Shared-ownership home - Purchase of remainder due to difference in valuations?

SiBannister

Hi,

First-time poster, with a query that I hope someone else has come across before, or if not, that someone could give me some advice
on how to go about...

My wife and I have a 40% share in a shared-ownership flat in West London (initial total purchase price £249,500, inc. £12,000 for parking space, in Nov 2009), and we are looking to move into a larger house in the next year or so due to the soon-coming arrival of our second child. Our neighbours, whose flat is identical to ours, except the opposite way round, have just sold their (same 40%) share through the housing association, as the rules of our leases dictate.

The housing association's approved valuers valued their flat at £235,000 total price.
We had our flat valued some time ago by an independent estate agent who said he could sell it easily for £285,000 and we might get £300,000.

One difference between ourselves and the neighbours is that we have a parking space and they don't - this would probably add £12-15,000 onto the price as it was documented as £12,000 extra when we first bought the place.

So - we can extrapolate that if we wanted to buy the remaining 60% of our flat, then we would be looking at a total valuation of around £247-250,000.

Then we could sell it for the £285,000 for a profit of around £35,000 (minus any fees such as stamp duty, conveyancing, the housing association's selling fee etc, which should still leave around £25,000 in my initial estimate for profit)

With all this in mind, I have 2 questions:-

1. Does this all sound reasonable? Or have I missed something obvious that will stop me doing this?
2. In order to purchase the remaining 60% of our flat, we will need to find approx. £15,000 for the deposit & fees*, which we don't have. I would like to know if it's possible to borrow this kind of amount of money from a bank, and do a deal whereby there's no interest or monthly payments (because we just can't afford that) but we have an agreement in place where once we sell the flat, we repay the £15,000, plus a commission (to be negotiated, probably something like £1,000 or so, at a guess). Does anyone know if this is possible?

If number 2 is possible, then this should be a way of making approx. £10,000 for us, or more depending on the final sale price, which will go a long way towards the deposit for the next house...

* - we have approx. £15,000 of equity in our flat already, but will need 10%, i.e. £25,000 for the deposit for the whole-flat-purchase, plus some more, maybe up to £5,000 for the usual fees & stamp duty etc.


Thanks for taking the time to read this, and for any help/advice you can give.

Simon.

notanewuser

SiBannister wrote: »

Hi,

First-time poster, with a query that I hope someone else has come across before, or if not, that someone could give me some advice
on how to go about...

My wife and I have a 40% share in a shared-ownership flat in West London (initial total purchase price £249,500, inc. £12,000 for parking space, in Nov 2009), and we are looking to move into a larger house in the next year or so due to the soon-coming arrival of our second child. Our neighbours, whose flat is identical to ours, except the opposite way round, have just sold their (same 40%) share through the housing association, as the rules of our leases dictate.

The housing association's approved valuers valued their flat at £235,000 total price.
We had our flat valued some time ago by an independent estate agent who said he could sell it easily for £285,000 and we might get £300,000.

One difference between ourselves and the neighbours is that we have a parking space and they don't - this would probably add £12-15,000 onto the price as it was documented as £12,000 extra when we first bought the place.

So - we can extrapolate that if we wanted to buy the remaining 60% of our flat, then we would be looking at a total valuation of around £247-250,000.

Then we could sell it for the £285,000 for a profit of around £35,000 (minus any fees such as stamp duty, conveyancing, the housing association's selling fee etc, which should still leave around £25,000 in my initial estimate for profit)

With all this in mind, I have 2 questions:-

1. Does this all sound reasonable? Or have I missed something obvious that will stop me doing this?
2. In order to purchase the remaining 60% of our flat, we will need to find approx. £15,000 for the deposit & fees*, which we don't have. I would like to know if it's possible to borrow this kind of amount of money from a bank, and do a deal whereby there's no interest or monthly payments (because we just can't afford that) but we have an agreement in place where once we sell the flat, we repay the £15,000, plus a commission (to be negotiated, probably something like £1,000 or so, at a guess). Does anyone know if this is possible?

If number 2 is possible, then this should be a way of making approx. £10,000 for us, or more depending on the final sale price, which will go a long way towards the deposit for the next house...

* - we have approx. £15,000 of equity in our flat already, but will need 10%, i.e. £25,000 for the deposit for the whole-flat-purchase, plus some more, maybe up to £5,000 for the usual fees & stamp duty etc.


Thanks for taking the time to read this, and for any help/advice you can give.

Simon.

:rotfl: :rotfl:

bitsandpieces

SiBannister wrote: »

1. Does this all sound reasonable? Or have I missed something obvious that will stop me doing this?

Are estate agents known for their honest and accurate valuations? They say it will sell easily for £285k, but that doesn't mean it will.

Either way, I can't think of how you'd get the £15k deposit you'd need for this (and then there's the question of whether you could get the mortgage for the other share - and afford repayments).

SiBannister

Hi,

Thanks for the reply. I'm aware that estate agents do bump up their valuations to get you interested but that figure isn't especially high anyway - there's nothing similar in the area for less than £320k at the moment.

As for the mortgage repayments - we're currently paying mortgage on our 40% and rent on the 60%. I've worked out that the mortgage on all 100% will be more, but only be £100 or so per month.

And as for getting the deposit - that was the whole point of my 2nd question. Is it feasible? And has anything similar been tried before, i.e. approaching a bank and proposing something like this? A fixed amount of money lent for a reasonably-fixed short-ish time and repaid with a commission, which will be agreed beforehand, paid out of the profits of the sale.

Dan-Dan

SiBannister wrote: »

And as for getting the deposit - that was the whole point of my 2nd question. Is it feasible? And has anything similar been tried before, i.e. approaching a bank and proposing something like this? A fixed amount of money lent for a reasonably-fixed short-ish time and repaid with a commission, which will be agreed beforehand, paid out of the profits of the sale.

I have never heard of such an arrangment , ever in all my life , would be utterly amazed if you found such a deal

What happens if you cant sell for 6 months ? , whats the finanical institutions options?

I think you need to go back to the drawing board and have a rethink on your plans

bitsandpieces

SiBannister wrote: »

Thanks for the reply. I'm aware that estate agents do bump up their valuations to get you interested but that figure isn't especially high anyway - there's nothing similar in the area for less than £320k at the moment.

Do you mean £320k asking price or the price transactions have completed at? If the latter, there's also a risk that your flat might get a higher valuation.

As for the mortgage repayments - we're currently paying mortgage on our 40% and rent on the 60%. I've worked out that the mortgage on all 100% will be more, but only be £100 or so per month.

Also the issue of whether you would be eligible for the larger mortgage on salary grounds. If you are on a high-ish household income, it might be worth seeing what you could cut back on - to save up the £15k in a short-ish time frame.

SiBannister

Hmm. I suspected it might be difficult to convince a bank to do this when the housing market isn't exactly stable, and the bank would have to wait for us to find our next home too.

The housing associations valuations are kept low, I think, to allow others to use the shared-ownership method and get onto the property ladder.

Unfortunately, saving the £15k in the next 9 months or so won't be possible, not with a baby on the way, although getting the mortgage wouldn't be a problem - I've been OK-ed for up to around £280k already (we were going to move last year, but never did in the end)

Anyway, thanks for the replies. Back to the drawing board...