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Negative Equity - Mortgage given by Royal Bank of Scotlandon ex-local authority flat

from Caroline & Catherine Tye (caroline.dianetye@fsnet.co.uk)
We don't know if any one can help us in our situation but perhaps some one can point us in the right direction.

In 1991 we purchased a flat in a refurbished ex local authority block of flats with a 100% mortgage for £33,950 from the Royal Bank of Scotland. The developer at that time was known as Lodgeday Developments of Newark, Nottinghamshire, they had bought 3 empty blocks from Sandwell Council and refurbished 2 of them, the third was left derelict. They arranged a "package" for us and others who purchased flats in the block i.e. arranged mortgage providers, solicitor.

In 1993 the first of the purchasers of the flats put their property on the market for sale. Their sales fell through because NO banks or building socieities would give mortgages on this type of building because "it was not of standard construction" and that this had always been the policy.

We have also attempted to sell our flat, we have had interested parties but when they tried to obtain a mortgage they were once again told that no banks or building societies would give mortgages on the type of building.

I rang around a number of banks/building socieities and was told they do not give mortgage, particularly on ex local authoritiy high rise flats.

There are 144 flats in the block and 25% have been repossessed, people have just "walked away".

The "best" we have been offered is £20,000 cash, which came from some one who has bought a number of the properties, some for as low as £11,000, then letting them out at rents of around £350.00 per month.

We have tried to speak to the Royal Bank of Scotland to ask them the question "why did they give us and others mortgages on these properties which could never been sold again with a mortgage" but they have not responded and pass us around when we telephone them and say they need to speak to some one else and will ring us back, they never do of course.

I have been to see my local MP, Tom Watson, West Bromwich East who has said he will write to the Chief Executive of The Royal Bank of Scotland regarding out case.

The management of the block was originally Lodgeday themselves but in 1995 they sold the lease to a company named Property Connections of Brighton, Lodgeday it appears "disappeared" and abandoned the third block. Property Connections then in 1998 sold the lease to David Glass Associates (Hercules Group) based in London from whom we have just received another demanding letter telling us to pay up in 7 days or they will instruct their solicitors.

The management/service charge has risen from £45.00 per month for 10 months in 1991 with £50 ground rent per year. It is now somewhere in the region of £90.00 per month plus "other items" which constantly keep being added and we are now struggling to keep up with these extortionate fees, there is 2 lift cars and one has been out of service for somewhere approaching 3 months, the other regularly breaks down. We do have a residents association who are at this moment trying to sort this problem.

The local council pursued Lodgeday for many years and 2 months ago the third block known as Marshall House started to be demolished by a company known as Matrixgrade based in Derbyshire and when the block is demolished "luxury houses£ are to be built on the site, the name of the developers are Bournston of Derbyshire, and I believe there is a connection with Lodgeday Developments of Nottingham.

If there is anyone who is or has been in a similar situation, we would appreciate any advice.

(posted 7907 days ago)

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