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Right of first refusal

Hi,

We are in the process of buying a house and it has all be going smoothly. However, I have had a letter from the solicitors saying they need to contact me lender because of a clause on the house. The house would have a "right to refusal" from the housing trust to buy back first but at market value. I will essentially own the house but should I wish to move then the housing trust have the right to buy first.

Has anyone ever had it that the mortgage company refuse to loan the money due to this clause?

Many thanks
«1

Comments

  • eddddy
    eddddy Posts: 17,537 Forumite
    Part of the Furniture 10,000 Posts Name Dropper
    The right of first refusal (or pre-emption right) is something that you should be concerned about.

    (The mortgage company would be concerned because it may affect the value of the property - that's why you should be concerned as well.)


    The first question you should ask is... Does this right still exist?
    I believe that the HCA recommended to housing associations that they remove this right from leases in 2015.

    See: https://newsroom.anthonycollins.com/ebriefings/changes-to-shared-ownership-leases-england-only/


    The next question is... If this right exists, how would 'Market Value' be decided?
    Is it a fair valuation method, or might you be forced to sell your property cheaply?
  • Hi Sebaroo
    I'm in the exact same position, did this affect your mortgage application?
    Many Thanks
  • Hi eddddy

    If the clause states that the District Valuer Services (DVS) determinds the price, is this a good of a bad thing?

    There is 4 & 1/2 years left of the pre emption.

    Thank you
  • da_rule
    da_rule Posts: 3,618 Forumite
    Sixth Anniversary 1,000 Posts
    Is this an ex-right to buy/right to acquire property?
  • Hi

    Yes I believe it was purchased from the council just over five years ago. The council does not want to purchase it back but will not remove the pre emption. So the pre emption remains on the house for another 4 1/2 years. This has just been found out after the valuation & searches have been carried out. Solicitor has contacted the mortgage company to let them know.

    Thanks
  • Norman_Castle
    Norman_Castle Posts: 11,871 Forumite
    Part of the Furniture 10,000 Posts Photogenic Name Dropper
    Planning to sell in the next 4 1/2 years? I wouldn't worry about it. The market value is what it should sell for and is likely to be close to any future buyers mortgage valuation. If you're not happy with the valuation you're likely to be able to appeal then withdraw the sale if still not happy.
  • da_rule
    da_rule Posts: 3,618 Forumite
    Sixth Anniversary 1,000 Posts
    In that case then it should not be a big deal. Essentially if you want to sell it in the remaining time, you have to serve notice on the council. They then have 8 weeks to say yes or no. If they do not reply you can proceed.

    If they say yes and you cannot agree a price then the District Valuer can be appointed. Their decision is final.

    A few councils etc are buying back at the moment so remember to do it if you do sell as you could save yourself some estate agents commission.
  • Thanks

    I'm still waiting to hear back from the mortgage company.
  • Hi Goldfishfan

    Just wondering what was the outcome. I’m in a similar situation except I’m the seller and the buyers lender and solicitor wanted the clause changed or removed or a new line added and the landlord (local housing) have refused. Would like to see if there was a solution. Best wishes
  • We are in a similar process, we have approached the council with an Offer Notice. This gives them 8 weeks to accept/nominate another housing association OR reject to buy back our property.

    If within 8 weeks, as per the Housing Act (right of first refusal 2005), they do not respond, we have 12 months after the 8 week deadline to sell to the open market. If within that 12 months we haven't sold the property, the council retains interest in the property for the remainder of the clause which is until 2024 and a new offer notice will be served again.

    We will see if we get any response back.
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