Shared ownership - something to look at if you "own" one

poppysarah

http://www.practicalconveyancing.co.uk/content/view/10570/1124/


Apparently, nearly 1 in 100 households in England has a shared ownership lease. It therefore follows that 1 in 100 households are in for a very nasty shock, when they discover that they do not necessarily own a share of the property!

The idea, of course, is simple. The householder pays the registered social L a capital sum equal to half of what it would have cost to buy the property outright; L then grants the householder a long lease (usually 99 years), with the rent being half of what it would have been in the open market. But, the problems arise if T falls into arrears of rent and L then brings possession proceedings:

1) If there are two months of rent arrears at the date of the hearing, the court cannot refuse a possession order. Once a possession order has been made, T has no right to pay off the debt so as to salvage the situation.

2) L can then retain 100% of the property (ie L takes over T’s 50%, or more, investment).

As a note in the NLJ puts it, the householder was not, it seems, the owner of a half-share in the property; indeed, in that situation there will have been no shared ownership at all. What the householder owns is the lease and nothing else – and once the lease has gone (when possession is given to L) then that is the end of the householder’s stake in the property. Thus, once rent arrears have accrued, T only has a short window of opportunity to pay off the debt or otherwise lose the whole investment.


A case is then given with the upshot being:
The 50% capital payment made on purchase had not bought her a half share in the property, it had merely bought her the lease – and nothing else.


Is this the case for all shared ownership or just certain types?

carefullycautious

Very worrying :eek:

MrsE_2

My DD & her DF are looking into buying a shared ownership home as they only way a young couple can get on the property ladder in Surrey:mad:

poppysarah

MrsE wrote: »

My DD & her DF are looking into buying a shared ownership home as they only way a young couple can get on the property ladder in Surrey:mad:

I reckon they've been propping prices up for far too long.

Would you ever have dreamed of when you held you new baby in your arms that one day they could buy half a house? Of course not - it's a massive swindle that nulabour encouraged.

Doctor_Gloom

'Shared' ownership is a scam from start to finish. It artificially inflates the price you have to pay for part of a property. And if that isn't bad enough you still don't own that part. Then trying to sell your part of the property is another nightmare altogether.

MrsE_2

poppysarah wrote: »

I reckon they've been propping prices up for far too long.

Would you ever have dreamed of when you held you new baby in your arms that one day they could buy half a house? Of course not - it's a massive swindle that nulabour encouraged.

Doctor_Gloom wrote: »

'Shared' ownership is a scam from start to finish. It artificially inflates the price you have to pay for part of a property. And if that isn't bad enough you still don't own that part. Then trying to sell your part of the property is another nightmare altogether.

I know its a last resort, but in Surrey its almost impossible for them to buy somewhere outright:(

Salz

I never knew this - and it appears true for all shared ownership
http://www.shared-ownership.org.uk/
Looking on the above website, it says:

What does the shared ownership lease entitle me to?
Whether you buy a house or flat under shared ownership terms, the housing association will grant you a lease usually for a period such as 99 years. It will entitle you to live in your home as an owner-occupier. It will also entitle you to buy further shares in the property and sets out how you can do this. It also states that you can sell your property.
Other points covered in the lease set out your responsibility for repair and payment of rent and service charge. Although you have not bought the property outright, you will have the normal rights and responsibilities of a full owner-occupier.

It's even more of a con than I thought it was!

wymondham

MrsE wrote: »

I know its a last resort, but in Surrey its almost impossible for them to buy somewhere outright:(

..... then why not rent?

MrsE_2

wymondham wrote: »

..... then why not rent?

They would rather pay their own mortgage than someone elses.

Now is the time to get on the property ladder while they have no children, if they rent it will start eating into their mortgage deposit money & they certainly won't save much while lining the landlords pockets.

anotherginger

MrsE wrote: »

They would rather pay their own mortgage than someone elses.

Now is the time to get on the property ladder while they have no children, if they rent it will start eating into their mortgage deposit money & they certainly won't save much while lining the landlords pockets.

if they can't afford to buy, then they can't afford to buy! renting gives people an opportunity to live in a property outside of what they could afford to buy, or at a lower cost than a mortgage, and with no maintenance costs. there are more reasons for renting than you are even considering.

Salz

MrsE wrote: »

Now is the time to get on the property ladder while they have no children, if they rent it will start eating into their mortgage deposit money & they certainly won't save much while lining the landlords pockets.

I presume they never want children then? At some point the interest rate will have to rise - maybe not in the next couple of years as they are going to try and keep it low for as long as they can, but what if it starts spiralling out of control and their payments increase right when they were thinking about/ just started a family.
They are looking at shared ownership, so they get to have a mortgage on half a house and pay rent on the other half, lining the landlords pockets as well as the bankers. Then, when they want to buy a bigger house they have to sell their part of a house, which again they may not find so easy to do, especially when everyone cottons on to the fact that you are NOT buying it, you are leasing a share of the property - that would be a bit like renting then?