Buying a house sold within 6 months

sk123_3

I'm a first-time buyer who put in an offer for a house. The offer's been accepted, mortgage offer arranged and the legal paperwork is under process.

However, I just now discovered that the property is being sold by the vendor within 6 months of purchase. FYI, the vendor has a portfolio of over 600 properties and hence it is natural for him to have rapid turnover/churn of portfolio.

The matter has now been escalated to the Mortgage lender. I fear that the lender will nix/decline the mortgage on the above ground.

I am buying the property for £400,000, which seems a fair value (or even cheaper) considering that the Land Registry records show that this house was last transacted in 2007 for £315,000. As per Zoopla records, this property was on market several times during last 8 years for prices ranging from £330,000 to £450,000. Currently similar sized properties on the same street are being marketed for £450,000.

The biggest hitch is that the vendor's title deed shows purchase price of only £150,000, since this property was purchased by him in Dec'14 as a part of portfolio sale (so it doesn't truly reflect the intrinsic value of the house). The vendor's solicitor has stated in cover letter that:
(i) the property has undergone extensive renovation since last purchase and
(ii) that the vendor had to pay a substantial amount to the sitting tenant to vacate.

Are the above (i) & (ii) valid reasons that the mortgage lender can get comfortable with?
What other representations might be necessary (from the seller) for the lender to get comfortable?
Do I stand a chance if I look for different lender (in the event the current lender declines mortgage)? Or are the chances of securing a mortgage next to zero (with any lender)?
How else can I make this work? Are there any workarounds to circumvent this problem?

Many thanks

Senior_Paper_Monitor

Who is your current lender ?

sk123_3

Senior_Paper_Monitor wrote: »

Who is your current lender ?

Coventry Building Society

Senior_Paper_Monitor

Heh Ho ...


From Coventry Criteria ...


Purchase applications

For purchase applications, the vendor must have owned the property for a minimum of six months.




Based on our experience most unlikely to waive that criteria.




There are plenty of competitive lenders who will accept this - tell your vendor that (with his experience) he should have known the problem this might caused and declared in 'up front'.

Thrugelmir

sk123 wrote: »

The biggest hitch is that the vendor's title deed shows purchase price of only £150,000, since this property was purchased by him in Dec'14 as a part of portfolio sale (so it doesn't truly reflect the intrinsic value of the house).

A portfolio sale doesn't explain the wide variance in value.

stator

Thrugelmir wrote: »

A portfolio sale doesn't explain the wide variance in value.

Sounds like the old tenant might have had a secure tenancy meaning they couldn't be evicted, so they had to buy them out

sk123_3

I have managed to dig further information from the estate agent.

I have now been informed that this property has been owned by vendor for last 8 years. This tallies with the record available on the Land Registry & House Registry websites, which shows that this house was sold for £315,000 on 17th Aug, 2007.

However, on Dec'14 this house was transferred from the vendor to a limited liability company (where the vendor is a director). This transfer was ostensibly for tax efficiency purpose. £150k was the transfer value, and not technically a sale value. The sales contract will be between this Ltd. Co. and me.

Does the above information change the situation for better? In light of the above fact, are the mortgage lenders likely to waive the 6 month restriction? Or is it still a no-go for most lenders?

Senior_Paper_Monitor

It certainly won't help in my view !

amnblog

A limited company is a 'new owner' legally.

Dave_Ham

The vendor and the Estate Agent need to be pulled to task here. They have tried to be clever/creative and it is you that has potentially incurred cost and wasted time.

Coventry and not going to go for this and I am unsure there will even be a home for this until 6 months from registration.

Coventry will definitely not accept this.

Poor show from vendor/agent

Good luck

sk123_3

Do mortgage lenders also have reservations against lending for properties purchased from limited companies (rather than from individual owners)?

Assuming that we either wait for 6 month moratorium to pass or few lenders can get comfortable with this 6-month issue, should I still expect mortgage to be declined on the grounds that I am purchasing it from a limited company?