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www.cobbetts.co.ukBirmingham I Leeds I Manchester
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THE HOLY GRAIL AND HOW TO OBTAIN IT (?)
Ian Moran
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What is the Holy Grail?
(a) A balance of:-
* Permanent Affordability
* Meeting local need
* Keeping Lenders happy
* Satisfying Section 106 terms
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What is the Holy Grail?
(b) Lawyers must be mindful of the interests of:-
The Seller The CLT The CLT’s own Lender The Individual Buyer The Individual Buyer’s Lender
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Section 106 Agreements
Cascade arrangements
Lender’s requirements
Eligible occupiers
Prohibition on buyers acquiring an outright interest
Allocations policies
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Methods of Disposal
(a) Re-sale price covenant
Property sold in its entirety at a percentage of OMV – buyer covenants only to re-sell at same percentage
Policed by RSL/CLT Nominations and pre-emption possible House – freehold transfer; Flat – lease
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Methods of Disposal (cont)
Drawbacks: Inflexible – no staircasing CLT does not retain equity stake Used on discounted units only
Advantages: Track Record Simple to operate
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Methods of Disposal (cont)
(b) Shared ownership• At present can’t deliver permanent affordability – full
staircasing rights required
• BUT• Possible amendments to Housing & Regeneration Bill • (i) Restricted staircasing shared ownership lease
specifically excluded from Leasehold Reform Act• (ii) Protected Area status• (iii) Exemption from all Affordable Housing Providers,
not just RSLs
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Methods of Disposal (cont)
(c) Declaration of Trust:-
Lease of house or flat by landlord to landlord and tenant jointly with Declaration of Trust
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Methods of Disposal (cont)
Advantages:- Flexibility – staircasing, possibly restricted CLT retains equity share Nominations and pre-emption possible
Drawbacks:- Untested, though HBOS accept it Discussions with Nationwide Building
Society, Ecology Building Society, Barclays Bank PLC
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Methods of Disposal (cont)
(d) Equity purchase
(e) Rent to purchase/Tenancy Plus
(f) Mutual Home Ownership
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OTHER ISSUES
• Resale Values• Market value• Percentage of market value• Link to earnings
• Housing Corporation Grant• Only available through partner RSL• Guidelines criteria yet to be finalised but administration
equivalent to RSL• Other roles for RSLs in CLT process