Selling house with section 106

firsttimesellerldn

My flat has a section 106 restriction on who you can sell to. I just ensured prospective buyers met the criteria and were aware of it at the outset (included in the initial ad). I was aware of the restriction when I bought and that I can’t remove it. 

GDB2222

I feel sorry for the buyers, who invested in the buying process, only to come across a problem that the OP could have told them about at the beginning. 

As @firsttimesellerldn says being open about the issue will save a lot of trouble, and the property needs to be priced correctly to take into account the restrictions.

Davesnave

GDB2222 said:

I feel sorry for the buyers, who invested in the buying process, only to come across a problem that the OP could have told them about at the beginning.

I have some sympathy for the readers here who, on the second page, still don't know what manner of restriction it is! Or did I miss it?

I have a different kind of restriction on my house which the vendor and agent were up-front about right from the start. I'd have been pretty miffed to discover its limitations and what they meant even a few days into the buying process.

EDIT: It was there, just well-hidden:

AdrianC said:

I presume this is a "local tie"? When was it imposed, and does it have an expiry?

Was in the paper work when I purchased the house, seems there is no expiry on it either

hippocrates1

These exist in my local area. They are sold at 70% market value to local people only. They sell rapidly here. Make sure the estate agent add says section 106 and has the restrictions in the advert eg can’t earn more than a certain amount etc. Often the issue is that banks want a bigger deposit for these properties and the people that want them don’t have large deposits.

user1977

Davesnave said:

GDB2222 said:

I feel sorry for the buyers, who invested in the buying process, only to come across a problem that the OP could have told them about at the beginning.

I have some sympathy for the readers here who, on the second page, still don't know what manner of restriction it is! Or did I miss it?

EDIT: It was there, just well-hidden:

AdrianC said:

I presume this is a "local tie"? When was it imposed, and does it have an expiry?

The OP hasn't actually confirmed that this is what they're talking about (and if it is, what the restriction actually says).

LBJ23

daveyjp said:

'Local house for local people' clause?

Yeah this one mate, and first time buyer. Have to sell at a discounted rate too

Davesnave

LBJ23 said:

daveyjp said:

'Local house for local people' clause?

Yeah this one mate, and first time buyer. Have to sell at a discounted rate too

But presumably you bought at a discounted rate as well?

I don't know how easy it is to get a Section 106 removed. With an agricultural tie there are 3 routes:

• convincing the local authority it's impossible to sell at a realistic price with the tie

• convincing the local authority the tie is no longer relevant

• non-compliance with the tie for 10 years, after which it should be possible to get a Certificate of Lawful Development

Some of these are very difficult or impossible to do in some areas and I expect its the same with Section 106.

GDB2222

hippocrates1 said:

These exist in my local area. They are sold at 70% market value to local people only. They sell rapidly here. Make sure the estate agent add says section 106 and has the restrictions in the advert eg can’t earn more than a certain amount etc. Often the issue is that banks want a bigger deposit for these properties and the people that want them don’t have large deposits.

How does the 70% of full value work? Is that just roughly the price that these go for, or does someone from the local council value the property, and the sale must be at 70% of that figure?

hippocrates1

GDB2222 said:

hippocrates1 said:

These exist in my local area. They are sold at 70% market value to local people only. They sell rapidly here. Make sure the estate agent add says section 106 and has the restrictions in the advert eg can’t earn more than a certain amount etc. Often the issue is that banks want a bigger deposit for these properties and the people that want them don’t have large deposits.

How does the 70% of full value work? Is that just roughly the price that these go for, or does someone from the local council value the property, and the sale must be at 70% of that figure?

GDB2222 said:

hippocrates1 said:

These exist in my local area. They are sold at 70% market value to local people only. They sell rapidly here. Make sure the estate agent add says section 106 and has the restrictions in the advert eg can’t earn more than a certain amount etc. Often the issue is that banks want a bigger deposit for these properties and the people that want them don’t have large deposits.

How does the 70% of full value work? Is that just roughly the price that these go for, or does someone from the local council value the property, and the sale must be at 70% of that figure?

The council decide the price 

hippocrates1

LBJ23 said:

daveyjp said:

'Local house for local people' clause?

Yeah this one mate, and first time buyer. Have to sell at a discounted rate too

Clearly this needs to be on your advert only a small proportion of people will qualify for this scheme. I’d be mad if I’d spent money on solicitors to find this out alter down the line. In my area if it doesn’t sell the local area is expanded.