Lovell resale covenant

[hopeful landlord]

Hi, please accept my apologies if i haven't posted this in the best section.

5 yrs ago I bought my first (only) home through the 'Lovell resale covenant' which it seems was quite a rare and innovative scheme, i think now replaced by a similar scheme Lovell Choice: as a NHS worker i got a mortgage on 70%, the other 30% is held by my local council (with i believe an option to buy them out at 30% of market value after 3 years which we have not done).

I met my wife shortly afterwards, she is now planning on moving out :( and so am I. As we are both planning on renting rooms in (separate) communal living settings, the simple answer seemed to be to rent out our current home. I found out today the council told a neighbour and have now also told me I am not entitled to let to tenants.

This may be accurate, I'm hoping it is not (and certainly appreciate their point re: it is not meant as a scheme to become a landlord rather a Keyworker scheme).

The council will get their legal dept to look at it (citing 3 or 4 weeks) - however it is rather urgent as i was hoping to commit to renting a room this Thursday, as if i don't it is likely I won't be able to get it.

The point i saw that i thought looked hopeful was this - could anybody give an opinion how this reads?

Not at any time during the said term separately to assign transfer underlet or part with the possession or occupation of any part or parts of the demised premises but only to assign transfer underlet or part with the possession thereof as a whole and not so to assign transfer underlet or part with the possession or occupation of the demised premises during the last seven years of the said term without the prior written consent of the Lessor or its agents (not to be unreasonably withheld)

I read it that i couldn't underlet (i understand from other threads as a 125 yr Lesee any renting out is considered underletting?) part but could the whole of the flat. I fear i may be wrong?

Thanks for your time

[Poppy]

Is that the whole clause? I understand the text to mean that you are permitted to underlet the whole property with their consent, not to be unreasonably withheld.

Send a letter to the council and helpfully point out the clause. Tell them you understand that they cannot refuse permission to underlet and you are informing them of the situation. As a courtesy you should offer to send them a copy of the signed tenancy agreement. Definitely inform them of your new contact details.

Have they told you of any particular reasons for withholding consent in this case?

BTW, I am assuming you are not in the last seven years of the lease term.

[hopeful landlord]

Is that the whole clause? I understand the text to mean that you are permitted to underlet the whole property.

Send a letter to the council and helpfully point out the clause. Tell them you understand that they cannot refuse permission to underlet and you are informing them of the situation. As a courtesy you should offer to send them a copy of the signed tenancy agreement. Definitely inform them of your new contact details.

BTW, I am assuming you are not in the last seven years of the lease term.

Thank for responding so quickly, that is greatly appreciated as it's quite a source of anxiety at present.

It is the whole of that clause, and no the lease term began in just 2001, so not in the last 7 yrs.

I photocopied and hand delivered a copy of the deeds (although they must have heir own copy) as requested, to the council this evening, and yes it seems writing to them would make sense. I've effectively said the same on the phone, so thanks for the suggestion.

the next clause is related:

On the occasion of every assignment or transfer of the demised premises for the term hereby granted and in every underlease or tenancy agreement (which expression shall in this sub-clause include any immediate or derivative underlease or tenancy agreement but shall not include any underlease or tenancy agreement for a term not exceeding twenty one years granted at rack rent and without payment of a fine) of the whole of the demised premises to insert a covenant by the assignee underlessee or tenant as the case may be directly with the Management Company to observe and perform the covenants on the part of the Lessee and conditions to observe and perform the covenants on the part of the Lessee and conditions contained in Parts Two and Three of the Eight Schedule of this Lease

But if i can get past the double negatives etc, seems to just want anyone that ends up living there to keep to the reasonable standards set out (but i do start to get lost in this language).

I'm wondering if i need to pay to get someone to check it, but if I guess their legal team don't disagree with me, then I'm ok...

[Poppy]

My basic understanding of the clause is that any tenancy agreements must include a clause that has regard for the lease covenants.

Stupid question. Did you have to meet some sort of person criteria to be eligible to buy this property in the first place? If so, I bet any incoming tenants will also have to meet that criteria.

I'm pretty sure you will be permitted to let, but you have to comply with all applicable lease conditions. I bet the council's solicitors are going to send you a letter telling you the conditions that must be met to obtain their consent.

If they're consulting solicitors, expect to be charged too.

[hopeful landlord]

My basic understanding is that any tenancy agreements must include a clause that has regard for the lease covenants.

Stupid question. Did you have to meet some sort of person criteria to be eligible to buy this property in the first place? If so, I bet any incoming tenants will also have to meet that criteria.

I'm pretty sure you will be permitted to let, but you have to comply with all applicable lease conditions.

Working for My NHS trust was enough to entitle me, but it wasn't just a key worker scheme it seems. if I sell on the Council are supposed to identify others suitable candidates.

Previous email exchanges when i noticed a similar property rather surprisingly for sale at 70% price (same deal) on the open market elicited this:

"The criteria should be - you are seeking affordable housing, be registered with the Council housing department or on the Housing Option register. Your earning should be around £25k+." [for buying]

i then asked:


I had been under the impression it was a key-worker only scheme – can you provide more detail on the eligibility criteria – is there a document re: this?

From your statement, did you mean it is open effectively to anyone earning enough money to take on the mortgage, or you *have* to have meet Housing Options eligibility criteria (i.e. not be able to afford to buy near your workplace, but not necessarily be a key worker) or requested to be on the council waiting list (which I assume anyone can do?).

I never got a reply to that over a year ago, although am now in contact with the same person again.
The criteria looked pretty weak to me - at the time i felt quite protective of anybody (beyond Keyworkers) being able to take advantage of a great deal, when i knew staff that would have liked to have got in on it if it was better organised/advertised.

I can't see how they could enforce those criteria if it doesn't say on the lease, but that is a helpful point to consider. Thanks again.

[Poppy]

We're talking about shared ownership here. There are probably statutory regulations in addition to your lease.

I think you would be unwise to rent a room elsewhere unless you know consent is forthcoming.

[animal]

Perhaps there is an additional restriction in the shared ownership agreement? It strikes me that if a council was putting money into a property they most likely would want a further degree of control... and restricting subletting would be one obvious candidate...

[jeffrey]

On posts #1 and #2, remember that s.19(1)(b) of LTA 1927 does not apply when L is HMG or a local/public authority.

[hopeful landlord]

Sorry my posts are a little lengthy (!)


We're talking about shared ownership here. There are probably statutory regulations in addition to your lease.

I think you would be unwise to rent a room elsewhere unless you know consent is forthcoming.

I’ve been thinking if there are other regulations outside the Lease I’m subject to, it’s not apparent but maybe there are.


Perhaps there is an additional restriction in the shared ownership agreement? It strikes me that if a council was putting money into a property they most likely would want a further degree of control... and restricting subletting would be one obvious candidate...

Thanks. Yes I agree it would be utterly reasonable, but am failing to see it so far, and with the path of recent events am placed in a postion where I have to make some unexpected decisions. The solicitor I used to buy the property has kindly agreed (at I think no cost) to have a look through it and give an opinion although I’m not sure how protected I would be by that as they said they are not experts in this area, i wonder if I will need to pay to get someone to scrutinise it?
I’m interested what speciality/person I should approach if it comes to this?
e..g. to fax it to someone to get a more guaranteed opinion during tomorrow daytime.

I had been thinking that if I managed to buy the other 30% (which i may not be able to afford) I’d be then clear to do as I wished if there were any restrictions, but my Dad helpfully pointed out wouldn't there be the same limitations placed, presumably the council own the freehold?


On posts #1 and #2, remember that s.19(1)(b) of LTA 1927 does not apply when L is HMG or a local/public authority.

Thank you for responding. I’m afraid I’m a novice with these terms.

Looking @ http://www.opsi.gov.uk/RevisedStatutes/Acts/ukpga/1927/cukpga_19270036_en_3#pt2-l1g17

19(1)(a) seems to suggest they can ask for a reasonable sum – fair enough – seems good news even that they cannot unreasonably withhold consent , although they can charge me for looking into this matter even?

Am I correct to read 19(1)( b) to mean as it is a local council I lose the [I]‘no consent or licence shall be required, if notice in writing of the transaction is given to the lessor within six months after the transaction is effected’, i.e. I do have to seek their permission as (I presume) they own the freehold?

(+the ammendments seem to make it clear if there are restricive clauses in the lease, then they obviously stand. Just still trying to find them at present!)

[hopeful landlord]

We're talking about shared ownership here. There are probably statutory regulations in addition to your lease.


My understanding is it is not shared ownership, but to quote a previous council email a "shared equity scheme" - http://www.firstrungnow.com/shared-equity/ seems to give a clear definition:

With shared equity, the first time buyer does not own the property in conjunction with any other party (unlike shared ownership) but takes out more than one loan for the property. A mortgage and an ‘equity loan'. You are the only person on the deeds. There is no co-owner. However, when the property is sold, the ‘first time buyer' has to repay the loans AND a proportion of any increase in equity of the property to the party making the ‘equity loan'.

However your point stands!

[jeffrey]

On posts #1 and #2, remember that s.19(1)(b) of LTA 1927 does not apply when L is HMG or a local/public authority.


S.19(1)(a) seems to suggest they can ask for a reasonable sum – fair enough – seems good news even that they cannot unreasonably withhold consent , although they can charge me for looking into this matter even?

Am I correct to read 19(1)( b) to mean as it is a local council I lose the [I]‘no consent or licence shall be required, if notice in writing of the transaction is given to the lessor within six months after the transaction is effected’, i.e. I do have to seek their permission as (I presume) they own the freehold?
Section 19(1)(a) can apply, but it's irrelevant here. It merely adds in that consent cannot be unreasonably delayed/withheld, but your lease already makes an explicit provision to the same effect.

Section 19(1)(b) cannot apply, as your L is a local authority. You do therefore still need their consent.