S106 low cost home self build - mortgagee in possession clause unacceptable to PA?

[chazzyjeff]

Hi all,

I recently had a planning consultant carry out an appraisal of some land which I have the option of purchasing.

He identified two potential development avenues.

The one I have been exploring first is a low cost self build home on some land with great access, views, location etc which is outside but immediately adjacent to the settlement boundary and in close proximity to other properties (but in a good location to not cause any significant detriment to said properties). I am eligible for low cost home ownership schemes.

The SPG states that rural development exception sites (adjacent to settlement boundaries) can serve to provide affordable housing including self build low cost homes and that planners should be "innovative and flexible to maximise delivery of affordable housing". Recently a large number of housing association rentals were built on directly comparable land which was adjacent to the built form of the village but outside the settlement boundary, so it appears use of these exception sites is possible in practice in the village, at least for housing associations.

 

We put in a pre app enquiry and the main objection was that lenders of private finance (mortgage companies) apparently always insist on a mortgagee in possession clause in the S106 which unacceptably jeopardises the house remaining affordable in perpetuity. If a borrower were to default, the mortgagee can sell at 100% market value therefore defeating the point of granting PP on an exception site (where open market dwellings would not be possible) in the first place.

 

Due to inheritance, savings and trade qualifications, I believe I can build the house without a mortgage but the PA are concerned about whether future owners would be able to get a mortgage and what would happen if they defaulted.

 

Personally I find the whole objection a little theoretical;

I know that neighbouring PAs have been granting PP on comparable projects for decades seemingly without any major issues.

Certainly the SPG hasn't identified this as a show stopping issue so it seems to be the opinion of the planners but not based on any guidance.

Even if I were to find a lender who said "yes we would theoretically lend without or a mortgagee in possession clause (or a conditional one which means they first have to offer it discount for sale to eligible buyers for say 3 months) there's absolutely no guarantee that this would still be the case if/ when I were to sell.

 

Is there a way to circumvent this objection with a lawyers argument? 
Do they actually have to follow their own SPG?

How do people secure mortgages on S106 dwellings on exception sites or do all lenders insist on being able to immediately sell with full discharge of any restrictions on the property?

Any ideas much appreciated

Cheers!