Buying a section 106 property

whitejohn

I'm very interested in buying a small house with a section 106 local occupancy restriction.
I'm a cash buyer with no property to sell and have checked with the council that I qualify to live there.
It looks like buying should not be too much of a problem but selling could be a problem?
At 69 years of age it's unlikely I would want to move again unless I needed to go in to a care home.
The owners bought it new for £115K and are selling it 2 years later for £130K so it's made about 6% PA which I would be happy with if I had to re-sell. (better than 1.35% interest on my cash)
I believe that it can be hard for potential buyers to get a mortgage on a section 106 so it may take longer to sell.
Is there anything else I need to know or anything I need to check before going ahead?
I wondered if I could ask to see the deeds and section 106 before proceeding with solicitors?
Thanks

G_M

You can pay £3 here to get the Title document (another £3 for the Title Plan) if you want. I always do before finalising an offer.

Your 6% calculation may be right, but is pointless. Any future increase (or drop) in price will relate to the market at that time, not historic value. If (just an example) the gov changed the route of HS2 through the back garden, the property would sell for closer to 68K.

You say they "are selling it 2 years later for £130K" but they are only selling it at that price because you are willing to buy it at that price. If you decide not to buy, they might end up having to sell it for, say, £120K, in order to attract another willing and able buyer - which kind of alters your maths......

Yes, its resale value will be reduced because of the limited mumber of prospective buyers.

And resale time could be extended - it might take months (or more) to find a buyer.

Having said all that, if it's the perfect house for you, and you have the money, why does the re-sale issue matter.......?

whitejohn

G_M wrote: »

You can pay £3 here to get the Title document (another £3 for the Title Plan) if you want. I always do before finalising an offer.

Your 6% calculation may be right, but is pointless. Any future increase (or drop) in price will relate to the market at that time, not historic value. If (just an example) the gov changed the route of HS2 through the back garden, the property would sell for closer to 68K.

You say they "are selling it 2 years later for £130K" but they are only selling it at that price because you are willing to buy it at that price. If you decide not to buy, they might end up having to sell it for, say, £120K, in order to attract another willing and able buyer - which kind of alters your maths......

Yes, its resale value will be reduced because of the limited mumber of prospective buyers.

And resale time could be extended - it might take months (or more) to find a buyer.

Having said all that, if it's the perfect house for you, and you have the money, why does the re-sale issue matter.......?

Thanks I will download those title documents.
Yes I would say it's almost the perfect house for me, good price and location which is why I was considering paying close to the asking price. Unlikely I would want to sell unless I needed to go in to a home and pay for my care.

00ec25

whitejohn wrote: »

Unlikely I would want to sell unless I needed to go in to a home and pay for my care.

you have said that twice so don't put the cart in front of the horse. The resale prospects appear irrelevant given you are 69 and buying a property which is a modest price and you are either going to leave in a coffin or to live in a care home where 130k may just about cover the average 2 - 3 year residence period before death of those who end up in one.

if it is the home you want, buy for the now for you, not for your beneficiaries once you're dead.

whitejohn

if it is the home you want, buy for the now for you, not for your beneficiaries once you're dead.[/QUOTE]

Yes I agree, that's a good point, probably thinking too far ahead

davidmcn

whitejohn wrote: »

Yes I would say it's almost the perfect house for me, good price and location which is why I was considering paying close to the asking price.

But do you know that it's a good price taking into account the occupancy restriction? Are there properties with similar restrictions which have sold recently? I would get it valued anyway before committing yourself to any particular price.

whitejohn

davidmcn wrote: »

But do you know that it's a good price taking into account the occupancy restriction? Are there properties with similar restrictions which have sold recently? I would get it valued anyway before committing yourself to any particular price.

I've been looking for 3 years in this area and never seen anything as good for my limited budget. Similar properties without a restriction seem to have a sold sign up in a couple of weeks. So hoping the restriction will work in my favour.

Will try offering a bit less but don't want to lose it.

getmore4less

whitejohn wrote: »

I wondered if I could ask to see the deeds and section 106 before proceeding with solicitors?
Thanks

Will the full S106 details be on the planning portal if only a couple of years old?

whitejohn

getmore4less wrote: »

Will the full S106 details be on the planning portal if only a couple of years old?

Thanks, I have asked the council for a copy, as you say it should be fairly easy to get all information on a modern house?