Lease Buy Back

Our fully revised guide explores the options that leaseholders have in surrendering their lease to Camden Council. It is also available as a PDF download, which you may find easier to read as the formatting is better!

There are two core reasons that Camden Council may buy back your property lease:

Regeneration: This is when an area is having a major development to improve the quality of the housing stock and local amenities. This may involve demolition of your property. Lease buy back, in this situation, can be compulsory.

Discretionary Buy Back: This is designed for leaseholders who can no longer afford owner occupation or whose circumstances mean that owner occupation is no longer suitable.
 

Index
Regeneration Buy Back
Key features
Process
Discretionary Buy Back
Key features
Further Information
Appendix 1: About Camden Leaseholders’ Forum
Appendix 2: Regeneration Buy Back Example Costings
Appendix 3: Regeneration Buy Back (Camden Council document, 30th May 2013)
Appendix 4: Discretionary Buy Back (Camden Council document, 30th May 2013)
 

Regeneration Buy Back
Opinion: Why does Camden Council not rehouse residents in the new replacement properties on a like for like basis?
Camden Council’s current position is that they have a legal duty to maximum their revenue; so if a leaseholder forced out from a property worth £350,000 and then the replacement property is worth £500,000 then Camden Council cannot, in effect, forego £150,000 of lost income.

We disagree with the principles involved in the above statement and continues to pursue legal advice to obtain a fair and equitable solution for all concerned. This is especially true where, in the typical context, a regeneration may lead to a site that had 90 properties originally being replaced with a site of 275 properties (as is planned in the Bacton redevelopment), meaning that Camden Council will make a significant profit on the additional properties that are due to be sold on the open market.
 

Regeneration Buy Back: Key features
– Negotiated settlement with Camden Council on an individual basis, based on your circumstances
– Camden Council will give you the following choices: (a) “market price” + 10% compensation + legal costs, removal costs and other reasonable expenses; (b) shared ownership in the new replacement building; (c) rehousing in an equivalent property (if available)
– If negotiations with Camden Council fail then Camden Council can apply for a compulsory purchase order
 

Regeneration Buy Back: Process
1. Market valuation of the property
2. Homeloss payment (for distress and inconvenience; typically 10% of market value)
3. Disturbance payments (for the expenses involved in moving properties)
4. Acceptance of Council’s offer
5. Completion formalities
 

Discretionary Buy Back: Key features
– Property Buy Back is at Camden Council and the leaseholder’s mutual agreement
– The maximum value is usually 25% of the market rate for the property
– You can remain in the property if you agree to be a council tenant, renting the property instead
 

Further Information
– For more details on Shared Ownership please see: https://www.gov.uk/affordable-home-ownership-schemes/shared-ownership-schemes
– For more detail on Compulsory Purchase Orders please see: https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/11487/147639.pdf
– For more Camden Council’s notes on Regeneration Buy Back please see Appendix 1.
– For example costings regarding Regeneration Buy Back please see Appendix 2.
– For more Camden Council’s notes on Discretionary Buy Back please see Appendix 3.
 

Appendix 1: About Camden Leaseholders’ Forum
We are a volunteer group representing all the leaseholders in Camden Council properties and freeholders paying service charges to Camden Council. We scrutinise Camden Council proposals, examine working practices and lobby on behalf of leaseholders to Camden Council.

More information is available at https://www.leaseholdersforum.org.uk

If you know of anyone who would like to receive updates from Camden Leaseholders’ Forum please direct them to https://www.leaseholdersforum.org.uk/mailing-list where they can sign up. Subscribers can also adjust preferences by clicking on the link at the bottom of any email we send.
 

Appendix 2: Regeneration Buy Back Example Costings
These are theoretical figures to understand what compensation and cost is involved for the less of your main property. e.g. a three bedroom property in Ludham. The full breakdown can be found in the next Appendix (which is the official position from Camden Council).

£350,000 Market value
£35,000 Homeloss compensation
(10% of market value, up to a maximum of £47,000)
£5,000 Disturbance payments (without any receipts/or actual expenses with full receipts, if greater than £5,000)
£390,000 TOTAL
 

Appendix 3: Regeneration Buy Back (Camden Council document, 30th May 2013)
The first stage in the negotiation process is for the Council to make a formal written offer which, is modelled on the statutory payment which would be recoverable if the Council were to exercise compulsory purchase powers and acquire the land. The heads of terms of the offer are detailed in 1-3, of this information sheet.

The Council offer will include:

(1) The Market Value
(2) Homeloss Payment
(3) Disturbance Compensation
(4) Acceptance of the Council’s Offer
(5) Instruction of Legal Services
(6) Exchange of Contracts
(7) Completion
(8) After Completion
 

(1) Market Value
The first stage is to arrange for the Council to visit your property and undertake a valuation.

If you would like your property to be valued, you can contact the Regeneration team to organise an internal valuation on 020 7974 3020. The valuation is undertaken by the Property Services department and will be undertaken by a qualified Surveyor. The valuation will be valid for 3 months from the date of issue.

Independent valuation: If you are unhappy with the Council valuation you can request an independent valuation be undertaken by the District Valuer. The final valuation of the property will be the District Valuer’s valuation and you cannot revert to the Council’s original valuation if this was higher.

Following the valuation, we will notify you of the valuation figure. The District valuation is final and the value of the property can of course go up or down or remain unchanged. The Council will pay the instruction costs for the District valuation.
 

(2) Homeloss Payment
The Homeloss payment is statutory compensation that you are entitled in recognition of the personal distress and inconvenience suffered from people who are displaced from their homes in respect of regeneration works. There are two types of payment:
– Homeloss payment for residential occupiers required to leave their home
– Basic Loss payment for Leaseholders not in occupation of the property

To be entitled to a Home loss payment you must have lawfully occupied the property as your principal residence for at least one year before the date of displacement.

The Homeloss payment compensation is reviewed annually for resident and non-resident Leaseholders and the present levels of payment have remained unchanged since 2008. Home Loss (Prescribed Amounts) Regulations 2008:

Residential Leaseholder (Homeloss payment)
Leaseholders in occupation of the property for a minimum of one year prior to the resolution to purchase are entitled to compensation for Homeloss payment at 10% of the value of the property to a maximum of £47,000.

Non-residential Leaseholders (Basic Loss payment)
Non-residential Leaseholders not in occupation of the property are entitled to a Basic Loss payment of 7.5% of the value of the property to a maximum of £75,000.
 

(3) Disturbance Payments
The disturbance allowance is intended to compensate the Leaseholder for costs incurred by displacement and the amount is intended to be equal to the reasonable expenses associated with the move.
The Disturbance Payment can be paid in two ways:-
1. A one off Payment of £5,000, without the need of Camden Council to review the receipts and invoices of costs that you incur.
2. Alternatively, if you have found a related purchase, the Council upon the submission of receipts/invoices refund the reasonable costs, which will cover:
– Disturbance Payments for removal costs
– Reasonable legal and Surveyor fees for the sale of your property and purchase of a new property if applicable
– Stamp Duty on a new property if bought within one year

Disturbance Payment for removal costs
The intention is to reimburse the Leaseholder for the reasonable costs incurred as a direct consequence of the move and is a natural and reasonable consequence of the move. Where possible, receipts and invoices will be requested.

Reasonable Legal and Surveyor costs
You will be required to provide a Statement of Costs from your instructed Solicitor, detailing legal fees and disbursements of a comparable property.

Stamp Duty
Stamp duty will be payable on the principal of equivalence, that is the owner should not be better off or (worse off) than before the regeneration proposals. In general the payment of Stamp Duty will be made on the basis where a new purchase is found (one year form the date of sale), the level of Stamp duty is paid on the grounds that the new property is not more than the market value of the sale. The Stamp duty will be payable on a replacement property if purchased in the United Kingdom, one year from the date of sale.

Assessment of Disturbance Costs
The actual eligible expenditure will vary from Leaseholder to Leaseholder depending on the individual’s circumstances.

Please note that the onus is on you to prove your loss rather than the Council to justify or identify your loss. You should keep all relevant documentary evidence such as receipts invoices and fees and quotes.
 

(4) Acceptance of the Council’s Offer
The Council’s offer will be valid for 3 months from the date of issue, if you wish to accept the Council’s offer you should do so in writing, either by post or e-mail. The acceptance should be signed by all owners of the property.
 

(5) Instruction of Legal Services
After acceptance of the Council’s offer, you will need to instruct a property Solicitor/ Conveyancer to look after the legal side of selling your home and act on your behalf.

You can find a Solicitor in your area that specialises in conveyancing, on the Law Society website.
 

(6) Exchange of Contracts
On exchange of Contracts the sale of the property will become legally binding, at this point all the Solicitors in the chain will exchange contacts. The Council will unable to provide you with a definite completion date until exchange of Contracts.

Deposit
All the agreed disturbance payments, valuation costs and market value will be included the Contract. If you are purchasing a related property, the Council will provide you with the required deposit for your next property, which will be deducted from the proceeds of the sale.

Arranging the Move
Once you have the completion date you can arrange to move. If you cannot get anyone to recommend a removal firm you can contact the British Association of Removers.

Service Charges and Capital Works
One of the conditions of the Contract is that is you should continue to pay your services charges and any arrears in Service charges. Any arrears in service charges and Capital work invoices will be deducted from completion monies, prior to the monies be transferred to your Solicitor.
 

(7) Completion
The remainder of completion monies less the deposit already paid on exchange of Contracts will follow upon completion. On completion the property will legally be transferred back into the ownership of the Council.

You should ensure that all items are removed from the property to avoid delay in completion of the sale, or being charged the cost of removal of items. The keys should be returned to the appropriate Neighbourhood Housing Officer.

Vacant Possession
One of the terms of the Contract will be the requirement to provide the Council with vacant possession. This includes ensuring that all your possessions are removed from the property.

Time scales
From the time that pre – contract negotiations and the disturbance payments are complete it is estimated that the conveyancing process will take 6-8 weeks.
 

(8) After Completion
Post
You can have your mail re-directed by the Post Office. This can be arranged by post, if you pick up a form at the post office, seven days’ notice is required. We strongly recommend that you request this service from the Post Office. Please note that the Council will accept no responsibility for collecting and forwarding of your mail to your new address.

Benefit Entitlements
Please note that it is your legal duty to declare when a payment is made to you to the necessary Council departments as this may effect your benefit entitlements.

Housing Options
If Leaseholders are suffering financial hardship or other difficult circumstances there is a discretionary scheme allowing Leaseholders to convert to a secure Council tenancy. Under this scheme the Council will pay 25% of the market value of the leasehold interest (the percentage is governed by statutory instrument and the percentages may change). See next Appendix for more details on this option. 
 

Appendix 4: Discretionary Buy Back (Camden Council document, 30th May 2013)
WHAT IS THE BUY BACK SCHEME?
Buy back is a scheme whereby under certain circumstances the council can purchase your leasehold or freehold property and in return offer you a secure tenancy within the same property.

DO I QUALIFY FOR BUY BACK?
Buy back is designed for leaseholders who can no longer afford owner occupation or whose circumstances mean that owner occupation is no longer suitable. The scheme is discretionary, there is no guarantee the council would be able to buy back your property and all parties would need to be in full agreement before such a buy back could take place. You should also be aware that the maximum the council could pay for your property would be in the region of 25% of the market value and this figure must also be enough to cover all outstanding debts secured against the property.

The main circumstances under which the council would consider buying back your property are as follows:
– You are experiencing severe financial difficulties and are in danger of having your property re-possessed.
– You have discussed debt repayment options with your bank or building society and investigated all alternative solutions to your financial difficulties.
– You want to remain living at the same property.
– You do not have an alternative residence (only in exceptional circumstances would the Council consider buying back when you do not live in your property, for example if you are an elderly leaseholder living in residential care).
 

THE BUY BACK PROCESS
Your initial approach should be by telephone where we will be able to discuss your specific circumstances and assess whether it would be in your interests to formally apply for buy back.

If your situation is appropriate, we will send you the relevant forms to complete in order to make an application. These will include an income assessment form, which will allow the council to assess your financial circumstances, and a council tenancy application form. We will also require evidence of any outstanding debts you have including service charge arrears and any mortgage(s) or separate loans you have secured against the property. You will be required to sign a disclosure form allowing the Council to contact your mortgage provider or if you have a solicitor acting on your behalf we will contact him/her for these details.
 

INSPECTION OF YOUR PROPERTY
The council will need to find out the condition of your property and to this end an officer from your local District Housing Office will arrange an appointment with you to visit and carry out an inspection.
 

COUNCIL DECIDES WHETHER TO CONTINUE
The council will then assess your application before deciding whether to continue on to the valuation stage. The circumstances of each case are considered on their own particular merits but the council has limited funds and there is therefore no guarantee of acceptance. If your case is not accepted or if at any stage you decide to withdraw from the process, then please be aware that the council will have an obligation to pursue any outstanding service charge debts you might have.
 

VALUATION
If your application is accepted then an officer from the council’s Property Services division will arrange to visit your property in order to carry out a valuation of the flat.
 

THE COUNCIL’S BUY BACK OFFER
The council’s formal buy back offer will take into account the fact that a secure tenancy of the property is being offered as part of the process. It will also detail all deductions to be made in respect of outstanding debts such as mortgages, secured loans and service charge arrears. Any remaining balance would be paid to you, through your solicitor, upon completion. We will also include details of the weekly rent you could expect to be paying and the rights and obligations you would have as a secure council tenant.
 

YOUR ACCEPTANCE
Should you wish to proceed with the council’s buy back offer then your written acceptance is required. A surrender document, which is needed in order to for you to give up your lease, will then be drafted and sent to you by the council’s solicitors for you to sign and return. If you haven’t already done so, you must appoint a solicitor at this stage and provide us with contact details.

The council’s offer is non-negotiable. However if you feel that there are exceptional circumstances attached to your case then you would need to write to us with detailed reasons as to why the council should reconsider its offer.
 

THE COUNCIL’S PAYMENT
The council’s payment (offer price less outstanding debts and administration costs) will at this stage be forwarded to your solicitors and retained by them until completion.
 

SURRENDER OF LEASE AND BEGINNING OF COUNCIL TENANCY
On the agreed date you will sign for the surrender of your lease and the council tenancy agreement. From this date you will be granted a secure council tenancy of the property and be liable for rent and all other relevant charges as applicable.
 

PROPERTY DEBTS PAID
Finally, your solicitor will be responsible for paying off your remaining property debts such as your mortgage and any secured loans. Although there is no guarantee that the valuation will exceed the property debts, any excess remaining after deductions (service charges, ground rent and mortgages) will be paid to you by your solicitor.
 

FREQUENTLY ASKED QUESTIONS
How much will I receive for my property?
The valuation will reflect the fact that a secure tenancy is being offered as part of the buy back process and you will therefore remain living at your property. Valuations in these circumstances are typically in the region of 25% of the open market value although the condition of your property (internally as well as externally) will also be built into the valuation. You should also be aware that any property debts (mortgages, secured loans, service charge arrears, etc) must be settled from the buy back premium.

At what stage will I need to appoint a solicitor?
You must appoint a solicitor once you have decided to accept the Council’s official offer to buy back your property. If you can show that you are unable to afford a solicitor the council may be prepared to cover the solicitor’s costs up to a maximum of £500.

Can I withdraw at any stage?
You can withdraw from the buy back process and remain a leaseholder at any stage up to the date of the lease surrender. However the council will then be obliged to pursue any service charge debt you might have.

How much will it cost me?
You will not be billed for any costs whether you complete the sale or withdraw at any stage.

How long will the process take?
We estimate that the process will take a minimum of three months.

Can I repurchase my property at a later date under the Right to Buy?
There is nothing to stop you applying to repurchase your property through the RTB scheme in the future. However the cost of the council buying back your property and any previous RTB discount will be taken into account when the new RTB offer is made. This will in effect mean little or no discount being given.

What next?
If you wish to be considered for the buy back scheme and have not already done so then please contact Steve Burr (steve.burr@camden.gov.uk) on 020 7974 8501 or alternatively write to him at the following address with details of your circumstances and why you think the scheme would be suitable for you: Leaseholder Services, Bidborough House, 38-50 Bidborough Street, London WC1H 9DB.

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This is the official Camden Leaseholders' Forum account. Why not come along to one of our meetings to see us in the flesh? Alternatively email camden@leaseholdersforum.org.uk if you want to get in contact or, best yet, post to the Discussion Board and then you will not only hear from us, but also you fellow residents too, who have their own stories to tell and answers to give...