Is it still worthy? (Shared Ownership)

John001_2

I have a big dilemma and I was wondering if somebody could give me their opinion. I will try to keep the story short:

I am living in a fairly new development in London. After my summer holiday I received a letter from the landlord with an option to either move out of the property or to buy it on shared ownership terms. As this came totally unexpected and I was not planning to buy a property I was not really prepared in any way.

I have been living in the flat for 1 year and 6 months, I came to like the place a lot, so I found it hard to part with it. Long story short I have decided to go with it. I told the landlord that I will take on the shared ownership in July this year.

Now it is December and after quite an incredible ordeal I had to go through to get a mortgage we are very close to closing on the sale. Taking on the shared ownership I found out that nobody really cares about you as a buyer. I have absolutely no negotiation power. The price of the property is set by the housing association. Yesterday my solicitors send me a draft of the lease that comes with the property.

I will have two landlords, so subsequently I am not really getting a lease but a sublease. I felt quite good about buying a property, that I would call my own. The lease is very restricting no amendments will be done to it no matter what my demands might be. Reading through the lease I realized that I always will be a tenant to my landlord anything that I might want to change on the property will have to be approved by them no matter what my share is 25% or owning it fully 100%. Honestly the lease is like a rental agreement but 25 pages longer.

It has been quite stressful to reach to this point but I am just wondering how difficult it might be to even get out. Let’s say in 5 years I would like to sell my share. The property is well located in London with stunning views.

It has been so long and stressful process and I am afraid if I can make a rational decision on this!!!

In the ads for shared ownership they tell you, you can be a proud home owner, but not from what I can see in front of me.

Have I just gone through a massive ordeal to just become a tenant fully responsible for all costs of the house repairs?

Any views are welcome – what do you think and would do?

Thanks.

Oldernotwiser

I remember when I bought my first property, which was a leasehold flat. I felt exactly like you do when I saw the lease, it felt as if I was still renting.

However, over many years I've now owned several leasehold properties and I find that you just get used to the whole lease thing and accept that this is just the way they read.

I wouldn't like to comment as to whether you should go forward or not but don't be put off just by the lease.

poppysarah

If you don't want to buy then don't ...
If it sounds wrong then move.

geoffky

Here is your problem...your next buyer will have problems..what happens if prices fall much more..who would want a part share in a house when you could buy all of a another one minus the hastle.shared ownership has major problems but they do not show until its too late.
good luck

BitterAndTwisted

I wouldn't buy a shared-ownership for the reasons you have stated: you don't actually own anything and never will. Plus, you will have to pay service-charges and a proportion of any improvement and refurburishment works. And you'll find it very, very hard indeed to sell it at anything like a sensible price compared to what it will have cost you.

mynameisdave

I don't see how you will have two LL's

If it is shared ownersip then the HA owns x% and the LL owns 100-x% If you are buying the HA share you are sharing ownership with the LL and you shouldn't have a tenancy contract with the LL as well as the HA if you own half the property - what you going to do if he issues a Section 21?

It sounds like that the LL is trying to sell you his share. THis means you will be a leaseholder with a mortgage and rental costs on the remaining unowned part.

I've never heard of a shared ownership scheme where the HA allows the the shared-owner let the property to a third party and I think you're LL is on dodgy ground for doing it.

brit1234

Don't do it, not shared ownership. :eek:

The others have it right it is a con. My friends are all having problems with the scheme and with prices falling you could be left trapped in a white elephant.

The only reason to buy it is if you owe your landlord your life otherwise it is to costly a price to pay to ruin your economic future.

PasturesNew

It sounds odd to me, not right and not normal.

It sounds to me as if: A SO block was built and your LL bought a share. You rented from him, now you're buying a part of his share. But you've no relationship to your LL (not husband/wife), so I'm wondering what happens if he stops paying his share?

All sounds very unusual and dodgy - and I'm very surprised you've even got a mortgage on it.

Dig deeper.... it just doesn't sound right to me. Or, as the others have said, walk.

John001_2

Looking at the Official copy of register of title from Land registry, there are 3 parties mentioned all over the place:

Barrat Homes Limited
Paddington Churches Housing Association (PCHA)
Peverel OM Limited

Sorry as for the 2 landlords I mentioned earlier, in the lease it says Landlord - PCHA and Tenant - Me. (...from talking to my useless solicitor I was confused...).


Is true the prices of housing are low, so I was thinking that if the prices will stay down and I want to increase my share that would work in my favor. If the flat would lose some its value and I want to staircase I can get the next share for even lower when I started.

I think with the shared ownership the ultimate goal is to staircase to 100% if possible, because the sale would be much less complicated rather than selling a share.

Another point of view why I considered to go through the shared ownership deal is that rents in London are at all time high and will increase more in coming years. I have to put down a massive deposit to secure the mortgage, that I would get back plus the payed portion of my mortgage so in 10 years I still have something compared to 10 years of renting.

BitterAndTwisted

Shared ownership? No
Peverel? NO!

thriftychap_2

ill cut and paste a response i wrote earlier.....

Please don’t be put off key worker/first time buyer schemes by the few narrow minded individuals here, they are very polemic in their arguments.

I am a teacher and was a FTB; i chose to do a scheme with the coop that i am extremely happy with. It means i can afford my own place with plenty left over at the end of the month.

Where these schemes will fail is down to individuals own inclination or lack of to be careful with money and plan for the future. If i was to spend all my disposable income each month on a new car, eating out and clothes etc and then in 25 years or whatever term the loan is on, have to then take out a mortgage to buy the remaining % of my property i would agree the it’s not a good situation to be in. However the scheme has not failed, i would have failed.

If however I decide to use my disposable income to a) make substantial overpayments on my 62K mortgage to reduce the term from 25 years to 7 (this is an aim) or b) save our 1300 pounds each month to eventually buy the remaining 40% in 4/6 years time (c) pay as much of the 40% 2nd charge back as i can in two years then remortgage and rent the flat with a LTV ratio of 70% which will earn us money each month and move to a 3 bed home and start a family with a flat that is paying for itself and making us money.

Any of the above is possible if you are astute, the schemes in question can be either a blessing or a burden, and it depends on what you make of your individual circumstances.

I wish you all the luck with your pursuit of your own home. I am very pleased with the scheme i am on and the service from the coop bank has been and continues to be exceptional.

Oh, just a quick note, i did originally buy the flat on my own. My OH is moving in Feb when she qualifies as a nurse, hence the reason our savings capacity will be 1k - 1.5k per month. I have also received 2 promotions in the last 1.5 years so my earnings have gone up as well. I mention this as I’m sure somebody will pick up on the fact these schemes are meant for people who can’t afford a house on the open market, which now we clearly can but could not 1.5 years ago.

Best of luck.