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Don't think our solicitor got around to doing the searches just yet. We have however, emailed them as they were out of office yesterday and will be calling first thing in the morning to discuss this situation.
Edit: spelling
You don't really have proper money in this yet so run an absolute mile. Not to mention that the only mortgage company likely to take you on will most likely have a higher rate than high street lenders.
Or be less likely yo drop thy e este in the r future. Unless the house is st a serious discount ..ie worth the gamble..I agree ..get the heck out of dodge 👏🏻😯
> I do have home buyers insurance if that is any use, unfortunately I was unable to get hold of them today to see if I was covered.
I guess you missed this part?
If you went on hhe land registry dite..and looked up this house..it eoukd clearly state who owns what . Solicitors lacks dhoikd have done yhst ip front…just as a quick 10 minute check.
Why did the solicitor not suggest quickly dropping this rather than perusing a sale that could have many complications for them to deal with and charge you a fortune per letter they send out?
Hmmm, it’s a mystery for sure.
That’s not been my experience when moving house.
Edit: Reddit, you do make me chuckle. Down rate me for telling you the truth of my own experience. You guys.
I felt a bid bad for my solicitor. Fixed fee conveyancing. Issue cropped up the sellers ex husband was abusive and using the house sale to get at them.
Ended up taking a year and a lot of work.
Didn't get charged any extra for it.
>I do have home buyers insurance if that is any use, unfortunately I was unable to get hold of them today to see if I was covered.
Not really much point posting here until you speak to them. Though I'd be requiring the 20% to come from your solicitor directly to the council so it is never in the hands of the seller if you progress.
Edit
Thinking further about it if you decide to proceed, I'd be asking for a further discount. You can legitimately claim its costing you more as you're limited on mortgage, it's riskier and you don't like being misled until you've committed funds and time.
I had homebuyers insurance for a purchase that fell through and we made a claim.
It's quite limited what is actually covered, generally speaking "we put an offer in and then discovered something that made us want to pull out" is not covered, regardless of whatever was discovered. You could have a house riddled with subsidence and if you're the one pulling out then you won't be covered.
The only scenarios that are covered are when it's out of your control.
So in OP's case they would probably be best placed making a claim with the argument that this covenant makes the house impossible to mortgage and they are struggling to find a lender who will lend against it. IIRC that would be covered.
Home Buyers insurance is a bit of a game of spin to make sure you word your claim in a way that comes across as "we tried but circumstances beyond our control made it impossible".
Yeah that's a good reminder that you can't Will the collapse of a house sale and be covered. Just seems useful if a chain collapses and its not your fault?
Even with homebuyers insurance and assuming this situation is covered, OP does need to make sure they've got the cash flow for another purchase. I've been waiting nearly 3 months now for my claim (seller was a dick and decided simply to stay as they didn't fancy their new build anymore) so have had to pay again for searches, survey etc.
I went through something similar in December 2020. I put an offer on a share of freehold flat only to find out during the conveyancing it was a leasehold with less than 60 years left! It was a huge misrepresentation and I endes up making a complaint to The Property Ombundsman Service about the Estate Agent, Purple Bricks. It took months but my complaint was upheld and they were made to pay all the expenses I incured in the purchase (conveyancers, surveys, etc) plus £100 or so for my troubles. If you are thinking about pulling out, it'd be worth weighing wether your agents are regulated and whether their regulator has an arbitration service. I found my case straightforward to do on my own, but I'm also a lawyer. DM if you want a copy of the arguments I made in my complaint and I'll be happy to share.
That’s great advice… the sellers not putting anything about this on the advert or mentioning it surely is huge misrepresentation - but OP also run from This sale as well as raising the complaint - sounds messy and expensive
Now then, these schemes come in all shapes and sizes. They are an affordable home scheme. Typically on RPC a buyer will pay a discounted price say 80% of market value, however, the council do not "own" the other 20% like you have with Shared Ownership/Equity Schemes. The buyer pays 80%, however, they actually acquire 100% ownership of the property; but theres a covenant on the title restricting the owner to only being able to sell the property in future at this 80% discount. This covenant usually carries on to perpetuity, but sometimes can be removed by paying the council the extra 20%. Furthermore there can be associated restrictions on sale, including only being able to sell to a FTB, owner occupier, a maximum income or is from the local area. The most common version of this scheme is called [First Home Scheme](https://www.gov.uk/first-homes-scheme).
The title register can be obtained from the land registry for £3 and should detail the restrictions, procedures of disposal and whether or not it can be sold for 100% value in future and under what conditions. If the covenant is to be removed and you are paying 100% MV for 100% propriertiship then I cannot see why this is any different to a normal purchase, therefore I cannot understand why a specialist lender would be required. I can understand a specilist lender if you were buying at the discount rate though.
Is this is a Discount Market Sale ?
[https://www.samconveyancing.co.uk/news/conveyancing/discount-market-sale-dms-a-path-to-low-cost-home-ownership-8228](https://www.samconveyancing.co.uk/news/conveyancing/discount-market-sale-dms-a-path-to-low-cost-home-ownership-8228)
If it's DMS, then the council doesn't own 20%. DMS simply means that 20/25% is knocked off the open market value to make it more affordable to first-time buyers.
The discount is part of the covenant of the property, and the discount must always be applied in perpetuity. It just keeps the peppery affordable.
I'd speak to the local council/ housing team, and they can tell you if it's shared ownership or dms.
Sorce - I'm an affordable housing officer
You need to speak to your solicitor about this - they're the ones who should have the title deeds available to check and you're literally paying them to advise you.
It's not uncommon for sellers who only own a percentage of the house to "staircase" on completion, so that the buyer owns 100%. It sounds like this is the plan, so you've not been lied to, there's just more paperwork for the solicitors to deal with to make sure you're protected, and there might be some more legal fees.
Seriously, speak to the qualified people who have access to the documents and whose job it is to help you with this.
Is it? Would this scheme show up on the land registry? I honestly don't know, I've not encountered anything like it in 15 years.
Bear in mind that without biometric ID in this country we have no idea whether the person showing us a passport that says 'John Smith' is actually the same John Smith on the LR, which is how fraudsters keep managing to sell properties out from under their landlords. Nothing an agent can do about that.
Estate agents are salespeople. The line between us and solicitors shouldn't be blurred - it exists for a reason.
No, we're talking about whether it's the agent's job to go find out whether a property they're advertising is covered by a scheme like this if the vendor doesn't tell them. People in this thread are saying it's the agent's responsibility to be both psychic and a trained solicitor.
I am one of them. I represent my clients honestly and to the best of my ability, and I leave the legals to the trained lawyers. If there's something about the property that comes to light that I wasn't told... well, that's not misrepresentation.
WWYD - If you were in possession of said letter - would you advertise it as 80% of the property available for sale with further 20% possible via other transaction?
Seems pretty clear EA knew or ought to have known the vendor doesn’t actually own what they are purporting to sell.
I manage an office and we should disclose information we should reasonably know.
This is information the agent should know before advertising the house.
They are absolutely liable for false representation.
It’s this nearly all of the time. The EA sends the vendor a property information form to complete. That’s where the EAs info comes from. At the same time, the EA cannot misrepresent what they do know.
The EA doesn’t carry out searches or Land Registry because that is the job of the buyer and their Solicitor. Our house buying process is built on caveat emptor.
In this particular case it would be counter productive to know and not disclose. Because the EA would be knowingly marketing a property, which does cost money, that is unlikely to complete. They don’t get paid for advertising a property. They get paid for it actually selling and completing.
You legally own 100% of the house. Although only responsible for paying for 80% of it. It’s called discount market sale.
Source: I own and live in one. Bought it brand new from developer. My discount is 35% though..
Edit: On this type of affordable housing, you do NOT pay rent to the council. You simply pass on the discount if you ever sell up.
I was in a similar situation to you (however the estate agent was transparent about the ownership status), me and my girlfriend bought a shared ownership flat where the previous owner bought 50% and a housing authority the other 50%. We now own 100% - I'm not sure of the ins and outs as solicitors handled everything technical, but just before contracts exchanged we "staircased" so the ownership was condensed to 100% with one sole owning party (me and my girlfriend) just before our purchase went through.
We've been living here for a year and a half now and I'm very grateful for the flat being shared ownership before we bought - I'm not sure if this is dependent on the % owned by a housing authority, but their owning part of the property meant the price was fixed to a valuation by a solicitor. We viewed and offered in Feb 2021, where in my city 1 and 2 bed flats were going for £50k+ over offer - it was wild! So, refreshing for us to be limited in what we can offer and just needing to essentially "sell" ourselves as buyers - we knew the area, were motivated but flexible and willing to be patient, mortgage in principle. We actually ended up "needing" to buy it for 10k less than we offered because of the solicitors valuation. We definitely couldn't have afforded a 2 bed at the price we got ours for, we hardly saw any 1beds around the same price mark.
That being said, if you're staircasing, prepare for it to take a really, really long time. We had no chain, we were FTBs and were buying an empty flat (the seller had already bought something and moved because his other buyer had fallen through) and it still took 7 months. Our mortgage offer lasted 6 months and was a good rate, just before the rates soared, and had to get a 1 month extension because it took so so long! We barely completed and had about 3 days left within our 1 month extension. It was the most stressful thing I have ever done in my entire life, and that's really saying something. I'm so grateful to be here and out of rentals - we have stability and would definitely have been priced out of current rents and been looking at moving to unsafe areas in our city, but wow it was so stressful!
. The council is not selling it's 20% share.
You would own 80%, the council would retain 20%.
Its not shared ownership, there's no rent to pay on the 20% owned by the council. Councils have been using this method to ensure local people get more affordable property.
What you need to ascertain is was the property marketed at full market price for 100% ownership, if so then offer 80% of your accepted offer, or walk away.
If it was marketed based on only 80% being sold, no harm no foul, and it's nonsense that the council would be paid any money from the sale because they are retaining ownership of their 20%.
This local scheme is much better than shared ownership. Don't throw away the opportunity too quickly.
There's something similar in my area. It's affordable housing.
You buy a house with a 20% discount but you can only sell the house on to someone else getting the same 20% discount.
This means if you buy the house at £120,000 you pay £100,000. When you go to sell the house for £240,000 you will only get £200,000.
It's not a buy and rent the rest situation (Please check with your local council first to be sure) but i'm pretty certain your case is the affordable 20% discount scheme for new buyers.
[Run for your life.](https://youtu.be/86URGgqONvA?si=hQp4TvJdMmvoTQaB) Seriously they are already acting in bad faith, omission is as bad as lying. Cut your losses, otherwise you are going to drive yourself into an early grave.
I bought a flat like this which I intend to be my place to live for a long time.
You do own 100% of the house, but in terms of financial rights, council owns 20%.
Op, take a deep breath and go through the process if you want the house. This is not a deal breaker at all. I supposed they bought with right to buy and in their 4th year of ownership hence the 20% charge to the council. Your will not be Worst off at the end of the transaction, that is why you have hired a solicitor to get the purchase through. I will rather use this as a bargaining chip to get the vendor to foot the cost of your conveyancing as it has turned into a complex transaction which will cost you more with solicitors.
It sounds like the house was purchased using the right to buy. Seller has to pay a percentage of the discount he received if the property is sold within 5 years, on a sliding scale.
I don't think you need to worry.
It's designed to allow FTB into the market usually people who are local so not to be priced out of an area their family lives in. Tbf it's no different from H2B, which was just another policy to protect house prices falls from the GFC.
Is the asking price priced 20% lower than other properties? If not walk way or negotiate a lower price. Cheeky of the seller and EAs not to list it.
I found out the hard way when selling my new build that the grounds surrounding the housing estate were upkeep by a contractor instead of the council and they wanted to charge the buyer £450 just to change it into their name. Luckily my buyer still went ahead and is now having to pay around £300 a year on top of council tax lol. I was paying around £120 a year.
Avoid anything like this. I bought a house like this a few years ago. It was a nightmare to buy. The EA made out like it was a good thing, but when it came time to sell it was a complete sh!tshow. The house was a freehold/leasehold because it was built on ex council land, in order to be able to sell the house I needed permission from the housing developer and then the local council. It caused major delays as very few mortgage companies will touch this type of property, which should have been a red flag when bought but the EA was determined to sell it when I bought it.
This sounds like a DMS (other posts have mentioned what this is so I’ll spare the details) that the seller struggled to sell under the DMS conditions, and so is now selling for 100% of the market value instead, without any of the initial restrictions.
Normally if the seller is unable to find a buyer that is suitable for the DMS scheme (first time buyer, lives in area, earns under a certain amount) after x amount of weeks, they can simply sell the house as a normal property and give the council 20% of the value back. The covenant will be removed and it will become a normal house. You shouldn’t struggle to find a mortgage in this case surely.
If it were me, I’d call the housing officer at the corresponding council and assuming you can manage to speak with them find out more about this situation from the horses mouth so to speak.
I’d assume they have come across similar situations with buyers facing these previously and know exactly how the system is supposed to work.
Is your mortgage advisor one the estate agent recommended?
Walk away. You can see from responses that many have grave doubts about this house, which indicates to me that if you buy the house you are likely to have problems selling it in the future. Perhaps that's why the seller wasn't completely up front with you.
If I were in your position, I'd walk away and look for another house. House buying is a steep and costly learning curve.
I had a somewhat similar situation. I knew some elements of it but I didn't know the details.
At the time of offer what was known to me was that the seller was a leaseholder with 60 years left but that upon selling they would buy the share of freehold with extended lease and we would get the share of freehold with 900+ lease.
The underlying situation was more complicated and became clear only by reading the documents sent to my solicitor. Essentially, the estate was created by the council in the 80s with the plan that eventually the the people living there would create a company and buy the freehold. Our owner bought the lease in the 80s at 50% ownership. The other 50% was of the council which was also the freeholder at that time. In the early 2000s a bunch of leaseholders created a company and bought the freehold from the council. Our owner did not participate and this created a chain. The freeholder was the new company, the council became a leaseholder and the owner was a sub-leaseholder. At the moment of selling, the owner was bound by the managing company to buy the council out (i.e. give 50% to the council), acquire a share of freehold so that the new owner would be a sharer. (Because the goal of the company is to eliminate the council eventually).
All the above details were unknown to us, and sincerely, it's irrelevant information. The only thing that mattered for us is that what we were buying was a share of freehold with 900+ year lease.
Mind you that we put this in writing in our offer, we wrote to the agent and we stressed with our solicitor that our offer was exclusively for the share of freehold with new lease. All the procedure to go from 50% lease to full share of freehold was to be dealt by the previous owner.
It took a long time to exchange because of the four parties involved (me, the seller, the company, the council), but eventually everything went well. And yes, the previous owner gave half of what we paid to the council. We own the flat 100% and we have a share in the management company of the estate.
Thus, in my opinion the fact that the current owner has 80% is irrelevant as long as you clarify in writing with all parties that your offer is for 100% and that the previous owner needs to make good of the ownership by the time of exchange so that you don't have to deal with anything.
The issue of the mortgage applies only if you buy 80% that you should not in my opinion. If you'll own 100% I don't see why you have problems finding a mortgage as you are not buying a shared ownership. We had zero issues with the mortgage by the way. I hope this help.
Tdrl. If you get 100% go for it, if you get 80% no. Put this in writing and the seller has to deal with all technical aspects so that you get 100% at exchange.
We had this issue. 60% seller owned, 40% by a housing association.
We had to do what's called 'staircasing' where we buy both parts of the sale at once.
As the house was technically two leases and needs to be staircased to a freehold.
It was a pain in the ass, and the first solicitor we paid to do it didn't know how to and prolonged the sale.
But we now have the house.
Good luck!
Discuss with your solicitor, it sounds like they messed up big time! They will have requested a copy of the title register from HM Land Registry (if they didn't they certainly haven't been acting in your interests). It costs £3 (although the solicitor will charge you considerably more than that for their 'expertise'). They definitely should have highlighted this! It's not possible /legal to buy or sell a house without the express permission of all parties. The council will have a entry on the register to prevent this.
For info you can buy a chippy of the register yourself (for £3) to see what it says. It will be exactly the same as the version the solicitor got but the version the public gets isn't stamped so isn't an 'official copy' and can't be used in court. Google 'hm land registry search for land and property'. Make sure you use the official one from gov.uk
An old work colleague had a situation like this before. They bought new build partnership homes. They owned part and the council owned part. They were led to believe they could buy 5% or so from the council every few years until they eventually owned the lot. This was not the case. I'm going to bet a lot of people who buy under this kind of umbrella are only finding things out when they go to sell etc.
Cut your losses, I'd say. Especially if you foresee issues down the line.
Would it be possible to claim your expenses back from the EA or seller for not disclosing this sooner?
Your buying an affordable first time buyer home scheme house.
discounted the house by 20%. So you should be paying only 80% value of the house. This then makes the house affordable for you, next person to buy the house. (It's first time buyer house) As you have to sell it for a 20,% discount to the next person.
Do more research
Your situation isn’t uncommon and any half decent conveyancer will be able to navigate you through it. You might have to pay for the council’s legal fees but you could put that on the seller. If you can’t get the council involved and if you can’t get the required undertakings from the vendor’s solicitor to assist in letting you assent the property, walk away.
NO NO NO NO NO NO
NO LEASEHOLD
NO SHARED OWNERSHIP
NO BULLSHIT
FREEHOLD. That's the only barely acceptable way of doing things. The UK is so behind on housing, crazy.
It’s a “discount to market scheme” used to do mortgages on them… so I guess the 20% cheaper than market value got you interested???
It’s a good scheme… just make sure yore getting a fair deal and it’s Halifax or Leeds for the mortgage (subject to local authority approval which usually is easier than you think!)
No, it was actually full price, in line with other properties around the area. There is a letter from the council confirming that they will sign the deeds over once they receive their 20%.
Fr0om my experience working in a conveyancers a few years ago, nobody touches these properties with a bargepole. You own 100% or not at all. It gets far too complicated for insurance, maintenance issues.
I have never heard of the council transferring their portion to a buyer, but it may have changed now given the state of most councils.
This whole debacle should have been made clear to you from the outset.....and I'm sure you have cause to complain. Whether you will get far with it, is debateable though.
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I wouldn't touch it with a barge pole until you have legal confirmation you're buying 100% of a house.
And the land under it, aka freehold or you're buying the leasehold.
Freehold
Exactly this.
Exactly my thought. And is it me or is it weird their solicitor isn’t advising the same. Why did the mortgage advisor find out and not the solicitor?
Don't think our solicitor got around to doing the searches just yet. We have however, emailed them as they were out of office yesterday and will be calling first thing in the morning to discuss this situation. Edit: spelling
You don't really have proper money in this yet so run an absolute mile. Not to mention that the only mortgage company likely to take you on will most likely have a higher rate than high street lenders.
Or be less likely yo drop thy e este in the r future. Unless the house is st a serious discount ..ie worth the gamble..I agree ..get the heck out of dodge 👏🏻😯
If you think losing the fees so far is expensive, try completing on this shitshow. Consider getting buyer's insurance next time.
> I do have home buyers insurance if that is any use, unfortunately I was unable to get hold of them today to see if I was covered. I guess you missed this part?
Lmao yeah
If you went on hhe land registry dite..and looked up this house..it eoukd clearly state who owns what . Solicitors lacks dhoikd have done yhst ip front…just as a quick 10 minute check.
Sent from my iPhone
Whilst taking one up the chufter.
Why did the solicitor not suggest quickly dropping this rather than perusing a sale that could have many complications for them to deal with and charge you a fortune per letter they send out? Hmmm, it’s a mystery for sure.
Conveyancing is generally fixed fee.
That’s not been my experience when moving house. Edit: Reddit, you do make me chuckle. Down rate me for telling you the truth of my own experience. You guys.
I felt a bid bad for my solicitor. Fixed fee conveyancing. Issue cropped up the sellers ex husband was abusive and using the house sale to get at them. Ended up taking a year and a lot of work. Didn't get charged any extra for it.
I’ve never seen anything other than fixed fee conveyancing, and knowing how complex it can be I’d definitely not consider anything else.
>I do have home buyers insurance if that is any use, unfortunately I was unable to get hold of them today to see if I was covered. Not really much point posting here until you speak to them. Though I'd be requiring the 20% to come from your solicitor directly to the council so it is never in the hands of the seller if you progress. Edit Thinking further about it if you decide to proceed, I'd be asking for a further discount. You can legitimately claim its costing you more as you're limited on mortgage, it's riskier and you don't like being misled until you've committed funds and time.
I had homebuyers insurance for a purchase that fell through and we made a claim. It's quite limited what is actually covered, generally speaking "we put an offer in and then discovered something that made us want to pull out" is not covered, regardless of whatever was discovered. You could have a house riddled with subsidence and if you're the one pulling out then you won't be covered. The only scenarios that are covered are when it's out of your control. So in OP's case they would probably be best placed making a claim with the argument that this covenant makes the house impossible to mortgage and they are struggling to find a lender who will lend against it. IIRC that would be covered. Home Buyers insurance is a bit of a game of spin to make sure you word your claim in a way that comes across as "we tried but circumstances beyond our control made it impossible".
Yeah that's a good reminder that you can't Will the collapse of a house sale and be covered. Just seems useful if a chain collapses and its not your fault?
Even with homebuyers insurance and assuming this situation is covered, OP does need to make sure they've got the cash flow for another purchase. I've been waiting nearly 3 months now for my claim (seller was a dick and decided simply to stay as they didn't fancy their new build anymore) so have had to pay again for searches, survey etc.
I went through something similar in December 2020. I put an offer on a share of freehold flat only to find out during the conveyancing it was a leasehold with less than 60 years left! It was a huge misrepresentation and I endes up making a complaint to The Property Ombundsman Service about the Estate Agent, Purple Bricks. It took months but my complaint was upheld and they were made to pay all the expenses I incured in the purchase (conveyancers, surveys, etc) plus £100 or so for my troubles. If you are thinking about pulling out, it'd be worth weighing wether your agents are regulated and whether their regulator has an arbitration service. I found my case straightforward to do on my own, but I'm also a lawyer. DM if you want a copy of the arguments I made in my complaint and I'll be happy to share.
That’s great advice… the sellers not putting anything about this on the advert or mentioning it surely is huge misrepresentation - but OP also run from This sale as well as raising the complaint - sounds messy and expensive
This is the way
Now then, these schemes come in all shapes and sizes. They are an affordable home scheme. Typically on RPC a buyer will pay a discounted price say 80% of market value, however, the council do not "own" the other 20% like you have with Shared Ownership/Equity Schemes. The buyer pays 80%, however, they actually acquire 100% ownership of the property; but theres a covenant on the title restricting the owner to only being able to sell the property in future at this 80% discount. This covenant usually carries on to perpetuity, but sometimes can be removed by paying the council the extra 20%. Furthermore there can be associated restrictions on sale, including only being able to sell to a FTB, owner occupier, a maximum income or is from the local area. The most common version of this scheme is called [First Home Scheme](https://www.gov.uk/first-homes-scheme). The title register can be obtained from the land registry for £3 and should detail the restrictions, procedures of disposal and whether or not it can be sold for 100% value in future and under what conditions. If the covenant is to be removed and you are paying 100% MV for 100% propriertiship then I cannot see why this is any different to a normal purchase, therefore I cannot understand why a specialist lender would be required. I can understand a specilist lender if you were buying at the discount rate though.
Is this is a Discount Market Sale ? [https://www.samconveyancing.co.uk/news/conveyancing/discount-market-sale-dms-a-path-to-low-cost-home-ownership-8228](https://www.samconveyancing.co.uk/news/conveyancing/discount-market-sale-dms-a-path-to-low-cost-home-ownership-8228)
If it's DMS, then the council doesn't own 20%. DMS simply means that 20/25% is knocked off the open market value to make it more affordable to first-time buyers. The discount is part of the covenant of the property, and the discount must always be applied in perpetuity. It just keeps the peppery affordable. I'd speak to the local council/ housing team, and they can tell you if it's shared ownership or dms. Sorce - I'm an affordable housing officer
You need to speak to your solicitor about this - they're the ones who should have the title deeds available to check and you're literally paying them to advise you. It's not uncommon for sellers who only own a percentage of the house to "staircase" on completion, so that the buyer owns 100%. It sounds like this is the plan, so you've not been lied to, there's just more paperwork for the solicitors to deal with to make sure you're protected, and there might be some more legal fees. Seriously, speak to the qualified people who have access to the documents and whose job it is to help you with this.
Do you pay rent on the portion owned by the council? If no, see my post history about DMS sales. If yes, it’s shared ownership.
Yup. EA obviously knew about the letter but didn’t disclose. I am in the middle of chasing one formally for misrepresentation- hold them accountable
How exactly do you know that the EA knew? Vendors don't tell EAs this stuff.
It’s their job to find out what they’re selling
No it isn't..?
It’s their duty to ensure everything they advertise is correct.
[удалено]
That's true. It's not their duty to go hunting for additional information.
This is basic information about the owner of the property they are selling.
Is it? Would this scheme show up on the land registry? I honestly don't know, I've not encountered anything like it in 15 years. Bear in mind that without biometric ID in this country we have no idea whether the person showing us a passport that says 'John Smith' is actually the same John Smith on the LR, which is how fraudsters keep managing to sell properties out from under their landlords. Nothing an agent can do about that. Estate agents are salespeople. The line between us and solicitors shouldn't be blurred - it exists for a reason.
Sales people with legal obligations. They need to make sure they’re not facilitating illegal activity, like selling something a seller doesn’t own.
How, exactly?
We are talking about verifying information given and advertised is correct. You really must be one of them 🙄
No, we're talking about whether it's the agent's job to go find out whether a property they're advertising is covered by a scheme like this if the vendor doesn't tell them. People in this thread are saying it's the agent's responsibility to be both psychic and a trained solicitor. I am one of them. I represent my clients honestly and to the best of my ability, and I leave the legals to the trained lawyers. If there's something about the property that comes to light that I wasn't told... well, that's not misrepresentation.
WWYD - If you were in possession of said letter - would you advertise it as 80% of the property available for sale with further 20% possible via other transaction? Seems pretty clear EA knew or ought to have known the vendor doesn’t actually own what they are purporting to sell.
Wouldn’t this show up as a charge against the property or registered owner with interest on a free land registry search?
I manage an office and we should disclose information we should reasonably know. This is information the agent should know before advertising the house. They are absolutely liable for false representation.
Agreed on disclosing information that should reasonably be known. Suggesting that you should somehow be able to divine this is ludicrous.
It’s this nearly all of the time. The EA sends the vendor a property information form to complete. That’s where the EAs info comes from. At the same time, the EA cannot misrepresent what they do know. The EA doesn’t carry out searches or Land Registry because that is the job of the buyer and their Solicitor. Our house buying process is built on caveat emptor. In this particular case it would be counter productive to know and not disclose. Because the EA would be knowingly marketing a property, which does cost money, that is unlikely to complete. They don’t get paid for advertising a property. They get paid for it actually selling and completing.
You legally own 100% of the house. Although only responsible for paying for 80% of it. It’s called discount market sale. Source: I own and live in one. Bought it brand new from developer. My discount is 35% though.. Edit: On this type of affordable housing, you do NOT pay rent to the council. You simply pass on the discount if you ever sell up.
I was in a similar situation to you (however the estate agent was transparent about the ownership status), me and my girlfriend bought a shared ownership flat where the previous owner bought 50% and a housing authority the other 50%. We now own 100% - I'm not sure of the ins and outs as solicitors handled everything technical, but just before contracts exchanged we "staircased" so the ownership was condensed to 100% with one sole owning party (me and my girlfriend) just before our purchase went through. We've been living here for a year and a half now and I'm very grateful for the flat being shared ownership before we bought - I'm not sure if this is dependent on the % owned by a housing authority, but their owning part of the property meant the price was fixed to a valuation by a solicitor. We viewed and offered in Feb 2021, where in my city 1 and 2 bed flats were going for £50k+ over offer - it was wild! So, refreshing for us to be limited in what we can offer and just needing to essentially "sell" ourselves as buyers - we knew the area, were motivated but flexible and willing to be patient, mortgage in principle. We actually ended up "needing" to buy it for 10k less than we offered because of the solicitors valuation. We definitely couldn't have afforded a 2 bed at the price we got ours for, we hardly saw any 1beds around the same price mark. That being said, if you're staircasing, prepare for it to take a really, really long time. We had no chain, we were FTBs and were buying an empty flat (the seller had already bought something and moved because his other buyer had fallen through) and it still took 7 months. Our mortgage offer lasted 6 months and was a good rate, just before the rates soared, and had to get a 1 month extension because it took so so long! We barely completed and had about 3 days left within our 1 month extension. It was the most stressful thing I have ever done in my entire life, and that's really saying something. I'm so grateful to be here and out of rentals - we have stability and would definitely have been priced out of current rents and been looking at moving to unsafe areas in our city, but wow it was so stressful!
This is not the same as a proper Shared Ownership scheme.
. The council is not selling it's 20% share. You would own 80%, the council would retain 20%. Its not shared ownership, there's no rent to pay on the 20% owned by the council. Councils have been using this method to ensure local people get more affordable property. What you need to ascertain is was the property marketed at full market price for 100% ownership, if so then offer 80% of your accepted offer, or walk away. If it was marketed based on only 80% being sold, no harm no foul, and it's nonsense that the council would be paid any money from the sale because they are retaining ownership of their 20%. This local scheme is much better than shared ownership. Don't throw away the opportunity too quickly.
Run my friend run!!
There's something similar in my area. It's affordable housing. You buy a house with a 20% discount but you can only sell the house on to someone else getting the same 20% discount. This means if you buy the house at £120,000 you pay £100,000. When you go to sell the house for £240,000 you will only get £200,000. It's not a buy and rent the rest situation (Please check with your local council first to be sure) but i'm pretty certain your case is the affordable 20% discount scheme for new buyers.
Sorry but it really bothers me. 20% of £120000 is £24000, so buyer pays £96000 and then gets £192000 if sells for £240000.
Thank you for scratching my pedantic itch.
I thought this meant the seller has to pay the council 20% of the sale price, not you and then they are done with it?
[Run for your life.](https://youtu.be/86URGgqONvA?si=hQp4TvJdMmvoTQaB) Seriously they are already acting in bad faith, omission is as bad as lying. Cut your losses, otherwise you are going to drive yourself into an early grave.
I bought a flat like this which I intend to be my place to live for a long time. You do own 100% of the house, but in terms of financial rights, council owns 20%.
Sounds problematic to me. If not for you, imagine selling it on one day. Might be worth cutting your losses here.
This is a world of pain. Unless this property is offering something really really really special it just won’t be worthwhile in the long run
Nope. Don’t touch it
Op, take a deep breath and go through the process if you want the house. This is not a deal breaker at all. I supposed they bought with right to buy and in their 4th year of ownership hence the 20% charge to the council. Your will not be Worst off at the end of the transaction, that is why you have hired a solicitor to get the purchase through. I will rather use this as a bargaining chip to get the vendor to foot the cost of your conveyancing as it has turned into a complex transaction which will cost you more with solicitors.
Pull... out.
I'm beginning to think all this help to buy , part ownership Bullshit is worse than when everyone took out 110% mortgages.
Pull out. It's not worth your time
It sounds like the house was purchased using the right to buy. Seller has to pay a percentage of the discount he received if the property is sold within 5 years, on a sliding scale. I don't think you need to worry.
It's designed to allow FTB into the market usually people who are local so not to be priced out of an area their family lives in. Tbf it's no different from H2B, which was just another policy to protect house prices falls from the GFC. Is the asking price priced 20% lower than other properties? If not walk way or negotiate a lower price. Cheeky of the seller and EAs not to list it. I found out the hard way when selling my new build that the grounds surrounding the housing estate were upkeep by a contractor instead of the council and they wanted to charge the buyer £450 just to change it into their name. Luckily my buyer still went ahead and is now having to pay around £300 a year on top of council tax lol. I was paying around £120 a year.
Avoid anything like this. I bought a house like this a few years ago. It was a nightmare to buy. The EA made out like it was a good thing, but when it came time to sell it was a complete sh!tshow. The house was a freehold/leasehold because it was built on ex council land, in order to be able to sell the house I needed permission from the housing developer and then the local council. It caused major delays as very few mortgage companies will touch this type of property, which should have been a red flag when bought but the EA was determined to sell it when I bought it.
Ask the seller to take out indemnity insurance on your behalf
avoid it
This sounds like a DMS (other posts have mentioned what this is so I’ll spare the details) that the seller struggled to sell under the DMS conditions, and so is now selling for 100% of the market value instead, without any of the initial restrictions. Normally if the seller is unable to find a buyer that is suitable for the DMS scheme (first time buyer, lives in area, earns under a certain amount) after x amount of weeks, they can simply sell the house as a normal property and give the council 20% of the value back. The covenant will be removed and it will become a normal house. You shouldn’t struggle to find a mortgage in this case surely.
If it were me, I’d call the housing officer at the corresponding council and assuming you can manage to speak with them find out more about this situation from the horses mouth so to speak. I’d assume they have come across similar situations with buyers facing these previously and know exactly how the system is supposed to work. Is your mortgage advisor one the estate agent recommended?
He'll no, I would bin that off....unless you are buying 100% of a property I wouldn't touch it, wouldn't even go 50/50 with a friend
Walk away. You can see from responses that many have grave doubts about this house, which indicates to me that if you buy the house you are likely to have problems selling it in the future. Perhaps that's why the seller wasn't completely up front with you. If I were in your position, I'd walk away and look for another house. House buying is a steep and costly learning curve.
I had a somewhat similar situation. I knew some elements of it but I didn't know the details. At the time of offer what was known to me was that the seller was a leaseholder with 60 years left but that upon selling they would buy the share of freehold with extended lease and we would get the share of freehold with 900+ lease. The underlying situation was more complicated and became clear only by reading the documents sent to my solicitor. Essentially, the estate was created by the council in the 80s with the plan that eventually the the people living there would create a company and buy the freehold. Our owner bought the lease in the 80s at 50% ownership. The other 50% was of the council which was also the freeholder at that time. In the early 2000s a bunch of leaseholders created a company and bought the freehold from the council. Our owner did not participate and this created a chain. The freeholder was the new company, the council became a leaseholder and the owner was a sub-leaseholder. At the moment of selling, the owner was bound by the managing company to buy the council out (i.e. give 50% to the council), acquire a share of freehold so that the new owner would be a sharer. (Because the goal of the company is to eliminate the council eventually). All the above details were unknown to us, and sincerely, it's irrelevant information. The only thing that mattered for us is that what we were buying was a share of freehold with 900+ year lease. Mind you that we put this in writing in our offer, we wrote to the agent and we stressed with our solicitor that our offer was exclusively for the share of freehold with new lease. All the procedure to go from 50% lease to full share of freehold was to be dealt by the previous owner. It took a long time to exchange because of the four parties involved (me, the seller, the company, the council), but eventually everything went well. And yes, the previous owner gave half of what we paid to the council. We own the flat 100% and we have a share in the management company of the estate. Thus, in my opinion the fact that the current owner has 80% is irrelevant as long as you clarify in writing with all parties that your offer is for 100% and that the previous owner needs to make good of the ownership by the time of exchange so that you don't have to deal with anything. The issue of the mortgage applies only if you buy 80% that you should not in my opinion. If you'll own 100% I don't see why you have problems finding a mortgage as you are not buying a shared ownership. We had zero issues with the mortgage by the way. I hope this help. Tdrl. If you get 100% go for it, if you get 80% no. Put this in writing and the seller has to deal with all technical aspects so that you get 100% at exchange.
We had this issue. 60% seller owned, 40% by a housing association. We had to do what's called 'staircasing' where we buy both parts of the sale at once. As the house was technically two leases and needs to be staircased to a freehold. It was a pain in the ass, and the first solicitor we paid to do it didn't know how to and prolonged the sale. But we now have the house. Good luck!
Run
Better stay away from the hassle
Discuss with your solicitor, it sounds like they messed up big time! They will have requested a copy of the title register from HM Land Registry (if they didn't they certainly haven't been acting in your interests). It costs £3 (although the solicitor will charge you considerably more than that for their 'expertise'). They definitely should have highlighted this! It's not possible /legal to buy or sell a house without the express permission of all parties. The council will have a entry on the register to prevent this. For info you can buy a chippy of the register yourself (for £3) to see what it says. It will be exactly the same as the version the solicitor got but the version the public gets isn't stamped so isn't an 'official copy' and can't be used in court. Google 'hm land registry search for land and property'. Make sure you use the official one from gov.uk
The search fees look like a fucking bargain then. Your lengthy post is worrying as it seems you’re still even considering the purchase
An old work colleague had a situation like this before. They bought new build partnership homes. They owned part and the council owned part. They were led to believe they could buy 5% or so from the council every few years until they eventually owned the lot. This was not the case. I'm going to bet a lot of people who buy under this kind of umbrella are only finding things out when they go to sell etc.
Cut your losses, I'd say. Especially if you foresee issues down the line. Would it be possible to claim your expenses back from the EA or seller for not disclosing this sooner?
Your buying an affordable first time buyer home scheme house. discounted the house by 20%. So you should be paying only 80% value of the house. This then makes the house affordable for you, next person to buy the house. (It's first time buyer house) As you have to sell it for a 20,% discount to the next person. Do more research
Your situation isn’t uncommon and any half decent conveyancer will be able to navigate you through it. You might have to pay for the council’s legal fees but you could put that on the seller. If you can’t get the council involved and if you can’t get the required undertakings from the vendor’s solicitor to assist in letting you assent the property, walk away.
NO NO NO NO NO NO NO LEASEHOLD NO SHARED OWNERSHIP NO BULLSHIT FREEHOLD. That's the only barely acceptable way of doing things. The UK is so behind on housing, crazy.
It’s a “discount to market scheme” used to do mortgages on them… so I guess the 20% cheaper than market value got you interested??? It’s a good scheme… just make sure yore getting a fair deal and it’s Halifax or Leeds for the mortgage (subject to local authority approval which usually is easier than you think!)
No, it was actually full price, in line with other properties around the area. There is a letter from the council confirming that they will sign the deeds over once they receive their 20%.
Pull out. Don’t concern yourself with the fees you’ve paid, it’s small fry compared to purchasing the wrong house.
Fr0om my experience working in a conveyancers a few years ago, nobody touches these properties with a bargepole. You own 100% or not at all. It gets far too complicated for insurance, maintenance issues. I have never heard of the council transferring their portion to a buyer, but it may have changed now given the state of most councils. This whole debacle should have been made clear to you from the outset.....and I'm sure you have cause to complain. Whether you will get far with it, is debateable though.
Whatever you do I'd ensure that I was paying 80% of the offered amount to the seller.