Shared Ownership 'Staircasing'...Advice?

ironman1

I have heard nothing but bad things about this shared ownership lark, but unless you are unable/not allowed, to fully buy the property, or you have to buy at the original value, I don't see much of a problem with it.

I'd rather own the whole thing and hopefully will soon, but we couldn't afford the 20k deposit and outright renting wasn't an option.

ironman1

Another thing I have only just thought about, what happens regarding the stamp duty? I know it's 1% anything over something like £125k and we took out a mortgage of £90k including the £10k deposit.

Would we be better off buying say another 25 per cent or whatever closest to 125k we can, and saving more? I'm not sure how the stamp duty works with shared ownership properties. We'll find out soon but it would be nice to know! Dont really need to be forking out a bundle to get more shares, unless it can't be avoided.

Richard_Webster

Another thing I have only just thought about, what happens regarding the stamp duty?

You don't pay SDLT if you acquire shares up to 80% but once you go over 80% they can hit you for SDLT on the total price you have paid over the stages (if it exceeds £175K at the moment or £125K next year) because they are added up as being part of one or of a series of linked trsnasactions.

ironman1

Oh right, thanks for that mate. In that case I might see if we can take our shares up to a max 80% for now. We then have one more hit at buying the full 100%.

I'd consider getting it all now but as I said with only £7500 left in savings I dont want us to go too much under that

ironman1

Richard_Webster wrote: »

You don't pay SDLT if you acquire shares up to 80% but once you go over 80% they can hit you for SDLT on the total price you have paid over the stages (if it exceeds £175K at the moment or £125K next year) because they are added up as being part of one or of a series of linked trsnasactions.

Richard, I have read your posts more thoroughly after work and am I right in saying that if we paid the other half (around 90k at a guess, brining the total up to £170,000 odd) we wouldn't need to pay Stamp Duty? As I said we took out a mortgage for the first half around this time last year...

Sorry if the questions are hard to understand, I wish I'd taken more interest before we went into this shared ownership lark...!

Richard_Webster

Richard, I have read your posts more thoroughly after work and am I right in saying that if we paid the other half (around 90k at a guess, brining the total up to £170,000 odd) we wouldn't need to pay Stamp Duty? As I said we took out a mortgage for the first half around this time last year...

If the total amount you pay to acquire the 100% - the original amount and what you pay for the other half together comes to no more than £175K and you complete before the end of the year when the SDLT threshold is supposed to be going back down to £125K, then no SDLT!

around 90k at a guess

You said in your first post that the value of 100% when you bought originally was £195K, so that means you paid £97.5K for 50%. You would only avoid SDLT if you could buy the second half for no more than £77.5K. Has the value of the flat gone down to £155,000 then?

This is just not consistent with what you told me, so did you pay £97.5K for 50% or didn't you? If you didn't, what did you pay? For SDLT the size of your mortgage is irrelevant.

£97.5K + £90K = £187.5K which is over the threshold therefore £1,875 SDLT. (I assume you didn't pay any SDLT when you bought the 50%)

geoffky

http://www.insidehousing.co.uk/story.aspx?storycode=6501770

these have a lot of news on shared ownership...

ironman1

You have PM mate

vbt

We bought ours as 50% shared ownership in Feb 2005 and paid rent on the other half, we then bought the final 50% in December 2007 and stopped paying any rent. To do this we had to get the property valued by an independent surveyor who valued the property at £155k - we then had to pay half of this amount to the housing association to buy the remaining share, so in effect we were only paying half of what the value as at that time - not what we bought it for. It was a very good decison for us because our mortgage further advance was barely more than the rent we'd been paying.

ironman1

vbt, I was thinking about the rent side of things. At the moment we are paying £240 a month, I'd be interested how much that goes down/mortgage goes up if we buy another say, 30%.