Questions about selling a shared ownership property after staircasing to 100%?

helger

I am currently buying a shared ownership property, and plan to staircasing to 100% afterwards.

At the time of negotiating the offer, I specifically asked the shared ownership sales negotiator of the Housing Association if there are any restrictions of selling the property after my Final Staircasing to 100%. The answer I got was that "I can directly sell the property in the open market if I staircased to 100%".

I recently received the draft lease from my solicitor, in which it states "during the pre-emption period (i.e. within 21 years after Final Staircasing to 100%) even though you own 100% of the property if you wish to sell then you first have to offer the property back to the Housing Association to buy it from you". The Housing Association then has three options:
(i) buy it back directly from me (which is very unlikely I think)
(ii) give up the right and allow me to sell it in the open market (I do not know the likelihood)
(iii) try to find another buyer for 8 weeks
Option (iii) above is very costly. I need to pay the valuation fee and 1% of the full market value at the very beginning in order to use the Housing Association’s service to try to find another buyer for 8 weeks. It is very likely that they can not find a buyer at all, meaning of a waste of money. What’s worse, if the property is not sold within a year, this procedure should be repeated as stated in the draft lease, meaning that I need to pay another valuation fee plus 1% of the full market value to use Housing Association’s service for 8 weeks again. What a nightmare even after the Final Staircasing to 100%!

From my perspective, option (ii) is ideal. Option (i) is acceptable. But option (iii) is totally a nightmare!

There is apparently a big difference between the draft lease and the words of the Housing Association sales negotiator. What should I do now? I know option (iii) normally applies before the Final Staircasing to 100%. I just wonder if it is possible for the Housing Association to remove the application of option (iii) after my Final Staircasing to 100%? As currently it is a draft lease, I thought there may be some room for negotiation? Any help to my questions is much appreciated. Bow

space_hopper

Helger, can I ask which housing association? This sounds very odd. Usually, shared ownership goes onto the open market regardless straight away.

This thing about paying 1% to them is laughable really. are you in the London area?

geoffky

space_hopper wrote: »

Helger, can I ask which housing association? This sounds very odd. Usually, shared ownership goes onto the open market regardless straight away.

This thing about paying 1% to them is laughable really. are you in the London area?

Wrong...its usual to have to offer first dibs to the housing association.

helger

Yes, I am in the London area.

The draft lease sounds very odd to me as well. That is why I ask if anyone has similar experience and how to deal with it.

Any suggestion is more than welcome.

HARSA

I am in the same position as you but mine is pretty straightforward;

It cost me £103 for the valuation. Should I wish to sell to the HA then I have to pay £205 for them to find a buyer.

After 8 weeks if no seller is found then I can sell in an open market.

There is currently a £10K difference between the HA valuation and my lender valuation. Once we have agreed a price, I will buy their 50% share & it becomes a freehold which can I go on and sell without any restrictions being applied.

Yours seems very strange indeed,

space_hopper

geoffky wrote: »

Wrong...its usual to have to offer first dibs to the housing association.

I probably didn't put my words in to context

Im my dealing with shared ownership (in the midlands) the house goes to the housing provider first, correct! However, in practice they tell you to immediately market the property yourself..hence my question, do you live in London

The demand would clearly be greater in London. That 1% needs to be checked by a solicitor to be honest, this is very poor practice and sounds like ripping you off, profiteering, something which a housing charity is not allowed to do! Remember, they receive subsidies from the government.

Id report to you mp to be honest, Shared Ownership schemes are good and any scamming like this needs to be followed up

space_hopper

Harsa, can I ask if the housing association has valued it higher than a lender valuation? I ask because normally on shared ownership you need to get it valued by an independent RCIS valuer.
Vested interests to fix the market is clearly being addressed by your responsible lender, fixing the market price is illegal, and again, gets this followed up with a letter to your MP, you also need to report this..

this is another example of scamming people! be aware. Im guessing again, you also live around greater London?

lalali

Can I ask which HA? I am going to buy also..
cheers

helger

I was told by my solicitor that this is a standard clause for shared ownership. I just wonder if anyone has the experience to deal with it.

Richard_Webster

Pretty standard sort of clause. A lot of Councils want to make sure that when they give planning permission for "affordable housing" as part of an overall development - that it stays "affordable housing". There is politics behind this.

The Council tries to impose a planning (s106) agreement on the builder and the HA in question to stop it going on to the open market. HA's solicitor won't agree that because he knows people couldn't get mortgagees if there were absolute restrictions, so HA agrees to a whole load of restrictions like this which they sell to the Council as giving the HA the ability to retain the property in quasi-public ownership. I suspect the reality is that HAs will rarely have the money to buy in the 100%.

The practical problem is that you at least have to go through the hoop of asking them and waiting around for them to reply when you want to sell.

If you buy from a Council under Right to Buy now you have to accept a further pre-emption period after the end of the initial 5 years where you have to offer the property back to a Council at full market value, so this kind of restriction is increasingly common in the case of "affordable housing".

HARSA

space_hopper wrote: »

Harsa, can I ask if the housing association has valued it higher than a lender valuation? I ask because normally on shared ownership you need to get it valued by an independent RCIS valuer.
Vested interests to fix the market is clearly being addressed by your responsible lender, fixing the market price is illegal, and again, gets this followed up with a letter to your MP, you also need to report this..

this is another example of scamming people! be aware. Im guessing again, you also live around greater London?

The so call independent valuer that the HA used (remember I paid the valuation fee -£103) works with the HA all the time. So I think there is something smelly there and they in fact have HA best interest.

They valued it @ £170 whilst my lender valued it @ £160K meaning £5K extra for the HA.

I have today emailed them and pulled out - reason being that I will not take on their risk. I will now try and pay off my 50% before end of this year and sell within 2 years to someone on their waiting list who is prepared to pay £170K

I know 2 years is a long time & value will either go further down or up but regardless it will be all relative to the property I buy next.