Putting in an offer for a shared equity home

poppy10_2

This is shared equity too.

OP - rental costs for the 65% not owned seem pretty high at £402/month - do you know which housing association is operating this scheme?

mrcashman

Thanks for everyone's opinion. The company setting the rental rate is Circle Anglia I think.

I am a renter looking to buy, and luckily I am in a better position in that I have a larger deposit, I am looking in a town which has many more homes for sale. My sister instead is searching for homes in a village which is much higher valued than Luton... for obvious reasons Personally I'd never go for a shared equity home, but I can see why this is the only option for her at the moment, and why she feels like this is her only option.

I will try and explain the situation to her, and hope that she listens.

kingstreet

Think we need a quick SO/SE reprise;-

Shared Ownership - the property is part owned by an individual and a housing association. Rent is normally paid on the HA share. The part-owner has the right to purchase additional shares by "staircasing."

If the part-owner wishes to sell, he/she is selling only his/her share, the remainder will be retained by the HA unless a plan to staircase upto 100% ownership at completion is used.

Shared Equity - the property is wholly owned by the purchaser. The purchase is typically assisted by a loan from a builder or the Government's Homebuy scheme. The loan may be interest-free for a period of perhaps 5 years. The loan is secured by a second charge over the property. If the owner wishes to sell, he/she will sell the whole of the property but will have to repay the loan from the proceeds and normally this will be expressed as a percentage of the proceeds, rather than the absolute amount loaned at the outset. ie If you borrowed 25% of the purchase price to buy the property, you'll repay 25% of the agreed sale price.

In this particular case, the agent has simply mis-labelled the purchase as it is clearly shared ownership and shown as such further down the rightmove page. The OP's sister is purchasing only a portion of the property, not all of it.

Graham_Devon

poppy10 wrote: »

This is shared equity too.

OP - rental costs for the 65% not owned seem pretty high at £402/month - do you know which housing association is operating this scheme?

The advert states this:

35% of shared ownership available with fixed price and no onward chain.

You even go on yourself to say the 65% not owned....which implies it's shared ownership, as you own the 100% of shared equity...just with an equity loan.

Shared equity is a very different beast.

franklee

Graham_Devon wrote: »

The advert states this:

35% of shared ownership available with fixed price and no onward chain.

You even go on yourself to say the 65% not owned....which implies it's shared ownership, as you own the 100% of shared equity...just with an equity loan.

Shared equity is a very different beast.

But the rightmove ad also says just above the photograph "Shared Equity £56,000" and the OP's title "Putting in an offer for a shared equity home" and the OP "The property is a shared equity home" etc. So I think kingstreet is right the EA has muddied the waters by calling it both. Certainly confused me.

Anyway can we have some pros and cons, which is the easiest to sell on?

mrcashman

This has confused me now. So is the property shared ownership or equity?

Either way I will get her to clarify with the EA tomorrow.

kingstreet

franklee wrote: »

which is the easiest to sell on?

Shared equity is easiest to sell as the purchaser is buying the whole property and the vendor settles his/her liability for the second charge out of the proceeds.

kingstreet

mrcashman wrote: »

So is the property shared ownership or equity?

Shared ownership.

I know it seems a bit pedantic to argue the toss over the terminology but the purchase processes are different for each one. Getting a mortgage is more problematic too. Some lenders will lend on one type, but not the other. Abbey/Santander for example lends on shared ownership but will not touch shared equity. Imagine going through the rigmarole of finding the best deal only to find you can't have it because you've mistaken the purchase type. :eek:

Richard_Webster

If it is shared ownership it is doubtful whether the estate agents should be advertising it at all. Very often it has to be offered to people on the HA's list first at a price the HA fixes. It is only if nobody on the list wants it that the seller can sell the share to someone else but only at the price the HA fixes.

So OP should check whether the HA have been approached. Sadly some SO sellers don't understand and put their properties with estate agents without realising they have to go through the HA.

Oh and I wish more financial advisers were like Kingstreet and understood some of these technicalities.....

poppysarah

kingstreet wrote: »

Shared ownership.

I know it seems a bit pedantic to argue the toss over the terminology but the purchase processes are different for each one.

Might be - but the end result is the same. Shared *whatever* schemes prop up high prices. Which means they are self-perpetuating.