Legal charge

Mojisola

Ed-1 wrote: »

If I lend a family member the money to buy their council house and they get a legal charge registered against the property in favour of me, does there need to be a loan agreement drawn up or not as otherwise what is the charge securing?

Ed-1 wrote: »

The loan would charge interest and would be repayable on the sale of the property.

Ed-1 wrote: »

Is it possible to say, charge a high annual rate and state that the loan is subject to no negative equity (i.e. the amount repayable cannot exceed the value of the property)?

If the home owner goes into care later in their life, the value of the property less any loan on the property is considered in a means test. So a higher loan could be to their benefit?

No, a higher loan could mean that the house buyer could end up in council funded care rather than being able to choose their own care home.

Ed-1

eddddy wrote: »

Just to make sure... is the family member planning to get a mortgage, as well as borrowing money from you?

If so, a lot of mortgage lenders would not like that arrangement. Your family member should discuss it with a mortgage broker before going further.

No - the rest of the purchase is funded by government discount under Right to Buy.

Ed-1

G_M wrote: »

The solicitor acting for your family member in purchasing the property will register the Charge. He may well wish to see the agreement/Deed I imagine.


Whether he would also draw up a Deed for you - you'd have to ask. He may consider it a conflict of interest to be acting both for you (the lender) an your family member (the borrower).

Could we draw up a Deed without a solicitor?

What details actually go to Land Registry? Does the amount lent etc. go to Land Registry when the charge is registered?

G_M

Ed-1 wrote: »

Could we draw up a Deed without a solicitor?Yes if you know what you are doing.

What details actually go to Land Registry? Does the amount lent etc. go to Land Registry when the charge is registered?

No. The Charge does not specify the terms of the loan.

It simply states there is a Charge. eg
1.(07.01.2019) REGISTERED CHARGE dated 14 December 2018
2 (07.01.2019) Proprietor: INVESTEC BANK PLC (Co. Regn. No. 489604) of 30 Gresham Street, London EC2V 7QP.

:j...............................................

Ed-1

G_M wrote: »

:j...............................................

What goes in section 9 of the registration form then?
https://www.gov.uk/government/publications/legal-charges-registration-ch1

steampowered

Ed-1 wrote: »

No - the rest of the purchase is funded by government discount under Right to Buy.

I don't know what your circumstances / the circumstances of your family member are, but it is worth having a good dig round the forums to read about the experiences of people who have done this - i.e. get a relative to help them buy their council property.

There are a number of posts on the forum where people have bought a council property and its turned out really badly. Remember that your relative has a very secure tenancy right now and that the council is responsible for repairs etc.