Mortgage on a property bought off plan with a re-assignment

Hi all, I just thought to give you an update; I will need to decide early next week. I am now waiting to hear from my solicitor that is coming back from his holidays next week but as things stand it looks like I am not going for it.

During this time I spoke with mortgage brokers, mortgage lenders and several other parties. All the people I spoke with who had direct experiences with assignments told me that most mortgage lenders are not willing to lend on these basis other than when the assignment comes from a developer and that, as a consequence, mortgage applications tend to fall through or completed at disadvantageous terms.

Looking at section 5 of the CML Handbook the majority of the mortgage lenders have restrictions in sections 5.1.1 or 5.2.1 for assignments, sub-sales, back to back transactions or similar and it indicates that mortgage lenders are not willing to lend in those circumstances.
Under the CML Handbook these transactions need always to be reported to the lender and none of those I consulted with said that it would not constitute an issue when completing on the mortgage application.

I told the agent that I am not happy with the title that would be transferred to me because it would prevent me to obtain a mortgage for reasons beyond my personal circumstances.

I also made him notice that the reservation terms and conditions indicate that the vendor’s solicitor documentation should provide “fully deduced title showing no adverse entries which would affect a standard purchasers’ mortgage decision to lend pursuant to the CML handbook” and that, because of the above reasons, an assignment cannot be considered a satisfactory title according to the CML handbook and that as a consequence, in case of not successful completion, the full reservation fee should be refunded.

Cheers

Reply to the comment left by "Fra Rex" at "05/10/2014 - 11:46":

Hi Fra. I'm looking at potentially buying a flat in what I'm pretty sure is the same development.

I would like to contact you to briefly discuss what led you to your final decision to not invest in it?

I am happy for Mark to forward my email address to you.

On my side I'm looking to buy to live in it so a bit different situation but would still be happy to hear from you.

Just to complete my story with Re-Assignments, in the end the Estate Agent and I agreed on an almost full refund I was happy with to drop the matter.

in the past few days an offer I made on another (existing) property got accepted, hopefully everything will be smooth with this.

Reply to the comment left by "Fra Rex" at "24/02/2015 - 22:31":

Hi Fra,

I'm also looking to invest in buy-to-let properties in Canary Wharf - I currently work and rent in the area, and I can see that activity is really heating up. The malls are busier on the weekends, the queues are longer during lunchtimes, crossrail looks promising, etc. So I can see why you've picked this place as your investment destination.

Hi Charles, mainly because:

- I live in the area as well and looking after the property is going to be easier
- I could still afford the price of a property in the area
- As you say the area has changed and it is still changing in the better

Last week, I completed on the property my offer was accepted, all went smooth although it took a bit of time.

Cheers

Reply to the comment left by "Fra Rex" at "05/10/2014 - 11:46":

Hi, I was wandering if you did make progress on the reassignment of contract. It appears that the market is flooded with resales on the off the plan purchases and the deals are quite good and some of them with a small uplift payment. It is real shame if the banks do not lend on those and decide the lend on similar flats sold by the builder directly which is at a much higher price.
Is there anyone in the forum who have successfully secured a mtg on a reassignment.

No, as I explain above I decided not to go for it, you need to be a cash buyer to be sure you will not have problems in financing the re-assigned property when the balance is due.

Reply to the comment left by "Fra Rex" at "14/06/2015 - 14:30":

Hi, thanks for your reply. I will have a chat with mtg brokers if they can underwrite the deal now based on current conditions. But it is a risky affair. Would it be possible to get the agent refund the booking amount.

You need to check the term and conditions with the agent, in my case they refunded most of the booking fee but they were not due to do so.

A simple calculation of the increase in house prices is interesting and I can only speak for the Reading area from personal knowledge.

From 1935 to date the average house price has risen at approx. 9.4% annually. Compounded annually and forgetting all costs expenses, repairs and modernisations this equates to a total return on original investment of 174,400%.

Bringing it a bit more up date the figures for 1972 and today are 9.2% and 6675%.

This takes no account of periods when prices were stagnant (1st and 2nd World Wars in particular) and the changing dynamic of property ownership. The vast majority of houses were rented before the 2nd World War, there were rent controls in the 1950's onwards thanks to the notorious Rackman and Governments generally have messed with the market in the spurious belief that it can be changed - it will spring right back to its natural level controlled by supply and demand as soon as regulation is relaxed.

And before get shouted down I know this disregards costs, CGT for landlords, mortgage payments etc., but it also ignores rental income or its corollary, which no-one ever seems to bring into the calculation, the value of occupying a house oneself at no rent.