Shared ownership purchase going pear-shaped - HELP!

nunovalente · 21 December 2006 at 2:26PM

Our move to a shared ownership property looks like collapsing, all on the back of a Section 442 guarantee. What this is is a means by which the council (who own the other share of the house) agree to our lender (the Halifax) selling on our share of the house if we fall into arrears.

Anyway, all was going smoothly - or so we thought. Our solicitor (who we got via the Halifax - never again), sat on the case for six weeks through November, telling us we would 'be in by Christmas.' How wrong this was. After finally realising he needed to get the Section 442 guarantee, the council got back to him, refusing. It transpires the council have never had to give one of these guarantees before (this is only a verbal guarantee, by the way).

We have tried to contact the council, who continue to say they do not have to give, yet the Halifax will not supply the mortgage unless they have it (we are after a 95% mortgage and they do not need to get the guarantee if the mortgage is 75% - something we are not in a position to do). The solicitor has been less than forthcoming with help on this, but the Halifax have instructed him to request it again. Cryptically, the council said today that 'there are ways and means around it'.:undecided

What I want to know is whether anyone has had experience of one of these before. What can we do? Our move before Christmas will obviously not happen, but now we stand the risk of not moving at all. And with the ridiculous property prices down here, we might never buy. :-( It is all a bit worrying, especially when we have given up the rent on our present house from January 4th - that's me, my wife and my 18 moth old daughter :-(

reverend · 21 December 2006 at 3:37PM

I am sorry about your experience. I have never heard of this particular guarantee, and hope someone else on the forum has. I wonder what it is Section 442 of exactly? Would you be able to find out?

I will say that people's experience of the abilities of solicitors often seem to be quite poor. My own was one of the least professional and least capable individuals I have come across in such a position of responsibility.

Bargain_Rzl · 21 December 2006 at 4:09PM

Hi - can't offer any advice on the Section 442 thing I'm afraid, but just wanted to ask - did nobody advise you that you shouldn't give notice on your existing tenancy until exchange of contracts?

Poppycat · 22 December 2006 at 12:46AM

Sorry to hear this, hope it gets resolved. I wonder if its this

http://www.opsi.gov.uk/ACTS/acts1996/96052-bg.htm

Local authority assistance in connection with mortgages 27. - (1) Section 442 of the Housing Act 1985 (agreements by local authority to indemnify mortgagees) is amended as follows.
(2) In subsection (1)-

(a) for the words from the beginning to "house" (in the second place it appears) substitute "A local authority may enter into an agreement with a person or body making an advance on the security of a house (or a building to be converted into a house)";

(b) for "society or body" (in both places) substitute "mortgagee". (3) After subsection (1) insert-

"(1A) The local authority may only enter into the agreement if the advance is for one or more of the purposes specified in subsection (1) of section 435; and subsections (2) to (4) of that section apply in relation to power to enter into such an agreement as they apply to the power to make an advance under that section.".
(4) In subsection (2) for "building society or recognised body" substitute "mortgagee";
(5) Subsections (4) and (5) shall cease to have effect.

izoomzoom · 22 December 2006 at 12:04PM

Hiya

We successfully purchased our own SO last month, it was a long struggle, well before we even found this house.

I don't think you are going to get anywhere with this issue of the HA/Council issuing this Section 442.

So realistically could you not try another lender ? I seriously recommend you do this via a broker who could research exactly what the lender wants before you apply (I know you will lose your Halifax fees).

And as for your sol, well every second person on here could complain but I have to say that our own sol was fab. Admittedly it took a long time (nearly 4 months), and there was at least one delay which I know my sol caused but in the end they came through. Could the HA not recommend a sol to you (one whom they obviously know has SO experience), and at the very least you could threatened your own sol by taking away his business.

Drastic advise, I admit, but what would be the alternative - you lose your home.

Finally, contact your LL and explain your circumstances. Even if they are not accommodating, they cannot force you to move (well they can but that takes months via court), and if you continue to pay your rent, what do they have to complain about.

Hope this comes right for you. What a Christmas for you !

nunovalente · 22 December 2006 at 1:31PM

Just out of interest, who were the lenders you went with in the end? The council are refusing this agreement because: a. the house was bought on the open market (although they had a month to sell it apparently), and b. they have never had to do this before. So now we stuck. I am thinking of trying another lender (anyone had success with a shared ownership mortgage where the lender has provided 95%?)

As for the solicitor...'I am sorry we cannot contact the coucil. I have five completions to do before we close at 1pm today.'

Graham_Devon · 24 December 2006 at 8:53PM

Stay clear of the woolwich. Other than that, I know the Abbey do shared ownership.

Mines with Halifax, bought earlier this year and I had to provide this section 422, which held things up for a month, but they were able to provide it. Went back and forth, fax wasnt suitable, then required a signature, which was digital one, which Halifax turned down until I had a section 422 in my hand with an actual penned on signature. They finally accepted it then.

Halifax would not do the mortgage without this, mine was 90%.

GhostDog_2 · 24 December 2006 at 10:11PM

We've mortgaged with the Woolwich

100% mortgage for 60% SO with local HA.

Our only delay was wholly the surveyors' fault and their inability to actually find the right property! :rotfl:

izoomzoom · 27 December 2006 at 2:33PM

Hiya

Sorry haven't been back sooner. You know Christmas and all ....

We went with 100% mortgage with Ipswich Building Society. In hindsight our application sailed through (just under 1 month from application to offer).

Let us know what you decide.

Shared ownership purchase going pear-shaped - HELP!

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