Sellers are doing their utmost to shift property in the current market. House builders and private sellers are using inventive ways in which to offload property. For example:
- Lottery sale or raffle? Sell tickets at £25 a go. 46,000 tickets will get you to your asking price of £1.15m. But is it legal? There is a useful article in today’s Times about the legality of such a lottery sale. See http://www.timesonline.co.uk/tol/money/property_and_mortgages/article4790809.ece#cid=OTC-RSS&attr=989864
- Guarantee against resale loss? Barratt Homes advertised recently that it is offering home buyers what appears to be a form of insulation against falling property values. If a house is sold within 3 years, Barratt will pay up to 15% of the loss. (Of course, check the small print).
http://www.barratthomes.co.uk/Common-Data/Homepage-articles/2011-Guarantee/ . But what if the loss could be greater? Maybe it is safer to claim a greater discount now? - Private shared ownership leasing? This still seems to have leasehold enfranchisement as a stumbling block at the moment – i.e. the shared ownership tenant could buy out the reversion under the Leasehold Reform Act 1967. There is an ongoing consultation relating to the removal of the right to enfranchise in relation to such leases. See http://www.communities.gov.uk/publications/housing/sharedownership
- Shared equity sales? Selling 100% ownership for a 75% payment seems to be the in-vogue sales incentive – including the newly announced Government initiative HomeBuy direct – see http://www.communities.gov.uk/housing/buyingselling/ownershipschemes/homebuy/HomeBuyDirect/ The scheme enables developers to sell a house subject to a 25% second charge in their favour, the cost of which is financed in part by the Housing Corporation.
- Private shared equity. House builders create their own schemes – see for example the Crest Nicholson EasyBuy scheme at http://www.crestnicholson.com/assets/pdfs/findahome/easybuy.pdf involving a second charge/equity share arrangement. The charge does not just cover a loan. If the property value goes up (?), the equity share goes up too. Of course, such private shared equity schemes would need to be acceptable to the CML.
The Law Society is keen to inform its members that, as more “schemes” arrive on the scene, more scope for fraud and error can arise. See http://www.lawsociety.org.uk/newsandevents/news/view=newsarticle.law?NEWSID=414238