Six Month Rule?

ValHaller

JQ. wrote: »

One speculator would buy a whole block of 100 units from the developer. They'd then split them into blocks of say 20 units and sell to another 5 speculators. They'd then split them into blocks of 5 units and sell to another 20 speculators. They'd then sell to 100 individual speculators. Those speculators would then try to sell to more speculators or find owner occupiers or find BTL'ers. All this happening before the development had even been completed. And often the developer doing the marketing on behalf of the speculators.

Such things were commonplace during the boom, they artificially raised values and made valuing such schemes very difficult as there was plenty of evidence supporting the stupidly high values. Ultimately, the banks ended up footing the bill, and now they're being rather more cautious.

But the 6 month rule does not even begin to address this. All the speculators need to do in the next boom is trade in assignable contracts (if that was not what they were doing anyway). That way, nothing shows up on the Land Registry, so no basis to apply the 6 month rule.

This is so reminscent of the old USSR deciding to cut public drunkenness by reducing the supply of alcohol by 1/3. The actual implementation was to cut beer by 2/3, wine by 2/3 and increase the supply of vodka.

JimmyTheWig

Johnnyj wrote: »

Yep, thought about the new lender route etc., but as you say we may as well wait three months. The buyer (my son) doesn't want this, the seller doesn't want it, neither set of solicitors wants it. Only the lender. The risk is that the seller gets shirty and pulls the plug.

The seller can't pull the plug once exchange has happened.
So if he can exchange now then it is all set in stone.
There's no chain either side, presumably?
One thing you son needs to bear in mind is that the mortgage company will (probably) do a credit check before releasing the funds. Three months is quite a long time (for some) to stay clean credit-wise. We've heard some stories on these boards of people taking out new credit between exchange and completion when there was only a two week gap.
Obviously the seller could refuse to exchange based on this. But then they'd have to find a new buyer (presumably a cash buyer if your son can't get a mortgage for it) and start the process from the beginning - I doubt they'd complete in three months anyway. So it would make sense for him to exchange now, too.

Just out of interest, is it possible to change the completion date after exchange if all parties agree? E.g. could they exchange now based on a completion date in 3 months time and then talk to the bank about the work that has gone on, reason for quick sale, etc and bring the date forward if they agree?

Johnnyj

Thanks for the responses all. Going with the three month wait, but things have taken a turn for the worst - new thread beckons !