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tim123

Need Help With Strange Restriction

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An auction property I have seen says:

"The seller cannot sell the property to a purchaser who intends to occupy the property as his, her or their principal home."

How does that work? The property is currently tenanted (on an AST) so it seems it's OK for a BTL to buy but not an OO. This makes no sense to me. It doesn’t seem to serve any useful purpose and could easily be got around by having a relation buy it to rent to you at a peppercorn rent.

Has anyone come across this before?

tim

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An auction property I have seen says:

"The seller cannot sell the property to a purchaser who intends to occupy the property as his, her or their principal home."

How does that work? The property is currently tenanted (on an AST) so it seems it's OK for a BTL to buy but not an OO. This makes no sense to me. It doesnt seem to serve any useful purpose and could easily be got around by having a relation buy it to rent to you at a peppercorn rent.

Has anyone come across this before?

tim

I think you need to check with the auctioneers. I suspect it is just a statement in another form that the property is sold subject to the Tenancy. You need to be clear of the exact legal nature of this tenancy. If it's an ordinary AST then you would, as new owner assume the same position as the owner who granted the tenancy. You will be subject to any fixed term that may be current. Thereafter you have to give 2 months notice to obtain vacant possession. Don't forget some people refuse to leave and you have to get a court order to evict, without which it's a criminal offence under the 'Protection from eviction Act'.

To buy it legally you would have to obtain a BTL mortgage and then convert it when you have vacant possession and move in.

Edited by plummet expert

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I think you need to check with the auctioneers. I suspect it is just a statement in another form that the property is sold subject to the Tenancy. You need to be clear of the exact legal nature of this tenancy. If it's an ordinary AST then you would, as new owner assume the same position as the owner who granted the tenancy. You will be subject to any fixed term that may be current. Thereafter you have to give 2 months notice to obtain vacant possession. Don't forget some people refuse to leave and you have to get a court order to evict, without which it's a criminal offence under the 'Protection from eviction Act'.

To buy it legally you would have to obtain a BTL mortgage and then convert it when you have vacant possession and move in.

No, it's got nothing to do with the current tenant. It specifically says that (s)he has been given notice to quit and will be moving out. And since posting I have found some more in the same auction with the same restriction that are currently empty (in need of improvement).

And I'm buying for cash.

tim

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Tthe other possibility is that when it was built the planning department would only allow, the build for the purpose of holiday useage.

I have come across this in the past.

We found a nice barn conversion but it had a holiday use restriction. B)

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Tthe other possibility is that when it was built the planning department would only allow, the build for the purpose of holiday useage.

I have come across this in the past.

We found a nice barn conversion but it had a holiday use restriction. B)

This is a "standard" victorian city center house conveted into flats.

It can't have a holiday restriction as it's currently lived in full time by a tenant.

The auction is this week. I shall watch what prices they go for.

tim

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This is a "standard" victorian city center house conveted into flats.

It can't have a holiday restriction as it's currently lived in full time by a tenant.

The auction is this week. I shall watch what prices they go for.

tim

I was just looking at the last Savills auction and came across these properties being sold by LB Hammersmith and Fulham, some empty. They still sold for a great deal. Wonder what the clause is all about?

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I was just looking at the last Savills auction and came across these properties being sold by LB Hammersmith and Fulham, some empty. They still sold for a great deal. Wonder what the clause is all about?

Those were the ones.

The guide prices were attractive. I guess that if you're buying with the intention of letting this restriction is irrelevent so a "normal" price was achieved.

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Hi Tim123,

it is the same with all properties sold by councils. It has something to do with regulations (look up Local Authorities (Capital Finance and Accounting (England)) Regulation 2003 if you have time). Basically, if councils sell to anybody other than owner occupiers they get to keep 100% of the sales money.

Below the exact wording from a document from Camden Council:

"Properties have been sold using one of the existing general housing consents A3.2, issued by the Secretary of State in 2005, which allows Councils to sell properties that are in need of ‘substantial works of repair, improvement or conversion’. Under the Local Authorities (Capital Finance and Accounting (England)) Regulation 2003, the Council can keep 100% of the money from these sales providing that the properties are not sold to owner occupiers."

I hope this helps.

N.

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Hi Tim123,

it is the same with all properties sold by councils. It has something to do with regulations (look up Local Authorities (Capital Finance and Accounting (England)) Regulation 2003 if you have time). Basically, if councils sell to anybody other than owner occupiers they get to keep 100% of the sales money.

Below the exact wording from a document from Camden Council:

"Properties have been sold using one of the existing general housing consents A3.2, issued by the Secretary of State in 2005, which allows Councils to sell properties that are in need of ‘substantial works of repair, improvement or conversion’. Under the Local Authorities (Capital Finance and Accounting (England)) Regulation 2003, the Council can keep 100% of the money from these sales providing that the properties are not sold to owner occupiers."

I hope this helps.

N.

Interesting. Would the new owner be subject to a similar restriction. i.e. not allowed to sell on to an owner occupier?

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Interesting. Would the new owner be subject to a similar restriction. i.e. not allowed to sell on to an owner occupier?

No, the new vendor is not subject to the restriction. Actually, for the properties sold by Camden Council there was a positive covenant that the purchaser (developer) had to refurbish the property and sell to an owner occupier within five years.

Obviously there were some unscrupolous individuals who bought and immediately put the property back at a higher price without refurbishing. I will write the exact wording when I find it...

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Interesting - I see that Savills have a group of another H&F properties in the next auction that don't seem to have this restriction on them, they are however on at really high guide prices. Is it done on a percentage? In this case, selling for much higher to those who intend to occupy could be more profitable than selling to developers and getting 100% of less?

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No, the new vendor is not subject to the restriction. Actually, for the properties sold by Camden Council there was a positive covenant that the purchaser (developer) had to refurbish the property and sell to an owner occupier within five years.

Obviously there were some unscrupolous individuals who bought and immediately put the property back at a higher price without refurbishing. I will write the exact wording when I find it...

Hm, I had interpreted the restriction as meaning "forever". I.e "The owner can not sell to an OO" was enforced upon every owner so that it could never be bought by an OO.

So I missed out there as I could have bought the property in the name of my (non property) company and then sold it onto myself for the same price, at the expense of two lots of Stamp Duty.

Though as has been noted, they went for well over guide.

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  • 260 Brexit, House prices and Summer 2020

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      • down 5% +
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