PUBLISHED: 14:02 10 May 2007 | UPDATED: 08:53 21 July 2010
I read with some dismay that leaseholders may face bills of more than £10,000 for work carried out on refurbishments of their homes ( Right to buy residents clobbered by charges, Gazette, April 13)...
I read with some dismay that leaseholders may face bills of more than £10,000 for work carried out on refurbishments of their homes ("Right to buy residents clobbered by charges, Gazette, April 13).
The discounts applicable when a secure tenant exercises the right to buy can at first seem attractive, ranging from 35 per cent to 60 per cent in the case of flats and from 50 per cent to 70 per cent in the case of houses.
However, potential high maintenance costs are just one of the issues I would advise a potential leaseholder to be aware of before purchasing.
The original rules have been amended, however, mainly owing to a growing number of abuses of the system.
These mainly involved property speculators who made agreements with secure tenants to the effect that they would acquire their properties under the right to buy provisions, using finance provided by the property speculator who would then purchase the property and rebate to the tenant some of the discount they had received.
Therefore, if you are a secure tenant considering purchasing your property, be aware of the following points:
l A deferred agreement to resell the property to someone else, entered into before the right to buy is exercised or during the five-year period after purchase, will trigger a repayment of the discount.
l The tenant must covenant not to sell the property within five years, subject to loss of the discount. The amount of discount to be repaid is calculated with reference to the value of the property at the date of resale, so that rising property prices will not produce a windfall profit for the purchasing tenant if selling in the first five years.
l The right of first refusal to purchase the property remains with a social landlord for 10 years after the purchase.
Fortunately, the vast majority of people who own their former council properties are able to pay for refurbishment work and, therefore, add value to their homes. However, the hardship caused by unplanned for bills can be avoided by getting expert advice before purchase. As well as maintenance costs, there are a variety of additional measures which aim to prevent abuses of the right-to-buy scheme that a secure tenant should be aware of before purchasing their home.
San Chima, Adams Solicitors,
Mile End Road.
If you value what this story gives you, please consider supporting the Hackney Gazette. Click the link in the orange box above for details.