Santander mortgage – Section 156A Right to Buy restriction causing delays.

mw_far

Hi everyone,

I’m a first-time buyer purchasing a freehold ex-council property and have encountered an issue with the 10-year Right-to-Buy restriction under Section 156A of the Housing Act 1985.
The sellers purchased the property from the Council in September 2020, so the restriction remains on the Land Registry title until September 2030.

The sellers have already followed the statutory process, offered the property back to the Council, and received confirmation that the Council does not wish to repurchase it. The Council has also issued the required compliance certificate for the current sale. However, my mortgage lender is Santander, and my solicitor has identified a potential issue because the restriction remains on the title after completion.

The restriction specifically applies to transfers by the registered owner or a registered mortgage lender, meaning Santander could potentially need to comply with the Council’s right-of-first-refusal process if it ever repossessed and sold the property before September 2030.

The difficulty relates to Santander’s requirements.

We have been advised that Santander may accept the restriction if either:

1. The Council’s nomination/acceptance period is limited to 4 weeks, with exchange within 4 months of acceptance and completion within a further month; or
2. The total period for nomination, acceptance and exchange does not exceed 6 months.

However, under the Housing (Right of First Refusal) (England) Regulations 2005, the Council has a statutory 8-week period to accept an offer.
The Council has confirmed that it cannot change the statutory timescales or amend the restriction.

My solicitor has now contacted Santander requesting approval to proceed, but we are still waiting for a decision. I’m not certain whether Santander has actually objected or whether my solicitor is simply referring the matter for approval under its lending instructions.

Has anyone experienced something similar?

• Has anyone obtained a Santander mortgage on an ex-Right-to-Buy property while the 10-year Section 156A restriction was still active?
• Did your solicitor have to refer the restriction to Santander for approval?
• Did Santander eventually accept the restriction without the Council amending it?
• Has anyone encountered the same 4-week or 6-month requirements?
• If Santander wouldn’t proceed, did another mortgage lender accept the restriction? If so, which lender?
• If you managed to resolve the issue, what was the solution and how long did it take?

The transaction has been ongoing for several months, and the sellers have an onward purchase with a mortgage offer approaching expiry. We’re concerned the chain could collapse over this issue.

I’d particularly appreciate responses from conveyancers, mortgage brokers or anyone who has successfully completed a purchase involving this exact restriction.
Thanks in advance for any advice or experiences.

mw_far

Trying to bump this up...asking for anyone's experience with Santander lending on 'ex' right to buy properties

strawb_shortcake

I'm not sure it's relevant to your scenario, but we bought under RTB, we remortgaged to Santander after 2 years, we had to get a deed of postponement for the HA charge, the 10 year restriction wasn't mentioned at all

mw_far

Thanks for sharing @strawb_shortcake, that’s interesting. Do you know if your title had a Section 156A Housing Act 1985 restriction relating to the council’s 10-year right of first refusal, separate from the housing association charge?

Our issue is specifically with that restriction, rather than the five-year discount repayment charge. Just trying to establish whether Santander has previously accepted the same restriction.

strawb_shortcake

https://forums.moneysavingexpert.com/discussion/comment/82174981#Comment_82174981

There was yes, this came up when we put our house on the market 9.5 years after our purchase, we didn't sell so had no experience

mw_far

Thanks @strawb_shortcake