Unexpected issue with owning / selling my affordable home

Snuggles

Grumpy_chap said:

Snuggles said:

14 years ago when I was single I bought a leasehold house. The freeholder is a housing association. I paid 60% of the open market value at the time, and when I sell I can only sell for 60% of the open market value. The HA always describe this as a shared equity scheme - in reality I think it's actually a discounted/restricted sale under a Section 106 agreement. As well as the price restrictions, for the first few months of marketing, the property can only be sold to someone with a local connection. After that it can be offered on the open market. This is all set out in the lease. I am not permitted to buy the property outright, and I don't pay any rent to the HA, other than a nominal ground rent.

The fact you only pay a low ground rent makes this uncommon for shared ownership, so I suspect the "discounted/restricted" sale approach you mention is what it is - though I am entirely unfamiliar with such schemes.

It seems like a real shame that you cannot buy the remainder of the property as, if you could "staircase" to 100% you could then, presumably, do whatever you liked.

Yes it's not the usual shared ownership arrangement as there is no rent to pay (just the ground rent, as with most leaseholds). 

Indeed, if we had the option to buy the property outright (including the freehold) we would have done that. It would certainly make it easier to sell. But part of the Section 106 agreement is that it must remain as affordable housing in perpetuity, so there is no prospect of buying it outright.

AnotherJoe

Snuggles said:

AnotherJoe said:

Seems like confusion on their part as you say, where does it say that in the lease.
take this asa lesson, usually  better to ask for forgiveness than permission. You could have avoided the property being empty by being in there one night a month or whatever 
Also there's  nothing to stop you buying and selling on the same day and just not tying the two deals together. That would help you with SDLT as well.
BTW when you say buyinga new house did you mean new to you or a new build?

I'm not sure what you mean by buying and selling on the same day and not tying the deals together. The issue we have is that it will probably take us a long time to find a proceedable buyer, and we don't want to lose out on being able to buy a suitable new property if our sale falls through.

I mean buying a house that's new to us, not a new build. 

The "normal" way of buying and selling in a chain is that the money to buy the new house comes at least partly from the sale of the old one. So the deals are tied together, one cant happen without the other.

Now look at what you are proposing. You buy a new house and then sell the old (empty) one  (say) three months later. SO the deals are not tied together. Each is independent of the other.

Suppose though you started selling it now whilst looking so the sale process is ahead of the buy process. Maybe less the 3 months gap in the end. Maybe only  2 months. Maybe only a month. Maybe a week. Right down to, the very same day.

As long as you have completions arranged for the same day. But the deals are not tied together, the money for the sale isn't immediately financing the purchase.

Of course, I"m not saying this is possible to achieve, but it would negate this (likely non problem)

In any case if selling is likely to take a long time why delay? Start sooner you can always slow the process down if need be especially if you are up front with the buyers who are likely to be FTB anyway and this probably less of an issue about completion date.

Jojayne86

Hello. I know this was a few years ago , what was the outcome? Did they get back to you? 

Thanks 

EssexHebridean

You may have some joy with getting an answer here in spite of the age of the thread as @snuggles is still an active forum member. (Tagging as they may not have this thread bookmarked still.) 

Snuggles

@Jojayne86 Sorry I've only just seen this. Can't believe it's nearly four years since I started this thread and we still haven't moved 😫 Thanks for the tag @EssexHebridean

I never got any useful response from the HA, they just reiterated that they wouldn't give approval for me to purchase a new property whilst I still own this one, however they wouldn't tell me where it is stipulated that I would need their approval, and suggested I seek my own legal advice as to whether purchasing a new property before selling this one would be in breach of the lease.

I did so and the solicitor agreed with me that there is nothing in the lease which prohibits this. The HA refused to enter into any meaningful discussion with my solicitor about it when they made further enquiries on my behalf. I didn't pursue it further, as I didn't want it to become a "dispute".

We haven't moved yet as life got in the way, but we still intend to do so. We will try to sell and buy in the normal way, but if circumstances mean that we need to buy before we complete on a sale, I'm confident there's nothing to prevent us doing so.

Why do you ask @Jojayne86? Are you in a similar situation?

ReadySteadyPop

RelievedSheff said:

I think you are over thinking this a little. Why not try to form a chain first? If it doesn't happen then use your plan as a back up plan.

Seems an expensive way round matters though with extra stamp duty and running two houses.

Also bear in mind, empty houses take longer to sell than furnished and lived in houses.

Not if they are priced correctly.

mills705

My other half had this type of property and think there is some confusion on the property type. 

With hers it wasn't shared ownership but it was called discount market value. All the terms you have said were identical to what she had to have in place. It was literally just the fact that you had to hit the criteria to buy the property at a discounted market rate. She did not pay anything to a housing association (her house was on a Bellway estate) but did have a maintenance charge for the upkeep of roads and grassy areas (it was never paid as the estate was still not completed when she left). 

All she had to do was get the property marketed normally and the estate agent did the qualification criteria. Her house was snapped up the day it went on sale. Someone offered the same day they viewed. 

The house was a small 2 bedroom affair with a small kitchen leading into a living/dining room with a downstairs toilet. Upstairs was a bigger main bedroom, bathroom and smaller 2nd bedroom. The main issue we found was a lack of storage space!