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Further Instructions to Solicitors

Not permitted (all applications)

For clarity the Society does not lend on the following types of properties:

• Agricultural tie or restricted properties.

• Sheltered housing and properties with restricted age for the occupants.


Shared Equity (Purchase)

These instructions relate to new shared equity lending only and are in addition to the Society’s edition of the BSA Mortgage Instructions. For additional instructions relating to shared ownership lending, please see the Society’s ‘Further Instructions to Solicitors – Shared Ownership’.

Where the Society is prepared to lend under the Government’s Help to Buy: Equity Loan Scheme, the arrangement for the equity loan must be through either a Registered Housing Association, Registered Social Landlord or through a Government or Local Authority approved and funded scheme.

Where a Shared Equity Loan is to be used to assist with the purchase of a property in conjunction with a West Bromwich Building Society mortgage, the Society’s additional requirements are:

  1. The borrower must pay a percentage of the full open market value (e.g. 75%) but must acquire ownership of 100% of the property on completion.
  2. The remaining balance (e.g. 25%) must be made up entirely of a deposit funded by the borrower (usually 5%)and by means of an equity loan from an equity sharing lender which is secured by a second charge ranking subsequent to a secured first charge in favour of the Society. The cumulative borrowing must not exceed 100% of the value of the property.
  3. The minimum amount of deposit payable by the borrower is 5% and the maximum initial equity loan must be no more than 20% (for properties outside of Greater London and 40% for properties within Greater London) of the current market value.
  4. Any future change in the value of the equity in the property (excluding any increase as the direct result of home improvements carried out by the borrower), on a disposal or sale, will be shared between the borrower and the equity sharing lender in the relative percentages, the equity sharing lenders rights being secured by the terms of the second charge.
  5. No rent, fee or other payment is paid by the borrower in respect of the equity sharing lender’s percentage.
  6. The repayment term of the borrower’s agreement with the equity sharing lender must be at least the term of the mortgage.
  7. On disposal of the property, or earlier on expiry of the term of the borrower’s agreement with the equity sharing lender, the equity sharing lender’s percentage must be repaid.
  8. Any ‘buy out’ of the equity lender’s percentage permitted under the equity sharing scheme in favour of the borrower prior to the expiry of the term of the borrower’s agreement must be at current open market value.
  9. The Society will only lend on a shared equity basis where a shared equity product has been selected. In the event that a shared equity product is not specified in the offer of loan then this should be reported to the lender.
  10. The Society must have the ability, as mortgagee in possession, to sell the property on the open market and at full open market value, with access to 100% of the equity of the property in satisfaction of its charge, and free of any restrictions in this regard.

Shared Equity (Re-mortgage)

These instructions relate to shared equity lending where the borrower(s) is/are re-mortgaging only and are in addition to the Society’s edition of the BSA Mortgage Instructions. For additional instructions relating to shared ownership lending, please see the Society’s ‘Further Instructions to Solicitors – Shared Ownership’.

Where the Society is prepared to lend under the Government’s Help to Buy: Equity Loan Scheme, the arrangement for the equity loan must be through either a Registered Housing Association, Registered Social Landlord or through a Government or Local Authority approved and funded scheme.

Where an existing Shared Equity Loan is to be used in respect of a re-mortgage of a property in conjunction with a West Bromwich Building Society mortgage, the Society’s additional requirements are:

  1. The borrower must pay or has paid a percentage of the full open market value (e.g. 75%) but must acquire ownership of 100% of the property on completion.
  2. The remaining balance (e.g. 25%) must be made up by means of an equity loan from an equity sharing lender which is secured by a second charge ranking subsequent to a secured first charge in favour of the Society. The cumulative borrowing must not exceed 100% of the value of the property.
  3. The existing charge in favour of an equity sharing lender must be postponed to the new mortgage in favour of the Society.
  4. Any future change in the value of the equity in the property (excluding any increase the direct result of home improvements carried out by the borrower), on a disposal or sale, will be shared between the borrower and the equity sharing lender in the relative percentages, the equity sharing lenders rights being secured by the terms of the second charge.
  5. No rent, fee or other payment is paid by the borrower in respect of the equity sharing lender’s percentage.
  6. The repayment term of the borrower’s agreement with the equity sharing lender must be at least the term of the mortgage.
  7. On disposal of the property, or earlier on expiry of the term of the borrower’s agreement with the equity sharing lender, the equity sharing lender’s percentage must be repaid.
  8. Any ‘buy out’ of the equity lender’s percentage permitted under the equity sharing scheme in favour of the borrower prior to the expiry of the term of the borrower’s agreement must be at current open market value.
  9. The Society will only lend on a shared equity basis where a shared equity product has been selected. In the event that a shared equity product is not specified in the offer of loan then this should be reported to the lender.
  10. The Society must have the ability, as mortgagee in possession, to sell the property on the open market and at full open market value, with access to 100% of the equity of the property in satisfaction of its charge, and free of any restrictions in this regard.

  11. Shared Ownership

    These instructions relate to shared ownership lending only, including where there is a Section 106 Agreement in place; and/or for properties developed in/for rural locations; and are in addition to the Society’s edition of the BSA Mortgage Instructions. For additional instructions relating to shared equity lending, please see the Society’s ‘Further Instructions to Solicitors – Shared Equity’.

    IT IS THE RESPONSIBILITY OF THE ACTING SOLICITOR/LICENCED CONVEYANCER TO ENSURE THAT ANY PROPERTIES PURCHASED PURSUANT TO THESE INSTRUCTIONS MEET ALL REQUIREMENTS. WEST BROMWICH BUILDING SOCIETY WILL NOT REVIEW ANY LEASES OR PROVIDE ANY ADVICE AS TO WHETHER A PROPERTY MEETS THESE REQUIREMENTS. IF THE INSTRUCTING SOLICITOR/LICENCSED CONVEYANCER IDENTIFIES THAT A PROPERTY DOES NOT MEET THESE REQUIREMENTS, THEY MUST INFORM US IMMEDIATELY IN WRITING.

    Lending Restrictions: The Society does not currently lend on properties developed for older persons/ and/ or people with long term disabilities.

    These instructions contain three parts.

    Section 1:- Shared Ownership Requirements which must be complied with for all Shared Ownership Leases.

    Section 2:- Requirements where there is a restriction on the disposal of the property contained within a Section 106 Agreement. For clarity, where the property is being purchased under a Shared Ownership Scheme then: i) the requirements set out in Section 1 of these instructions apply; & ii) where the property has been developed in/for a rural location the requirements set out in Section 3 of these instructions also apply.

    Section 3:- Requirements for properties developed in/for rural locations. For clarity, where the property is being purchased under a Shared Ownership Scheme then: i) the requirements set out in Section 1 of these instructions apply; & ii) where there is a restriction on the disposal of the property contained within a Section 106 Agreement the requirements set out in Section 2 of these instructions also apply.

    Section 1

    Shared Ownership Requirements which must be complied with for all Shared Ownership Leases.

    1. Landlord
      The landlord must be a registered Shared Ownership Provider as listed by the Regulator of Social Housing
    2. Lease
      The lease must be the 2010 or later form lease, for use from 6th April 2010, issued by Homes England (known as the ‘Model Lease’) without material variation.
    3. Percentage Share
      (a) The initial share to be purchased by the borrower must be at least 10% based on the open market value of the property and there must be the right (but not the obligation) to buy further shares in the property permitting staircasing up to 100% of its total value. If the lease does not enable the borrower to acquire the full 100% of the property then the Society will not lend in these circumstances.
      (b) If the percentage of the property to be purchased is different to that set out in our mortgage offer then you must inform us and await further instructions.
      (c) Subject to 3 (b), the percentage share of the property to be purchased should be stated in the Certificate of Title.
    4. Consent to Mortgage
      Before exchange of contracts, you must ensure that the Landlord is shown a copy of the mortgage offer, and other terms of the mortgage to be taken out by the borrower, and the Landlord must provide written consent to the mortgage and (if appropriate) written consent to the assignment of the lease. Evidence of consent must be sent to us following completion.
    5. Term
      The lease must have at least 60 years remaining at the end of the mortgage term. If the lease does not meet this requirement, you must obtain a deed of variation from the Landlord to grant an extension to the lease and the Landlord will be required to obtain any requisite consent which may be required from Homes England and the Regulator of Social Housing (formerly the Homes and Community Agency).
    6. Ownership
      The lease must be granted to the borrower(s) alone and the borrower(s) must not hold their share in the property in trust with the Landlord.
    7. Possession Undertaking
      The lease must provide for notice of forfeiture proceedings to be served on a mortgagee and you must obtain a written undertaking from the Landlord in the form set out at Appendix A to provide us with not less than 28 days’ written notice of intention to forfeit the lease or commence proceedings. This is required before completion.
    8. Downward/Reverse Staircasing
      Where the Landlord permits downward/reverse staircasing, the Society requires written confirmation from the Landlord that the proceeds of sale will be paid directly to the Society. This is required before completion.
    9. Restrictions on the disposal of the property
      If the Lease contains any restrictions on the disposal of the property, you must also comply with Section 2 below.
    10. Alienation, Mortgagee Protection, Rent Review, Staircasing and Pre-emption
      Clauses relating to Alienation, Mortgagee Protection, Rent Review, Staircasing and Pre-emption are fundamental clauses of the current Model Lease and must be in the same form as those contained in the current model shared ownership leases for flats, houses or Social HomeBuy houses or flats (as the case may be) without variation and which can be found on the government website below: https://www.gov.uk/guidance/capital-funding-guide.
    11. There must be no obligation in the lease for the Society to release its security upon payment of anything less than the full amount of the outstanding mortgage plus any fees, costs and expenses associated with the mortgage.

    Section 2

    Requirements where there is a restriction on the disposal of the property contained within a Section 106 Agreement. For clarity, where the property is being purchased under a Shared Ownership Scheme then: i) the requirements set out in Section 1 of these instructions apply; & ii) where the property has been developed in/for a rural location the requirements under Section 3 of these instructions also apply.

    In new developments, a proportion of houses are often sold as “affordable housing”. Local Authorities often attach conditions to the way these properties can be sold by specifying conditions in a “Section 106 Agreement”.

    1. Where there is an affordable housing restriction which will be binding on a mortgagee in possession, this is acceptable provided:-
      (a) The disposal of the property to the Landlord is at full market value and
      (b) The restriction applies for a maximum of three months after which time the Society must be able to sell the property on the open market at full market value without further restriction.

    Section 3

    Requirements for properties developed in/for rural locations. For clarity, where the property is being purchased under a Shared Ownership Scheme then: i) the requirements set out in Section 1 of these instructions apply; & ii) where there is a restriction on the disposal of the property contained within a Section 106 Agreement the requirements set out in Section 2 of these instructions also apply.

    1. Restriction on the resale of the property only where the Scheme Provider has an option to buy back the customer’s share at full market value for a period of no more than 3 months. The Society must then be able to staircase to 100% and sell the property on the open market at its full market value; and no further restrictions may apply.
    2. The mortgagee protection provisions in the lease must be unaffected by any restrictions.
    3. The Residential Surveying Panel Manger must confirm that the restriction has no impact on the value of the security.

    APPENDIX A

    Name of Landlord
    Address of Landlord
    Postcode

    Dear Sir/Madam

    Re: [Insert applicant name and security address]

    Leaseholder:
    Borrower:
    Landlord:
    Property:
    Lease:
    Lender:
    Mortgage Account Number:

    In consideration of the Lender granting the Borrower a mortgage on the Property, the Landlord undertakes not to commence any proceedings to obtain possession of the Property under any of the grounds in Schedule 2 of the Housing Act 1988 without:-

    (a) Giving the Lender not less than 28 days’ notice in writing of their intention to commence proceedings; and
    (b) If within such a period of 28 days’ (or within such other period specified in the notice period, if longer), the Lender indicates in writing to the Landlord that it wishes to remedy such breach, or is going to take such action as may be necessary to resolve the problem complained of by the Landlord, giving the Lender such time as may be reasonable (in view of the nature and extent of the breach/problem) to take such action.

    Signed……………………………………………….
    Dated……………………………………………….

    You should retain the attached copy of this undertaking as it details below the address where any notice should be sent:

    West Bromwich Building Society
    Mortgage Administration
    2 Providence Place
    West Bromwich
    West Midlands
    B70 8AF




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