What is a section 157 Housing Act restriction and how could it affect you?
Section 157 of the Housing Act 1985 imposes a restriction on the disposal of property in specific circumstances, with the aim of regulating the sale or transfer of these properties within designated regions. It is a lifetime covenant which applies to all buyers, irrespective of whether they are the first buyer or subsequent ones. They are typically found on the title of ex-council houses that were purchased under the right-to-buy scheme and properties in Areas of Outstanding Natural Beauty or National Parks.
The aims of Section 157 restrictions
Protect local affordability:
Section 157 restrictions require the new buyer to apply to the council for consent to live in the property. The restriction prevents individuals who do not live or work locally from purchasing these houses to preserve affordability for residents in the community. It also aims to prevent buyers from purchasing properties as second homes or investment opportunities which can have a negative effect on the local housing market by increasing prices for local buyers.
Protects community:
By preventing ‘outsiders’ from buying these properties it helps to preserve the character of the community and stops the excessive turnover of properties, which can happen in buy-to-let or second-home situations. Importantly, houses in the local community are reserved for residents who live and/or work within the area, contributing to community stability. By only allowing buyers who work in the local area, these restrictions also protect the local economy.
Protects social housing:
Properties with Section 157 restrictions are ex-council properties so preserving them is important for ensuring that affordable housing remains for those who genuinely require it.
Considerations when selling or purchasing a property with a Section 157 restriction
Section 157 restrictions have an important role in ensuring that property transactions align with intended social and housing policies. Even so, they can create some implications.
Impact resale value:
The presence of a Section 157 restriction will limit the scope of potential buyers for the property as there will be conditions about living and working locally, the exact requirements will vary depending on the local authority. Being limited in who can buy your property could affect how much you are able to sell it for. However, any impact is likely to be small.
Lack of flexibility:
Section 157 restrictions are lifetime covenants but for some homeowners who want control over their property, these restrictions can be too inflexible.
Section 157 restrictions play a crucial role in ensuring that property transactions within designated areas align with the intended social and housing policies. Nevertheless, they have specific requirements.
You can find out more about Section 157 of the Housing Act 1985 here: https://www.legislation.gov.uk/ukpga/1985/68/section/157
