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Section 106 Help

jovitiger
Posts: 2 Newbie

Hi I'm desperate I own a property with a Section 106 on it and have been trying to sell it for 2 years, the latest sale fell through on the day of exchange as the buyers mortgage company withdrew their offer to her on the basis of the valuation the council had provided, this was despite her having a large deposit and having a mortgage approval for 6 months! I am only allowed to sell to someone in the local borough and not above the 2007 purchase price subject to indexing which currently gives the property a value of nearly 40% increase on the purchase price of 2007. I cannot sell it as investors are not interested as they cannot make any money on it to resell and now no lenders will lend against it either, not can I even remortgage it myself, the only people that might be able to buy it is if I find a cash buyer, this is making a nonsense of having it classed as affordable housing to help people get on the property ladder in the first place as I know of no first time buyer with 100% cash. I cannot remove the S106, Ive asked the council and I've even asked if they will buy it to which I've received no response
I am at a total loss as to what to do as the way it stands I have a property I can neither sell or rent out.
PLEASE SOMEONE HELP ME :-)
I am at a total loss as to what to do as the way it stands I have a property I can neither sell or rent out.
PLEASE SOMEONE HELP ME :-)
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Comments
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Hi, as house prices have gone up should you not get the percentage back of the market value?
A relative of ours have just sold their house with this clause (not lived in it for as long as you) and have sold it for more than they paid for it due to property increases. Your situation does not make sense0 -
Thank you. I can sell it for its original purchase price subject to indexing which would give me a small profit, Ive tried many times over the last 2 years to sell it a various prices. My problem is that no one wants to buy it with a S106 in place and now no mortgage provider will lend against it with S106 due to the selling price restrictions as should prospective buyers subsequently they default on their mortgage there is not enough sope to get their money back.0
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I have sent you a message0
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Perhaps someone like @K_S might be able to advise on the possibility of mortgaging if you could provide so basic figures? And any additional restriction like buyer income?
Bought - estimated current value - mortgage your recent buyer needed.
If you've have not made a mistake, you've made nothing0 -
jovitiger said:Hi I'm desperate I own a property with a Section 106 on it and have been trying to sell it for 2 years, the latest sale fell through on the day of exchange as the buyers mortgage company withdrew their offer to her on the basis of the valuation the council had provided, this was despite her having a large deposit and having a mortgage approval for 6 months! I am only allowed to sell to someone in the local borough and not above the 2007 purchase price subject to indexing which currently gives the property a value of nearly 40% increase on the purchase price of 2007. I cannot sell it as investors are not interested as they cannot make any money on it to resell and now no lenders will lend against it either, not can I even remortgage it myself, the only people that might be able to buy it is if I find a cash buyer, this is making a nonsense of having it classed as affordable housing to help people get on the property ladder in the first place as I know of no first time buyer with 100% cash. I cannot remove the S106, Ive asked the council and I've even asked if they will buy it to which I've received no response
I am at a total loss as to what to do as the way it stands I have a property I can neither sell or rent out.
PLEASE SOMEONE HELP ME :-)
For FTBs, I'd suggest speculatively contacting an independent broker, to get an idea of lenders who are more willing to accept the S106 condition. You can suggest those to any prospective buyers, so they don't waste time with others.0 -
jovitiger said:
I own a property with a Section 106 on it and have been trying to sell it for 2 years
Have you been using a good estate agent, who understands the section 106 issue?
I'd have thought a good estate agent could have built a reasonably strong selling proposition by saying to buyers something like...
"The section 106 agreement means the property is cheaper than other similar properties - so you'll get more property for your money. But you'll have to choose from a restricted list of mortgage lenders, so you might need a larger deposit, and you might not get the lowest interest rate on the market."
Also, this might be a case where it's actually useful to use an estate agent with an in-house mortgage broker. The broker can advise prospective buyers (and you) about the constraints of getting a mortgage.
So prospective buyers can make an informed choice on day 1 - rather than getting a shock on exchange day with their mortgage offer being withdrawn, and losing hundreds of pounds in fees.
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