Shared ownership/equity is a scam.

steph2212

Hi, just wondered if anyone could help. I bought my house in 2008 under the old shared equity scheme 75/25. My house was bought for 154.000 and it has now been valued at 130.000 because the market is so poor. Me and my partner have been split up for a couple of years and we need to sell up but face having to pay Taylor Wimpey £25,000 (the remainder of the 25% equity loan).
The company itself have been extremely unhelpful. I have asked if there is some sort of repayment scheme to which they sent back a very blunt letter stating 'no seek legal advice'.
To be honest I dont think I will ever sell my house for what I purchased it for so inevitably I am going to have to foot some debt but I just do not know where I can get £20.000 from!
Does anyone know if I have to repay this, wether there are any loop holes, payment plans etc. Taylor Wimpey are in a win win situation and the scheme sounded appealing to first time buyers at the time.

forum_newbie_2

We are in the process of walking away from our SO property. It was worth £140K and we took a 44% share on it. It is now worth £115K and we tried to sell it but couldn't until we paid the negative equity. So we stuck it out another year but the development has turned into such a terrible place with crime and drugs and violence that we have no choice but to move our children away from here. We have just signed a tenancy agreement for private renting and will be saying goodbye to this place next week. We have now stopped mortgage and rent payments and will be plunging into absolute financial ruins but the relief of knowing we are going is worth it after 4 years of misery. What comes next we will face and get through somehow.

scheming_gypsy

charleyroo wrote: »

I'm not an argumentative person and I don't dispute that some schemes are a complete scam, but I just wanted people who are researching to know that not all schemes are completely bad!

Tis true!
I got my shared ownership house in December 2003; brand new build (3 bedroomed 'mid mews') on a new estate and the same price as the none shared ownership houses on the same street.
It's a 60 / 40 share and my rent started off at £50 a month, it's now £57.50 a month which includes building insurance. As it's a house and not a flat there are no service charges to pay.

the only issue i do have is that it's a new build - ie crap; which has nothing to do with the shared ownership aspect.

Ihatesharedowner

A little follow up to earlier post.

We now own the whole property. No thanks to our HA.
We got very fed up of them... in the end and fell out with them.

When we went to sign the paperwork we found they had passed on £120 of THEIR legal costs to us. No explanation. Our solicitor said it was odd.

So we tried to question it, and to ask about procedure with ending the rent.

We emailed first thing on the friday morning (bare in mind we were supposed to complete by the Wed, so there was a lot of urgency). No response, so my husband called at 4.30pm. He got a rude response saying she didn't know why we were calling and she couldn't find out the information and then HUNG UP ON HIM. So he called straight back and was told the lady had left the office and he'd have to call back on Monday.

So he called back on Monday, and got told that no one hung up on him (Lie) and that no one wanted to deal with him anymore as he was 'abusive' for calling them incompetent (husband is assertive but never raises voice - hes very good at complaining). We were told it was 'normal' charge and that we should just cancel service charge and rent direct debits.

Mysteriously the £120 disappears but on day of completion they then decided that we needed to pay balance of the years service charges upfront.

Fully expecting them to mess up the service charges and rent, we made damn sure they couldn't charge us by closing the account... and as fully expected three days ago we got a threatening letter demanding we pay our rent immediately. On a house we now own fully.

We rang up to complain and were told we 'hadn't cancelled the dd' and we were still on their system as shared owners. Our argument was simply, that they shouldn't have tried to take the money anyway since they had absoluetely no right to do so.

Couple of hours later we got a call back. Turns out they owe US money for rent.

All this despite making a point to try and sort this out and avoid even MORE problems.

I think we have managed to get the moral high ground and have every right to call them incompetent.

It does make us ask HUGE questions about who is running our old Shared Ownership Scheme. No wonder some people are being screwed over. I have to ask whether its down to utterly poor management or the schemes themselves being flawed.

brit1234

Frankie56 wrote: »

I bought a house some years ago with a housing association. I own 1/4. I had to sign to say that I would be responsible for all repairs and I have to pay them for buildings insurance as well as rent for 3/4 of the house. I felt,, because of personal circumstances, that I didn't have much choice at the time. I recently asked if there was any way they could help me out because the windows need to be replaced and the heating boiler won't last much longer but they said there was no way they could help. I have to pay for it all myself.

I now feel that this is very unfair as I have to pay to keep their part of the house in good repair and they will get 3/4 of the profits when the house is sold, even though they say they are non-profit-making.

Is anyone else in this situation? How do you cope? Does anyone know anywhere I can get help with these repairs as I am in a very low paid job and in receipt of housing benefits and live alone?

Just another bad shared ownership story based on repairs. If you own 100% of a property then yes you should pay 100% of critical repairs. However what if you own 10% and rent 90% why should you again pay 100% of the repairs?

brit1234

Have Your Say: Shared ownership

Many key workers have been tempted to buy a share of a Housing Association home as a first step on the property ladder.

Under these shared ownership schemes the worker buys a percentage of the property and rents the other part.
But rent increases at some associations are more than double the pay rise proposals for public sector workers this year.

We asked for your comments about shared ownership, some of which are published below.



I looked at this scheme when buying a house and it's a complete joke. You end up paying far more than you would with just a mortgage anyway, and all the houses seem to have a 25% mark-up in their value, ie you are not getting anywhere near as much for your money as if you bought with a friend. It's a government hoax to win votes. Total rubbish.
David Parry, Notts

I bought my flat two years ago with the key worker loan scheme as I am social worker and eligible for the scheme. I now find that they are limiting my career opportunities as they have a very narrow view of "key worker". I have decided to buy them out and been told that I have to foot the bill for surveys and legal fees. They also say I cannot deduct the money I have spent on improving the flat (£8,000) even though they said originally I could. They have made a significant profit at my expense. I wouldn't recommend this scheme to anyone if there was an alternative.
Adella Habib, London

Surely the key worker in question had a conveyancing solicitor when purchasing the 30% share in the property. In any property purchase it is always the purchaser's solicitor that would explain the key details of the lease. It seems a bit odd to blame the housing association for any lack of explanation.
Dan Litman, Birmingham

Nurses are not saints. Please, there's nothing more special about nurses and teachers than about cleaners, couriers, traffic wardens, laboratory technicians, accountants, the blokes who work at the tip etc. We all work, we all have to exist and there's lots of hard workers on salaries lower than nurses. This attitude is weak, unjust, and an insult to all the other workers who keep cities alive! Get over it!
Andy, Nottingham

What's the point in trying to get on the ladder? Any property will leave you broke and hence devoid of a life outside your four walls. Time to leave the country, maybe if enough do the government might wake up to the new age poverty it is presiding over.
Jonathan, Sussex

The fact our key workers (and anyone else) cannot afford homes in modern Britain is an absolute disgrace under a government which said it would not allow house prices to get out of control back in 1997. However, trying to paper over the cracks of this massive social problem with shared ownership schemes is pouring more fuel onto the fire, it's about time something was done to bring house prices down, not dream up ways to keep them high.
Simon, Chester

Yet again the government undervalues the people who work for the public sector and puts pressure on their ability to afford a reasonable quality of life. It is forcing low to middle earners to seek more social housing thereby putting pressure on very limited stocks.
Tony, Bedford

I was, until recently, living in a shared ownership property but I have now bought the freehold. Unfortunately I am still subject to the service charge which this year was increased by over 200%! There seems to be absolutely no control over the service charge and when you have inefficient housing associations they seem able to do what they want without explanation.
James Ashdown, Hackney, London

The government will not do anything about house price inflation until it becomes a political threat to it. I wrote to my MP pointing out that I had noticed how housing goes up the political agenda in wards where extremist parties have been gaining votes. Suddenly he got the message. You have your chance in May.
Andrew, York

Even though I sympathise with the nurses, the majority of workers in the UK can no longer afford to buy a house. Most people have to live far away from where they work because they cannot afford a place near work. With road pricing coming soon this will mean these people will pay even more. So the government is not only shafting nurses but the rest of us too.
Adam Sharples, Wrexham

If you can't comfortably afford your payments, then do not buy! This obsession with "getting on the ladder" is what is driving this insane housing bubble, and it will be the foolish and reckless who will get burnt first when the bubble (inevitably) bursts.
Alan, London

Nurses and key workers should be chuffed that they are getting any help at all. Public sector workers should stop considering themselves to be so disadvantaged. When you choose a career path, salary should be a key consideration. I too can not afford to buy a place to live in but I can not expect the company I work for to help me out. Let's face it, not many people who bought their house 10 years ago could afford it today. Maybe ownership is simply becoming the preserve of the rich - a thing of the past.
Vincent Dremm, Sidcup

Ken Lewthwaite asked when the nurses are going to stop whingeing. When we actually start paying them properly, rather than using massive amounts of our tax money on wars and cheap corporate tax schemes, trident renewals and politicians' ridiculous expenses bills.
Jocelyn Godbold, Bristol

Affordable or not, giving priority to public sector workers is nothing less than discrimination against the equally important (and wealth generating) private sector workers, many of whom are on even lower salaries. As for the scheme itself, how is it a step on the ladder when you can only afford to climb half-way up the first rung for that one bedroom flat? And do people honestly believe this is the path to 100% ownership of a three-bed semi? It's pure delusion, and this government scheme only exists to help keep our housing stock overpriced and not risk losing votes should they fall.
Paul Turnbull, Tynemouth

I live in key worker rental housing and have the same problem. Each year my salary increases by about 2%, but the housing association puts my rent up by RPI+0.5%, this year that equates to a 5% increase. The rents started off cheap for the area but now my rent is only £100 less than private rents! Give it a few years and my key worker rent will be more than if I was renting privately! I have less and less money every year. A point will come when I cannot afford to live in my "affordable" accommodation or buy into shared ownership. What on earth will I do then? It's an absolute joke.
Jessica Nash, Maidenhead

The reason why housing is so expensive is supply and demand. More jobs/people than houses. Any scheme just gives priority to whatever group of people it targets, and leaves others at more of a disadvantage than if the scheme didn't exist. We need a match between jobs and people and homes - which means encouraging jobs and the building of houses in areas which are underdeveloped, and cutting immigration.
Linda, Oxford

Many other workers, including professionals, have moved out of London to live due to the house prices, costs of living etc. The government has done a lot to help key workers already, the housing being a huge one. No-one owes these nurses anything. If they want to do their job they must take the negative sides also. They have good pension schemes and a lot of annual leave for what they do.
Adam W, London

If public sector workers forsake London and the weighting allowance - Where will Londoners get their services from? You will end up seeing a service implosion with living standards dropping for the majority of people. More people will travel to get into London for work and the congestion will increase, pollution will go up and the pace of life will get even more hectic. With the environment that Londoners have helped to create, greed only benefits people who are already wealthy, by your inaction and self-interested protectionism may you reside in the castle you have built for yourselves.
Glen Allan, Glasgow

I have never agreed with shared ownership schemes. Why pay for a house twice? Paying rent and paying a mortgage on top? I have every sympathy with the nurses and it just goes to show that this government does not care for the people of this country.
Darren W, Newcastle upon Tyne

Does this really surprise anyone? The government keeps trying to put sticking plasters on the housing crisis when it needs major surgery. If house prices do not fall by at least 30% in the next 12 months lots of asset rich people will not be able to access essential services. Maybe it serves them right.
David B, Wolverhampton

I appreciate many nurses do a fantastic job, and many are paid modest salaries, but I find it very difficult to be sympathetic when as a professional of 35 I cannot even afford a one bed flat in the North West. Key workers who are lucky enough to be able to take advantage of these schemes should remind themselves as their rents increase that the capital value of their stake in the house is also increasing. House price inflation is the root of the problem for housing key workers. The government should re-evaluate its priorities.
James Tate, Liverpool

I think it's high time the government got to grips with this and actually did something to tackle the increasing problems caused by the shortage of affordable housing. It really makes my blood boil when it turns a blind eye to these massive city bonuses and yet essential workers like nurses can't afford even the most basic place to live.
Rebecca Tarn, London

Being a key worker in London, the only property I can afford is shared ownership. However many of my friends with existing shared ownership properties are thinking of selling due to the increasing costs of the rent and service charge. Shared ownership is not the solution to the house price problem it just supports high prices artificially in the housing market.
Gavin, London

Recently our housing association sold two bed-sitter apartments in the building I have lived in for 30 years to developers. One sold for £206,000 the other £256,000. This action has deprived two essential workers from renting these properties at an affordable rent. This housing was set up originally to provide affordable housing for essential workers. Whilst this was happening, I was in hospital following a heart attack. Two nurses informed me that they were having to move out of London because they could not afford a place to live.
Bill Baker, London

More whingeing from nurses. When are they going to stop? They have received significant pay rises over recent years (and at the same time a reduction in their duties) and now they complain about a scheme which gives them assistance which the majority of the population do not enjoy.
Ken Lewthwaite, Yeovil

I have lived in a shared ownership scheme for the past 11 years. The first couple of years were fine. However over the past six years residents have found relations with the housing association have become increasingly difficult. The service charge increases have caused extreme problems - in four years increasing by a massive 37%! How on earth are key workers supposed to be able to afford these kind of increases? The rent and service charge element is now more than my mortgage. At this rate I will not be able to live here when I retire in six years time..
Chris Graham, North London

My daughter is a qualified nursery nurse. She is paid less than most nurses and because she works in the private sector she is not able to buy shared ownership housing on any of the schemes. Can someone tell me how someone like her on a low salary, meeting requirements laid down by government is ever going to be able to afford a flat? It is impossible around here. She is 25 and has looked in to it. I actually think it is despicable she slogs herself to death and childcare is no easy option.
Mrs Pat Goodwin, Coulsden

http://news.bbc.co.uk/1/hi/programmes/moneybox/6435657.stm

antidoto

My recent experience with HBD confirms that there is something very wrong with it.

I had booked a 2 bed flat, mortgage offer received and solicitor ready to start legal work.

However the valuation from my bank was 10K less than the asking price. This wouldn't pose a problem under other circumstances but in HBD case, the valuation price HAS to match the offer and purchase price. Soon after my (under) valuation, the sellers informed me that we can't do business as they had to drop the price (to satisfy HBD rules) and risk further downvaluations of nearby flats in the future.

A small detail, 100% of the sold flats had been valuated by Nationwide, the valuation matched the requested price and all sales went through.

7% of the potential buyers (like me) chose not to go with Nationwide and those people eventually lost the chance to buy the flats even though they had all required money/mortgage.

In my case, it was the 2nd time that the flat was downvaluated as there was another potential buyer before me who made the mistake not to go with the "recommended" IFA/bank.

Despite two consecutive downvaluations, the sellers still insist on asking for the original price and the most funny of all, the government does not react (the HCA is aware of the issue). Isn't this alarming?? The government consents to lend buyers an amount of money that is based on the purchase price that is set by the sellers alone!


So, with HBD, you are "free" to use your own IFA/bank, BUT if you dont follow the indicated by the sellers IFA/bank, you will probably miss the chance to buy the flat you want.

If this is not a scam, then WHAT IS????????????????:eek::eek::eek:

Idiophreak

antidoto wrote: »

7% of the potential buyers (like me) chose not to go with Nationwide and those people eventually lost the chance to buy the flats even though they had all required money/mortgage.....

...Despite two consecutive downvaluations, the sellers still insist on asking for the original price and the most funny of all, the government does not react (the HCA is aware of the issue). Isn't this alarming?? The government consents to lend buyers an amount of money that is based on the purchase price that is set by the sellers alone!

I think you're downplaying, somewhat, the part of the buyer in this. If the seller overvalues the place, they won't sell it at all. So it doesn't really matter. If the seller and the buyer arrive on a price that they think is fair, why would the government try and change how much they can lend? The process doesn't need *another* valuer getting involved.

Yes, properties will get downvalued - and quite often this is due to sellers overpricing - and sometimes it's due to aggressive down-valuing. In this instance, much as you'd like it to be some great conspiracy, I'd suggest that it's simply that Nationwide are using all the other properties they've valued as comparables. Nationwide's previous valuations aren't something that will necessarily be available to other valuers to use as a comparable.

Putting yourself in the position of the seller they have two options. 1) knock 10k off, sell to you 2) wait for another buyer, 93% of which will use Nationwide and be approved.

If things were going slowly, you'd stand a chance with 2. If the things are selling, they'd choose 1.

Sad to say it, but the 7% of buyers *didn't* have all "required" money/mortgage - as the lender refused to lend them as much as was "required". If they did have all the "required" money, I'm sure they could have just paid the 10k out of their own pocket and carried on as if nothing had happened. Alternatively, they could have switched lender to Nationwide and just bought the thing.

poppy10_2

antidoto wrote: »

So, with HBD, you are "free" to use your own IFA/bank, BUT if you dont follow the indicated by the sellers IFA/bank, you will probably miss the chance to buy the flat you want.

Nice cosy relationship, isn't it? If you use the developer's recommended broker and mortgage lender, the property will magically be valued at whatever the builder is asking for it, even if it is actually worth less.

The developer gets to keep their prices artificially inflated, the broker and lender are complicit in the near-fraud, and the buyer gets shafted by having to overpay and take on a larger mortgage than they would otherwise have needed. Such a scam, with the FTB as the victim.

Idiophreak

poppy10 wrote: »

Nice cosy relationship, isn't it? If you use the developer's recommended broker and mortgage lender, the property will magically be valued at whatever the builder is asking for it, even if it is actually worth less.

The developer gets to keep their prices artificially inflated, the broker and lender are complicit in the near-fraud, and the buyer gets shafted by having to overpay and take on a larger mortgage than they would otherwise have needed. Such a scam, with the FTB as the victim.

Lol. Yes, so lenders are going to over-value a property...err...why?

In the last few years we've seen lenders tighten their lending criteria, particularly the LTV...why? So that they can achieve fast resale should the borrower default. Why would they jeopardise that? What's in it for the lender? A little more interest? I can't see it.

Brokers, fine...developers using the same broker is good sense for both of them, I get that - the broker gets a supply of business and the developer gets a better chance of mortgage approvals...but lenders just won't lend more than they think the thing is worth.

The issue more than anything is the restricted choice of lenders - there are only a handful that will have anything to do with shared equity or shared ownership and it's this that reduces choice more than anything.

Also, do you think people are so stupid as to pay more than they think somewhere's worth just to use this scheme? Why would they? They'd get a house now, sure, but they'd be shafting themselves in a couple of years time - anyone with two braincells to rub together wouldn't just go "oh well, if that's how much I have to pay...".

Nobody gets lumbered with bigger mortgages than they need have...they actively apply for them and agree to them. It's not really the developer's fault if people *want* to pay more than it's worth...If they really think it's worth paying that much more to get on the ladder or whatever, at the end of the day it's their choice...they're all grownups...