Has anyone any experience of selling an affordable home with S106 condition?

lohr500

Planning on having a call with the site sales office this afternoon to ask more questions on the scheme.
I suspect the sales team might not have the detail, but hopefully they can point us in the right direction on who to talk to or send through some documentation. 

daveyjp

lohr500 said:

Current eligibility conditions for the home in question are : 

• *Must not already own or have a mortgage on a residential property
• *Will purchase the property and live in it as my/our principal home
• *Must have a local area connection (live, work, family etc.)
• *Joint income must not exceed £55k

At the moment there are several unsold new builds in the same scheme on the same development.
My daughter and partner are only getting the chance at one becauses the local area rule is being relaxed in two weeks time in an attempt to sell the houses. 

If the same requirements carry forward when it comes to the time to sell, then am I right to be concerned?
(Assuming the joint income value is index linked in some way).

The joint income has to have some mechanism for an annual uplift, otherwise the property becomes unsellable in future years.

mills705

My partner sold hers circa 8/9 months ago so have experience. 

Hers was a small 2 bed semi detached property in a new build estate. For on selling she chose a few local agents to come value the house and they then say it is worth for example £100K then it would market for 70k with the s106 info clearly noted and explained as part of the sales process. Its 30% discount on the market rate of the property.

Hers sold within 24 hours of it going on sale! It went on the market on Monday, was viewed that night and then an offer was taken at 9am Tuesday. 

There were a few under this scheme in the estate and the previous one (next door) sold in a similar fashion ie very quickly!
This estate does attract a premium so not sure if its that or just selling during the right time but there were no issues. 

When we were looking to buy there were similar schemes for larger family homes aimed at young families but they were always a bit small for us so we got an older property. 

lohr500

@mills705 Thanks for the feedback.
We have a call at 2pm today with the sales team so I hope to learn more about the selling clauses around the S106 agreement. 

ArbitraryRandom

lohr500 said:

My daughter and partner are only getting the chance at one becauses the local area rule is being relaxed in two weeks time in an attempt to sell the houses. 

This is the bit I would be asking about - one of the rules is being relaxed in this instance... what is the mechanism for that/can it apply to other rules/can the same mechanism be used for onward sales? 

lohr500

@ArbitraryRandom

Agree. The call has been delayed but understanding what rules will apply at the point of them wanting to sell in the future is key. And what flexibility criteria apply to those rules if no buyers can be found within a given timeframe.

Section62

lohr500 said:

ArbitraryRandom

Agree. The call has been delayed but understanding what rules will apply at the point of them wanting to sell in the future is key. And what flexibility criteria apply to those rules if no buyers can be found within a given timeframe.

The details of the agreement and how it may be varied are normally contained within the S106 agreement.  Usually these are public documents and can be found on the council's planning website as a 'document' attached to either the main planning consent, or an application for discharge of one or more conditions.

Getting hold of the original S106 agreement is probably better than hearing the developer's salesperson's interpretation of it.

lohr500

Well we've spoken to the salesperson and she is going to obtain the resale clause details from the local council and forward them on to us. A 20% affordable homes discount applies to the house in question. 

Her understanding is that all subsequent sales of the house have to be at 20% less than the prevailing market value.
And that if the property doesn't attract any buyers after 12 weeks of being on the market, the eligibility clauses are waivered, the house remains as a low cost property, must still be sold at the 20% discount, but becomes available to any buyers. The new buyer has to accept the S106 condition which stays with the house. Then the process rolls forward for all subsequent sellers/buyers.  

I await the actual documentation from the council to see if the above is the case!! If so, it doesn't seem unreasonable to me. So long as any earnings limit criterion is adjusted annually to reflect wage movements. 

lohr500

Just to update the discussion. 

The documentation never came through from the sales office lady.

However my daughter and partner have had their offer accepted on another house they went to look at so we haven't followed up on the documentation for the "low cost home" scheme property.

The house they are buying is not linked to any affordable housing scheme.