Stuck in a negative equity/shared ownership spin

Peeky_Joe

Me and my wife bought 35% of our property in June 2006 through shared ownership. The property was a new build, and we got a 100% mortgage - as it turned out, one of the last as the property market fell off a cliff around two months after we completed.
Anyway, that's the background. I never saw negative equity as a big issue really as it only becomes a problem when you need to move/remortgage etc. Well the need to move is fast approaching. We now have a daughter and in the coming 14 months she will be starting school. Gaining access to better schools being the main and most pressing need of many to move.
We knew when we planned to move that we couldn't afford the deposit on a new property, so had decided to sell our flat and rent a house. Based on my most recent mortgage statment and a conversation had with an estate agent regarding the valuation, I am in approximately £10k of negative equity on just my share, without taking into consideration estate agent fees, legal costs etc. While we have some money available, we don't have anything near that kind of figure. So what do we do? Are we stuck here?
My first thought was to sub-let our flat, without informing the housing assocoiation or my mortgage company. Although I'm now more reluctant to go down this road, it appears it's that or staying put.
This rock and hard place isn't very comfortable!! All thoughts and/or suggestions welcome.

BitterAndTwisted

You're gong to have to stay put until you can cover the negative equity and all of the other associated costs with selling. There is no other alternative.

KRB2725

Can you not get the permissions required to rent it out legitimately?

Peeky_Joe

emmatthews wrote: »

Can you not get the permissions required to rent it out legitimately?

No - Housing Association wouldn't allow it.

FireWyrm

Peeky_Joe wrote: »

Me and my wife bought 35% of our property in June 2006 through shared ownership. The property was a new build, and we got a 100% mortgage

That's unfortunately the problem.

Peeky_Joe wrote: »

Well the need to move is fast approaching. We now have a daughter and in the coming 14 months she will be starting school. Gaining access to better schools being the main and most pressing need of many to move.

It's the same for every parent, you're not alone. However, a thought....just how bad are the local schools really? 5 year olds arn't noted for dealing dope, so it's unlikely to be a very bad school in the accepted sense. The worst case scenario is that they arn't teaching her the alphabet as fast as other schools in better areas perhaps. Can you cover this deficiency with some home schooling? You should have enough command of the language and some basic arithmetic to teach her yourself and suppliment what she is getting for at least the first few years which means that you have up until about age 9 or 10 before it becomes a serious issue. This gives you another 5 years to play with I think.

Peeky_Joe wrote: »

Based on my most recent mortgage statment and a conversation had with an estate agent regarding the valuation, I am in approximately £10k of negative equity on just my share, without taking into consideration estate agent fees, legal costs etc.

There's your answer I'm afraid. You simply cannot sensibly afford to move.

Peeky_Joe wrote: »

My first thought was to sub-let our flat, without informing the housing assocoiation or my mortgage company.

Dont. Seriously.

Peeky_Joe wrote: »

Although I'm now more reluctant to go down this road, it appears it's that or staying put.

You have no real option I'm afraid.

Peeky_Joe wrote: »

This rock and hard place isn't very comfortable!! All thoughts and/or suggestions welcome.

I can only offer consolation. You're not the only one feeling like this. I suggest you start investigating other education alternatives for your daughter if this is your primary worry.

ILW

Send your daughter to a private school.

pineapple123

You cant rent your/HA property out Its against terms and conditions of shared ownership.
Have you approached the HA and explained the situation they may be able to help.

Caveat_Mortgagor

Peeky Joe,

Its refreshing to see someone with a problem who has already put a lot of thought into their problem and developed a mature attitude to the realities they face.

Too often we see people here wanting advice about how to get out of their obligations via the backdoor.

The only consolation I can offer is that with a responsible and thoughtful manner such as yours, your daughter has a great role model to learn from. Thats not something Ofsted measure.

greenmoneysaver_2

I think Firewyrm has put it really well.

The push for schools starts now, but really, you can easily supplement education at this age if needed. ALso do lots of after school stuff - sports etc, she will meet a wider socail circle than just school friends.

bunnybunnyrabbit

Contact your housing association in writing and explain the situation. Your lease will probably say that you cannot sublet, but because of the current financial climate many people are finding that they need to.

You would probably need to show that you won't be making a profit on the let (basically just covering your costs).

Its worth looking into before writing it off.

Trigger79

Hi there,

I'm in the same position. I just phoned my housing association this week and they immediately said I could rent it out in the short term until I'm out of negative equity.

I know many others who've done the same - housing associations are being much more lenient about this if you just ask them.

Good luck!