Getting mortgage for flat which will be knocked down in two years

FightingPCM

Hi there,

I currently live in a council property which will be regenerated in two years (knocked down as we move into a new property). I want to but the current property I live in (under the right to buy which will mean its discounted) so that my housing association has to buy the property back from me at market value + 10%. Will I have any problems getting a mortgage considering the flat is going to be knocked down? Is it possible to get a mortgage for less than a year? (Since the housing association will have to immediately buy the property back from me) - is there a time limit for when I have to do this as well?

KatrinaWaves

You will 100% have a problem lending money against something which will be knocked down in 2 years.

I doubt your money making scheme will work, Id be very surprised if HA's have to sell places they have earmarked for regeneration purely to give the current tenants a bung.

FightingPCM

KatrinaWaves said:

I doubt your money making scheme will work, Id be very surprised if HA's have to sell places they have earmarked for regeneration purely to give the current tenants a bung.

No need to doubt, my housing associating has very clearly said that for resident homeowners living here before 2015 they will get a new regenerated home free of charge (double the value of the current property) or they can sell their home at market value plus ten percent. Selling the property also applies to any compulsory purchase order made after 2015 for residents who are not currently homeowners. They have very clearly told us they will offer us a market plus an additional ten per cent as well as the valuation, legal and relocation costs.

My only concern is getting a mortgage for the property - I will be able to pay it off very quickly obviously, but will need to get one in the first place.

Retired_Mortgage_Adviser

No, I don't see any scenario in which a lender would give you a mortgage secured against a property that is to be knocked down in 2 years time.

How much will it cost to buy? With an RTB discount, could you raise the funds in any other way at all?

FightingPCM

Retired_Mortgage_Adviser said:

No, I don't see any scenario in which a lender would give you a mortgage secured against a property that is to be knocked down in 2 years time.

How much will it cost to buy? With an RTB discount, could you raise the funds in any other way at all?

I'm afraid that it would still be too much as I would need around 100k to buy out even after RTB and ISA help to buy, would you recommend getting a loan for the short period of time?

KatrinaWaves

FightingPCM said:

KatrinaWaves said:

I doubt your money making scheme will work, Id be very surprised if HA's have to sell places they have earmarked for regeneration purely to give the current tenants a bung.

No need to doubt, my housing associating has very clearly said that for resident homeowners living here before 2015 they will get a new regenerated home free of charge (double the value of the current property) or they can sell their home at market value plus ten percent. Selling the property also applies to any compulsory purchase order made after 2015 for residents who are not currently homeowners. They have very clearly told us they will offer us a market plus an additional ten per cent as well as the valuation, legal and relocation costs.

My only concern is getting a mortgage for the property - I will be able to pay it off very quickly obviously, but will need to get one in the first place.

I am very aware of compulsory purchase details, but you are not a homeowner, and they are not going to sell you a house for less than market rate only to buy it back mere months later for more than market rate. Thats cloud cuckoo land.

Anyway you dont have enough money so, its not gonna happen anyway. Unless you earn 200k youre not gonna get a loan of 100k

FightingPCM

KatrinaWaves said:

I am very aware of compulsory purchase details, but you are not a homeowner, and they are not going to sell you a house for less than market rate only to buy it back mere months later for more than market rate. Thats cloud cuckoo land.

I have a unqualified right to buy, so they can't refuse to sell the house to me.

It's perfectly fine if you have an opinion on the matter, but if it's not relevant to my question - which it is not - don't share it.

drinae

FightingPCM said:

I have a unqualified right to buy, so they can't refuse to sell the house to me.

"Some homes don't qualify for right to buy. For example, some sheltered or adapted properties, or homes that are due to be demolished in the next 2 years. "   

england.shelter.org.uk/housing_advice/council_housing_association/council_house_right_to_buy

"Homes due to be demolished
If your landlord intends to demolish your home, he may serve you with an initial demolition notice, valid for up to 7 years. This notice suspends his obligation to complete a Right to Buy purchase. If you have already applied for the Right to Buy, you can still complete your purchase if demolition does not take place. You can also make a new application while an initial demolition notice is in force, but your landlord does not have to complete the sale under those circumstances. However, if your landlord serves a final demolition notice, then any existing Right to Buy claims are ended and no new applications can be made. Your landlord can only serve such a notice if all other premises which are to be demolished within the relevant area have been acquired or are subject to binding agreements to acquire. This is to prevent tenants from being disadvantaged by unresolved compulsory purchase issues. A final demolition notice will be valid for 2 years, and can be extended on application to the Secretary of State. If you have established a valid claim to exercise the Right to Buy before either an initial demolition notice or a final demolition notice is served, you have 3 months in which to claim compensation for expenditure connected with the conveyancing process, such as legal or survey fees. If your landlord subsequently decides not to demolish the property, he must serve a revocation notice on you as soon as is reasonably practicable. If it appears to the Secretary of State that a landlord has no intention of demolishing properties he may serve a notice revoking the initial or final demolition notice which has been served on you."

assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/793269/Your_Right_to_Buy_Your_Home_A_Guide_-_2019.pdf