Buying land from neighbour who has equity release issue

Elmroad82

MeteredOut said:

Elmroad82 said:

MeteredOut said:

Elmroad82 said:

Hoenir said:

Are her neighbours trying to raise money without recourse to the ER company.  Othertwise the exercise is of no benefit to them. Who is going to pay all the associated legal charges ? 

I cant seem to redeit the original post... but yes they were trying to raise money. My mother had got the land valued and the valuer said due to the overall size of the garden and the small piece being sold, that selling it would have no impact on the value of the neighbours house. The ER valuer  verbally agreed.... but subsequently in writing then said the house had fallen by 50k in value and that's the issue.

Is the ER saying the house has fallen in value by £50K since purchase (or since the ER was made) or that the neighbour selling the land would reduce the value of the house by £50K below its current value?

Some posts are assuming the former (as what is written across posts is a bit ambiguous) but I'm wondering if it’s actually the latter.

The house has been owned for 20+ years - what I’ve been told is that the ER company have revalued the house since the ER was taken out in 2018 and have valued it as 50k less. They require a payment of 50k to let the neighbour sell the land. I’m not aware of the amount that ER own. My understanding is that selling the garden won’t devalue the house as the garden is so big. My mum was also assured of this when she had an independent valuation done. 

Based on your most recent post, and this the bit highlighted above, It would be good to get clarity.

Are the ER saying the house is *currently* valued at £50K less that when the ER was taken, or that it *would* be valued at £50K less if the part of the land is sold? Or both?

The latter would make sense (which I why i surmised this previously).

The neighbour needs to get legal advice as to what the ER can demand/block regarding sale of any land. It doesn't seem right that the ER could claim £50K for a £40K land sale, but maybe they think it is being sold under value.

Initially I was told it was due to the current house price being less than 2018, however I’ve subsequently seen paperwork saying they deem the value of the house to be reduced by 50k if the neighbours sell the land. I don’t believe my offer was discussed with ER. What doesn’t seem reasonable though is the amount, as of last month, owing to ER is ~100k (10% of house value)  (again I’ve seen this in documentation) yet they are wanting 50k to release the land! As I mentioned before, my mum can’t influence the ER but I’m trying to help steer my mums neighbours in the right direction as they’re pretty old and find this a bit mind blowing. 

Elmroad82

Maybe the small print says, if the owner wants to sell any part of the house or grounds, it must compensate the full amount to ER prior to release (irrespective of the amount borrowed)? I’ll never know as I don’t think the contract will be shared with my mum…

user1977

Elmroad82 said:

Maybe the small print says, if the owner wants to sell any part of the house or grounds, it must compensate the full amount to ER prior to release (irrespective of the amount borrowed)? I’ll never know as I don’t think the contract will be shared with my mum…

Like I've said, it almost certainly just says you need to get their permission, and not that they're ever obliged to give permission. Plenty of other lenders' mortgage conditions kicking around if you want to find examples, admittedly for "normal" mortgages but I don't see why it would be any different for ER.

Elmroad82

Yeah - however interest rates were lower in 2018 so that makes it difficult to find another mortgage as financially attractive..