Local Occupancy Clause

Tommx6 · 16 October 2019 at 11:54PM

Hi all,

We are in the process of a buying a new build house in a village in North Yorkshire that [unfortunately] has a Local Occupancy Clause.

The clause states that it is only available to buy as a permanent home for persons that have lived in the parish for 3 years, which we meet.

So the story goes... we put an offer in - it gets accepted - mortgage offer comes through - all in the hands of the conveyancer.

Until today, our conveyancer rings and says that our mortgage lender didn’t tell the valuer that the house had a Occupancy Clause. Now the mortgage lender are unwilling to lend us the money against the house :mad: .

So my question is, can these clauses be removed?

Would love some feedback on this.

Thanks

davidmcn · 17 October 2019 at 12:09AM

If they could be (easily) removed, there wouldn't be much point in having them. I expect it would take a planning application to do so, and justification - which I doubt would be forthcoming if the developers can find other buyers.

You might want to check with mortgage brokers if there are more flexible lenders - but bear in mind you'll have this problem when you sell or remortgage too.

Tommx6 · 17 October 2019 at 12:11AM

Sorry just a little more to add.

These clauses are here to stop persons that currently don’t live in the parish buying up houses from local stock.

we meet the criteria are both locals working in the area with close ties to it, but now the clause is currently preventing us from buying this property. It seems to me that the local authority are just shooting themselves in the foot?

unforeseen · 17 October 2019 at 6:00AM

They are not shooting themselves in the foot, they are preventing yet another house becoming a holiday home that gets used for part of the year with the owners contributing sod all to the local community.

pinkteapot · 17 October 2019 at 6:45AM

Local occupancy clauses hold down the value of houses that have them (I also live in a popular holiday area where many houses have these). Some picky lenders will just rule out lending on them. Others will value accordingly.

Did you use a mortgage broker or apply direct? If you used a broker, give them a kick for not thinking of this. If you didn't, now's the time to ring one! A broker will know which lenders will lend on houses with these clauses. Otherwise you've got the hassle of ringing round lenders to ask.

There will be lenders out there for you so you can still buy the house and the council haven't shot themselves in the foot at all.

AdrianC · 17 October 2019 at 8:02AM

Tommx6 wrote: »

we meet the criteria are both locals working in the area with close ties to it, but now the clause is currently preventing us from buying this property.

No, the clause isn't. Your current lender just don't want to lend against this property, with the clause in place.

Find a different lender.

I presume the property would be more expensive - or have sold already - without the clause?

getmore4less · 17 October 2019 at 8:43AM

Tommx6 wrote: »

Sorry just a little more to add.

These clauses are here to stop persons that currently don’t live in the parish buying up houses from local stock.

we meet the criteria are both locals working in the area with close ties to it, but now the clause is currently preventing us from buying this property. It seems to me that the local authority are just shooting themselves in the foot?

but now the clause is preventing us from using this lender

How did you pick the lender?

eddddy · 17 October 2019 at 9:04AM

Tommx6 wrote: »

Until today, our conveyancer rings and says that our mortgage lender didn’t tell the valuer that the house had a Occupancy Clause. Now the mortgage lender are unwilling to lend us the money against the house :mad: .

So you're saying that the mortgage lender knew about the Occupancy Clause, but failed to mention it to the valuer?

I guess that suggests that the lender doesn't have a problem with Occupancy clauses - but the property needs to be re-valued to take account of the Occupancy Clause.

i.e. The valuer is likely to value it lower (or worst case, might say it's unsuitable security).

And until a new valuation is done, the mortgage lender is unwilling to lend.

Or have you been told something different?

G_M · 17 October 2019 at 11:05AM

Presumably the valuer has now reduced his valuation to take account of the clause.

How much is the (new) valuation?
How much have you agreed to pay?
How much have similar local properties sold for recently - with/without such clauses?

Your next step is either

* to find a different lender as others have said - though the lender and their policy does not seem to be the problem, or
* reduce your offer based on the new valuation. The seller must be realistic and accept that the clause reduces their property's value - as you too will discover when you eventually come to sell.

That, of course, is good thing as it makes the property more affordable for local people.

Richard_Webster · 17 October 2019 at 3:01PM

So are you paying significantly less than the price would be if there wasn't a local occupancy clause? That should be the case.

If not you are being had by the developer.

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Local Occupancy Clause

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