarise the message from these cases simply: keep good records and get good advice. Both were crucial to the successful parties’ outcomes.

But they also show the continuation of a trend starting years ago in the Supreme Court in Arnold v Britton. The courts will not readily intervene in property contracts to help a party out of a bad bargain where the terms of the agreement are clear and were clearly understood at the time the contracts were entered into.  What is on the paper matters, even if it means a dramatic financial outcome.