Selling Shared Ownership

Morgage_Confused

this is critical.....just bumping this post as its most important. he might take 100% of the hit in equity loss and not 35% of it.

Ulfar wrote: »

I think the brother may need to re-read his contract paperwork very carefully as some of these schemes are drawn up such that any loss in equity value comes of the owner first and not the part retained by the housing association.

In this case the brother could only have £6000.00 which will get eaten up by fees.

You have to be very careful with shared ownership and the different terms offered.

MarkyMarkD

brit1234 wrote: »

Please don't tell me what I am thinking. I'm not confusing SO with SE as I mean SO. Both are scams but I am talking about shared ownership in this case.

Shared Ownership is a scam, avoid at all costs. At least the government has stopped funding this failed scheme despite the winging of the housing federation.

Shared ownership isn't a scam.

Your views on lenders' acceptance of deliberate over-valuations is unsubstantiated and ridiculous. If what you were saying were true, it would mean lenders incurring significant shortfalls when they repossess SO properties - particularly given that SO loans are normally at very high LTV percentages. If that were true, lenders wouldn't bother doing SO because it wouldn't make them any money.

If you would care to provide some evidence that lenders have taken a huge bath on SO, and hence stopped doing SO lending, please provide it.

SO is still available, from housing associations, which are still government underwritten. So where do you get the idea that the government has "stopped funding this failed scheme"?

As others have posted, more rationally than you, those who have purchased on shared ownership have often lost less (if they have to sell up) than those who stretched their borrowing ability to buy outright.

MarkyMarkD

Morgage_Confused wrote: »

this is critical.....just bumping this post as its most important. he might take 100% of the hit in equity loss and not 35% of it.

Not in any shared ownership scheme (via a Registered Social Landlord) that I have ever seen.

May apply to developer part-buy/part-rent schemes, though.

brit1234

MarkyMarkD wrote: »

If you would care to provide some evidence that lenders have taken a huge bath on SO, and hence stopped doing SO lending, please provide it.

It would be easier for you to find the lenders that supported shared ownership in 2007 and compare it to the couple in 2012.

MarkyMarkD wrote: »

SO is still available, from housing associations, which are still government underwritten. So where do you get the idea that the government has "stopped funding this failed scheme"?

Yes it is still available but in lesser numbers, the remains of the unsold stock from the previous funding.

I get the idea that the funding has stopped from both the government and the National Housing Federation (Housing associations group lobby people). I think you will find last year the government scrapped the housing association money for shared ownership entirely. Instead they put money to affordable rent and a new scheme which has turned out to be Newbuy. The National Housing federation have been screaming the last 6 months about this, or have you missed their massive propaganda campaign.

Even Grant Shaps told me personally that he agreed that they were bad in a live online debate on either the Guardian or Independent website. That was why I was so shocked when he came out with Newbuy because it went against what he said for both shared ownership/equity properties

MarkyMarkD

brit1234 wrote: »

It would be easier for you to find the lenders that supported shared ownership in 2007 and compare it to the couple in 2012.

In case you haven't noticed, there has been a major change in the availability of all types of mortgage between 2007 and 2012, but particularly focused on higher LTV products. As I previously noted, SO is particularly prone to high LTV because the sort of borrowers who purchase SO tend to have very small deposits.

And SO borrowers may (and that's a big may) be more prone to arrears and defaults - particularly during recessionary times.

And the FSA has (between 2007 and 2012) clarified higher capital requirements for SO lending, which may (read, did) have meant an increase for those who didn't previously share the FSA's new guidance on the matter.

So, lenders pulling out of SO is more to do with lack of lending capacity (and capital) and choosing to focus it on lending which is most profitable.

brit1234 wrote: »

Yes it is still available but in lesser numbers, the remains of the unsold stock from the previous funding.

I get the idea that the funding has stopped from both the government and the National Housing Federation (Housing associations group lobby people). I think you will find last year the government scrapped the housing association money for shared ownership entirely. Instead they put money to affordable rent and a new scheme which has turned out to be Newbuy. The National Housing federation have been screaming the last 6 months about this, or have you missed their massive propaganda campaign.

Even Grant Shaps told me personally that he agreed that they were bad in a live online debate on either the Guardian or Independent website. That was why I was so shocked when he came out with Newbuy because it went against what he said for both shared ownership/equity properties

Perhaps this is more because government funding for low-cost housing has fallen across the board, and they have chosen to focus limited fire-power on affordable rent instead of SO?

Don't get me wrong - I have no axe to grind for SO, and think that often people buy SO properties (or certainly used to) for the wrong reasons, because of delusions of "security of ownership", and in silly ways - e.g. buying a 25% share, with an interest only mortgage, and somehow believing that gave them some sort of ownership.

But I don't agree with your central premise that SO was a scam on buyers, for the benefit of developers, because of consistent over-valuation.