Shared Ownership Nightmare

JohnnyFind_2

I recently enquired about the process involved in staircasing and was told the following:

Please note you cannot staircase below the original market value of the property. You can buy further shares providing the value at the time of doing so is equal to or higher than the original value of the property.

This has come as a big disapointment, as I was now in a position where I could aquire more equity. I was under the impression that the recent falls would actually work in my favour.

I have nothing in black and white about a cost floor in any of the documentation (lease) and this is something that was never mentioned by any party involved.

Obviously I have requested documention, but as you can imagine it leaves me in a catch 22 situation. I would be unwise to sell my current stake at a loss, yet I can't make any progess and purchase any further shares; as the bank would be unwilling to lend any further monies in this situation.

Trapped.

PasturesNew

If you were just planning on buying more and thought now it'd be a bit cheaper, then you're not trapped, just your cunning plan won't come to fruition.

What was the plan then?

Marsh_Samphire

The HA that I work for does allow shared owners to staircase if the value of the property has gone down, we point out to them that they could be able to get further shares for less £ in that situation! With my cynical hat on, it could be that they just don't want you to buy more shares now... !

But your solicitor should have drawn your attention to any restrictions when you bought the property, e.g. some shared ownership properties can only staircase to 80% so the shared owner would never be able to own all of their house.

Check your lease and any paperwork from your original purchase, it really should say there if you are not allowed to staircase if the property value has dropped.

ironman1

I have only just found out that we can buy more shares in our SO property at the current value.

I can't belive I didn't ask sooner but I'm happy as the price of our place has dropped around £25k since we bought it last year. So we want to buy the other half or maybe a bit less, asap.

I'd be fuming if I found out we could only buy more shares based on what we originally paid.

Auzelia

The LIFT scheme lets you buy back a %age of the proprty up to 80%, regardless of falling or rising value.

The home owner has to pay for the valuation though to determine how much they need to pay for the %age that they want to buy.

But obv this is just based on the LIFT scheme, im unsure how the standard Shared Owenership works where the owner pays both Rent and Morgage payments

Richard_Webster

If the value of the property goes down the further shares are cheaper to buy, but this has a nasty effect on the overall loan to value ratio of the amount the buyer wants to borrow. The LTV ratio would be calculated on the value of the 75% or 100% or whatever share you would be staircasing to.

See my explanations and worked examples in this thread: http://forums.moneysavingexpert.com/showthread.html?t=1929667

JohnnyFind_2

Not much I can do about this, after all I signed the papers.

After trawling through the lease which is many many pages and as you can imagine is legal technical English. I believe I have found the clause that mentions the cost floor.

In my last correspondance I was told the following:

[FONT=&quot]In summary, the value at which you stair case or re sell is either the price you purchased for or the new valuation - which ever is greater.

Now correct me if I am wrong but I read that as being able to sell back the pecentage I own at least for the price I paid??

If that is the case, I will gladley sell back. I have enough for a deposit on a house now anyway....

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