Shared Ownership undervalued by 10 grand

thewinkshow

since you have not 100% made up your mind, I would offer the valuation price or slightly lower and walk away - if the contact you, fair enough, if they dont be prepared to lose the fees - dont feel like you have/need to do this on their terms - dont forget they are the ones trying to sell over-priced flats in a bad financial climate, they need you more than you need them.dont be desperate or fall in love - think rationally.

these new build flats (that they are now calling apartments) and modern living are vastly over prices most of the time, no garden, like living in a hotel, and have to live by the rules of the apartment and tolerate everyone around you.
for what your paying per square foot you dont get much space compared to a house with land, driveway,garage,garden and room for renovations/extensions.
you have to basically leave it like it is, it may look nice now, because its new, with all the new furnishings, but give it ten years (when your also paying back the extra shared ownership and increased management fees) it wont be new, and you cant really change the way any of them look, they are all like replicas baring a bit of paint colour.10 years when the fad of modern city flats dwellings, sorry apartment living are a thing of the past, your left with a overpriced flat. buy a house with a normal mortgage once you can afford is my advice.

forgotmylogin

Lots of good advice here, most of my friends are of the opinion that we should get on the ladder now and that we will be in positive equity in no time especially with it being in London.

I don't wanna be paying over the odds for something though, and I am prone to agree with a lot of the comments made on here.

Will update after we have spoken to the Housing Association.

bodgerx

brit1234 wrote: »

Shared Ownership is a way developers can get more money out of you, aka sub prime loans etc. They are a con designed to keep prices high, stay clear.

Your bank is wise to this, don't over pay. Your property is overvalued.

Negative equity is not a situation unique to shared-ownership.

thewinkshow

Negative equity is not a situation unique to shared-ownership.

I agree, but you are more prone to negative equity if you buy an over-priced,hard to sell,badly built shared ownership apartment.

being overpriced from day one means your already up against it should the market downturn.

bodgerx

thewinkshow wrote: »

Negative equity is not a situation unique to shared-ownership.

I agree, but you are more prone to negative equity if you buy an over-priced,hard to sell,badly built shared ownership apartment.

being overpriced from day one means your already up against it should the market downturn.

Rule no. 1 - never pay the sticker price.

I think the temptation on some of these schemes is to think that you aren't entitled to make a sensible offer. In most instances you are. For example, myself and my brother have recently bought under the Homebuy scheme. We both negotiated a chunk of the asking price. I'm sure there are others on the same sites, that weren't buying under this scheme, and have paid closer to the sticker price.

We used to have a shared-ownership property - sold it last year and broke even after selling costs (bought 2006, sold 2009). I know of others that have bought and sold between those dates and made a loss.

Point taken about new-build flats though - they can be a risk.

maninthestreet

forgotmylogin wrote:

Mypartner and I are buying a shared ownership place and will be getting a 40% share and paying rent on the remainder.

Problem is the lenders valuation has come in £10,000 undervalued. The lenders have sent us a mortgage offer but we will need to find an extra £3,600 on top of our deposit to buy the flat.

The lenders and housing association have been arguing for weeks and neither is prepared to budge, so do we pay the extra for a flat that is likely to be overpriced or do we walk away and lose the money we have paid so far in terms of conveyancing etc.

You seem to be trying to tell us that the flat has been under-valued but overpriced at the same time???

Idiophreak

Think it's just a case of applying common sense and becoming comfortable with what you think the place is worth. Our shared equity flat was downvalued when we bought and it was fairly distressing - but, having done our research, we remained confident that the valuation price was too low, so raised the extra cash to "top up" the mortgage. No regrets so far. Every other flat on the development has sold for as much or more than ours, despite ours being the best flat on the site.

Don't forget that shared equity through a builder will still be an option for you even once shared ownership schemes aren't available to you any more. For my money it's a better way of buying, too - you own the whole property from day 1, you don't pay rental on the portion the builder lends you, you don't get the negative connotations or limited areas of shared ownership properties and the properties are generally better built. Of course, you'll still get people queuing up to tell you that it's a con and you shouldn't go near it, but that's MSE for you...

forgotmylogin

Well it looks as though the Housing Association will notbudge, so we have told them we want to withdraw.

We actually have seen a two bed ground floor maisonette, shared ownership re-sale. It is 5 grand less than the original property and had a big garden and a garage. We need to arrange a viewing but this may be much more suitable and hopefully negotiating a price will be easier.

forgotmylogin

Just an update on our situation.

After all the helpful advice on here we have decided to postpone the house buying and avoiding the shared ownership route.

We have had to swallow the loss so far in terms of conveyancing, lenders fees and financial advisor's fees to the tune of about £750.

We are now going to be renting a bigger flat (we have spent the last 5 years in a studio flat and I was going stir crazy). We will be paying slightly more rent on the new place but we reckon we can still be debt free within 12 months.

Thanks again for all the advice on here and you may now find me loitering round the debt free wannabe board.

Henry_P_Chester

Good decision. In 12 months start piling up the savings. Don't worry about not being on 'the ladder' in my opinion house price will be no higher on two years than they are today, most likely they will be lower even in London.