Section 157 Properties Explained: What You Need to Know

Here in Devon, we are lucky to have the option of escaping the busy towns to enjoy a quieter rural living experience. However, if you are considering making the move, you need to be aware of some restrictions imposed on certain properties within these areas before proceeding with your purchase.

If you’re buying or selling a property in a rural or national park area, you may come across the term “Section 157 restriction.” These restrictions can affect who is allowed to buy the property and consent from the Local Authority will be required before a prospective purchaser can proceed with the purchase.  

Here at Wollens, we have had plenty of experience assisting buyers with houses that are caught under the Section 157 Restriction over the years and so we have created a straightforward guide to help you understand what Section 157 means and why it matters.

What is a Section 157 Property?

Section 157 refers to a provision in the Housing Act 1985, which allows local authorities to restrict the resale of certain properties. These restrictions are often applied to former council houses in designated rural areas or National Parks, where there is a need to keep housing affordable for local people who have a genuine need for housing, rather than being used as second homes or holiday lets. 

Why Do Section 157 Restrictions Matter?

1. Buyer eligibility – Not everyone can buy a property subject to a Section 157 restriction. A purchaser will need to prove a local connection through either residence or employment, usually for a period of 3 years immediately prior to the purchase.

2. Valuation and demand – Because the pool of eligible buyers is smaller and therefore limited, Section 157 properties may sell for less than unrestricted homes in the same area.

3. Mortgage considerations – Some lenders are cautious about restricted properties as a restriction on who can buy the property will limit the lenders’ ability sell should they repossess the property in the future.

It’s always worth checking mortgage availability early in the process to ensure your lender will be happy to proceed.

4. Transaction process – Before making substantial progress in the transactions, a buyer’s Solicitor on behalf of the buyer will need to make an application to the Local Authority for consent to proceed. As a result, the transaction may take a little longer.

Where a property is being purchased jointly, at least one purchaser must be able to meet the Local Authorities criteria in order to proceed.

There are circumstances whereby new owners do not have to comply with the three-year rule. These are known as “exempt disposals” and arise where:

• the property is being transferred from joint to sole name (or vice versa) or,
• inherited under a will or intestacy

Even though these transactions are exempt, a form of consent is still usually required to satisfy the restriction requirements by HM Land Registry.

Can the Restriction Ever Be Lifted?

Sometimes, local authorities may agree to waive or vary the Section 157 restriction. This is not guaranteed and usually depends on local housing policies. Where possible, it’s important to check with the relevant council before making plans around resale.

What Should Buyers and Sellers Do?

• Buyers – Make sure you meet the eligibility criteria before committing. Your solicitor will confirm whether the property is restricted and guide you through the process of proving your local connection.

If you propose to obtain mortgage funding, you should also inform your mortgage lender or broker as soon as you are made aware of the restriction to ensure the lender is happy to lend. 

• Sellers – Be aware that marketing might take longer and that potential buyers will need to satisfy the council’s requirements.

You should make your selling agents aware from the outset so that the property can be marketed accordingly, and potential buyers are made aware of the restriction from the very early stages. This reduces the risk of a sale falling through because the purchaser does not meet the qualifying criteria or are simply not willing to proceed as a result of such restriction.

Final Thoughts

A Section 157 restriction shouldn’t put you off buying or selling, but it’s important to know what it means from the outset. With the right advice, transactions can proceed smoothly, and you’ll have peace of mind knowing the rules have been followed.

If you’re buying or selling a property affected by Section 157, our conveyancing team is here to help guide you through the process. Get in touch today for clear, practical advice.

You can also complete an online enquiry form. One of the Wollens team will contact you as soon as they are available.