Mortgage company refuses to lend due to builders smallprint

Sedwards

We thought we were nearing the end of a long struggle of selling our current home and buying a brand new home. It now turns out that it seems we're back to square one.

We're looking at a freehold property from Linden Homes. They have not offered the road, pavements, street lighting etc to the council to adopt and maintain, instead they are saying that for the first 5 years, all that maintenance is covered by a maintenance company. Lets call them "Maintenance company A". Few will be surprised that Maintenance Company A, is a subsidiary of Lindens.

There is the option, apparently, that if more than 75% of the residents want to get rid of "Maintenance company A" in 5 years time, then they can choose a different Maintenance company.- a Maintenance Company B, or C or D, if you like.

It's now been discovered that Linden homes have put a restriction in the deeds saying that people on the development can only sell their houses and move out IF Maintenance Company A approves the sale (eg: No monies outstanding).... EVEN IF it's then Maintenance Company B, or C or D looking after the development in 5,10,15 whatever, years time.

It's been suggested to Linden Homes that they add "or successor" anywhere in the deeds where it says that permission to move must be granted by maintenance company A (or successor), but, so far, it's been a big fat instant NO!

For this reason, our mortgage company, who have approved us on everything so far eg: income, employment, electoral roll, etc have now said that they will NOT lend us the money for a house from that builder.

Our difficulty now is that the mortgage lender will have left a "credit checked for a mortgage" marker on our credit history/score, so if we now start applying for mortgages left, right & centre from other mortgage lenders, our credit score, or likelihood of attaining a mortgage elsewhere with such a recent mortgage check on us, will undoubtedly make it incredibly difficult to attain a mortgage. Obviously, we'd tell any other mortgage companies about Linden Homes restrictive "Maintenance Company A" smallprint first, to see if it would prevent an otherwise approved mortgage from being offered - for the sake of two words........

It sounds like a greedy bit of smallprint, designed to make residents feel less happy about ditching Lindens "Maintenance Company A" subsidiary at the 5 year point. After all, Lindens dont have a reputation of speedy, polite and efficient customer service, even when they have a supposed reason to keep customers happy. I cant imagine how slowly they'd move, just to look into signing off on letting a resident go, years after Maintenance Company A have been dismissed...

Threatening to pull out of the purchase doesnt seem to bother Linden Homes. We're just one couple, buying one house. I'm sure they'll sell the house that we had our hearts set on, really quickly to the next bod through the door. One couple just saying "Our mortgage company doesnt like your smallprint" wont affect them by more than a few weeks.

However, I'm currently compiling a list of mortgage companies to mass email, letting them all know about this small print in the Linden Home deeds. If NO-ONE can get a mortgage for a Linden Home then that would affect Linden homes significantly enough for them to start caring about the small print and add the "or successor" wording which our high street mortgage company requires.

Such a shaming process is unlikely to help us here and now, and we're already regretfully starting to view other houses to move into, but our mass email, when we're ready to fire it off to 200+ mortgage lenders, might help other house buyers in the future.

Are there any central associations of mortgage lenders, not in Linden Homes pocket, or control, which I should also include on the mass email list?

foxy-stoat

So you want to write to all the mortgage lenders because of the small print in 1 builder's contract that your lender doesnt like the sound of?

Seems like an awful lot of effort that will achieve you very little and the lenders wont really take much notice of as its probably your solicitor has picked up this restriction and reported it to the lender who have declined the application.

It is not uncommon for new developments to keep the roads private as the local council/highways have strict specifications for their adopted roads, its just another expense you need to factor in when you buy into a property such as this.

They are probably trying to avoid people selling their properties if they owe money to their maintenance company - it may well be an unfair and unenforceable term in the contract that could be removed or amended so the lender will be happy - what has your solicitor advised?

[Deleted User]

Sedwards wrote: »

Such a shaming process is unlikely to help us here and now, and we're already regretfully starting to view other houses to move into, but our mass email, when we're ready to fire it off to 200+ mortgage lenders, might help other house buyers in the future.

It's honestly not going to help anyone, ever, now or in the future. Mortgage applications will continue to be reviewed on their own merit.

Focus your efforts instead on finding a home you like and can buy.

Sedwards

“what has your solicitor advised?”

Our solicitor has asked Lindens if they would add “or successor” to the smallpeint which says permission to move must be given by maintenance company A ..... and Lindens have said instantly that they won’t be changing anything in the smallprint.

As far as the amount of work or time this is taking me, now that packing up our current house no longer seems to be needed, I feel it’s worth it. I wonder how many deposits different people will keep losing, on the same houses as Mortgage lenders suddenly hit the smallprint and pull the rug out from deal after deal. Every failed deal is deposits to Lindens bank account and arrangement fees and survey fees to other trades - all keeping the housing market bouyant with a churn of end consumers paying out deposits and suyveryors fees over and over again.

Sedwards

“It's honestly not going to help anyone, ever, now or in the future. Mortgage applications will continue to be reviewed on their own merit.”

Oh don’t worry, I’ve felt pessimistic about the whole thing too. If I had to add in costs of 230 envelopes, postage stamps and inkjet overheads, I wouldn’t be even considering letting the mortgage companies etc know, but emails are free to send and I will know that I’ve done what, in my opinion, is the right thing. And we’re all entitled to our own opinion - we’ll, unless there’s smallprint about that now too :-)

JimmyTheWig

Sedwards wrote: »

Linden homes have put a restriction in the deeds saying that people on the development can only sell their houses and move out IF Maintenance Company A approves the sale (eg: No monies outstanding).... EVEN IF it's then Maintenance Company B, or C or D looking after the development in 5,10,15 whatever, years time.

It's been suggested to Linden Homes that they add "or successor" anywhere in the deeds where it says that permission to move must be granted by maintenance company A (or successor), but, so far, it's been a big fat instant NO!

Why would Linden Homes care if you want to sell your house and you owe Maintenance Company B money?
Is there a list of reasons why they could oppose the sale, or is it just examples?

davidmcn

Sedwards wrote: »

For this reason, our mortgage company, who have approved us on everything so far eg: income, employment, electoral roll, etc have now said that they will NOT lend us the money for a house from that builder.

I presume that it's your solicitor which has flagged this up as a problem to the lender, not the lender taking the initiative to read the title deeds themselves and form their own view? In which case, isn't the solicitor going to give similar advice to any other lender?

Presumably other lenders (or solicitors) don't have an issue, as I can't imagine a developer churning out unmortgageable properties.

AnotherJoe

IMNSHO this is just another example of large companies way overstepping their mark.

I also would not be remotely interested in such a purchase. Is there anywhere else it applies? When you buy a car or a TV or a toaster is there such a clause? Why should a house be different?

Have you tried returning the contract to LH with this clause removed? Its quite possible they wont even notice but I I wouldnt buy it without the absence of that clause, do you really want to proceed with it? I know also there are other builders who specify a fee will apply when you sell but dont mention what it will be !

All you can do is do what is right for you. Rather than write 200 letters I think you'd have more luck if you wrote to one of the sunday newpaper property/financial columns.

Finally, i am not a mortgage broker but are you really sure that

our credit score, or likelihood of attaining a mortgage elsewhere with such a recent mortgage check on us, will undoubtedly make it incredibly difficult to attain a mortgage.

Why would you be

applying for mortgages left, right & centre

Surely many people have mortgage offers fall through and get another one?

kingstreet

A couple of credit searches are going to have very little impact and it may be possible to change the property details on the current application.

foxy-stoat

Sedwards wrote: »

Every failed deal is deposits to Lindens bank account and arrangement fees and survey fees to other trades - all keeping the housing market bouyant with a churn of end consumers paying out deposits and suyveryors fees over and over again.

Believe me, the money they will make actually selling the properties is their goal and far out ways a few deposits or reservation fees.

kingstreet

You're like to find under the Consumer Code and certainly under HTB, the reservation fee is refundable in the event of the above;-

http://www.consumercode.co.uk/