Shared Ownership - mislead??

withers_83 · 1 October 2007 at 2:16PM

Hi,

I bought a flat 3 years ago as part of a shared ownership (75-25 split) with the builder (big national national housebuilder) which was geared towards helping first time buyers get on the property ladder.

Now i am looking to try and sell my property but i am being told by estate agents that the valuation is around 5-6k less (and people are still not viewing the properties) than i bought it for due to other people selling in the same development.

The estate agent also mentioned similar people in the development who are in the same situation and who were unhappy with how the flats were initially sold, for what now appears to be inflated prices (or certainly varied prices with some flats being sold for around £100k up to £130k for very similar apartments).

He has said that many have approached the house builder to see whether they would reduce their equity in the flat to help sell the properties and limit the loss.

My question would be whether this is worth pursuing, whether there is something legally that could be done or whether we were just very naive as first time buyers and have been hit by falling house prices? any comments or thoughts would be gratefully received.

cattie · 1 October 2007 at 2:23PM

The problem with all new builds is that they are generally overpriced, so it's very common for owners to find when they come to sell that the valuation is less than the price they paid. So you are not alone here.

If you look around you will see a glut of new & newish builds that just aren't selling at the prices people are hoping to achieve. There is too much competition & most buyers interested in new/newish developments would prefer to buy a brand new property rather than a previously owned one if there is very little in the price.

withers_83 · 1 October 2007 at 3:12PM

I have to agree with you cattie.
Especially in my area there have been many new apartments being built and the supply is far outweighing the demand.

It just made me think whether it was worth trying to negotiate a reduction in equity with the builder to help me reduce the price and hopefuly sell it. At the moment i stand to lose 6-8k which is what i have saved to move closer to my office ( i travel around 100 miles a day!!!) however with them accepting a slight reduction i can make the property more attractive on price and can reduce that amount?? it was just a thought and thank you for your reply.

cattie · 1 October 2007 at 7:13PM

You've got nothing to lose by asking, they will in all likelihood say no, but if you don't ask you'll always wonder if they might possibly have agreed.

SquatNow · 1 October 2007 at 7:33PM

Why on earth would they agree? They would simply be giving you money for no reason. They're a business not a charity. You made a stupid deal and you lost money as a result. Brand new houses are usually overvalued by 20%, that is, the day you move in, the value drops by 20%. The same as when you drive a brand new car off the forecourt it loses 20%. You paid a premium for a brand new house and were lucky that most of the "premium" value that it lost when you bought it has been made up by HPI.

If you bought a brand new car on finance, then when you came to sell it a year later you asked the garage to reduce the finance amount as you didn't expect the car to lose 20% of it's value the day you bought it, what would they tell you?

To Sum Up: The builder isn't going to give you a load of free money you don't deserve. Stop complaining and be glad that HPI made up part of the 20% value the house lost the day you moved in.

jonewer · 1 October 2007 at 7:50PM

Please help!

I bought a car for £25k 3 years ago and now I want to sell it but the vendor now tells me its only worth £10k!!!

Can I sue the dealer for the difference?!?!

Please help. God Bless.

withers_83 · 2 October 2007 at 10:28AM

The situation is a little more complex than what you perhaps have interpreted. I agree, normally you would just have to take it on the chin and cut my losses, however the estate agent felt that the way in which the builder has gone about selling the properties initially is perhaps not morally (or potentially legally) correct. That is not my opionion but theres and probably not the best way to encourage people to get onto the property ladder.

I am not a solicitor, hence why i posted this. I think i have my answer though now!!!!!

I perhaps also feel your comparisons to a car are a little confusing as over the past three years the housing market has increased, yet a car (unless a limited edition classic car) will never increase in value, only depreciate so i feel the two are not comparable??? Just my opinion.

Anyway i appreciate all your comments.

matto · 2 October 2007 at 1:09PM

Is the builder claiming a fixed equity, i.e. 25% of the original prices or are they just looking for 25% of the sale price?

withers_83 · 3 October 2007 at 7:23PM

Well this is where the confusion lies, originally they said it would be fixed equity of 25% on the orginal price of the house, now they have said 25% of the sale price with certain conditions such as the property has to be marketed to their satisfaction, it cant be sold to someone you know and that its confirmed by the solicitor on exchange of contracts.

To be honest i am a bit confused as to where i stand as they seem to change their minds quite a lot!!!

I admit that i was quite naive going into this agreement but i am obviously keen to reduce my loss as much as possible!!!!

Also please take this as a warning to other first time buyers looking at shared ownership!!!!!

dmg24 · 3 October 2007 at 7:30PM

I am not sure why you think something potentially illegal has taken place?

olly300 · 3 October 2007 at 7:31PM

withers_83 get what the builders say in writing.

Shared Ownership - mislead??

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