Shared Ownership Scam!

elfordio

I bought 25% of a flat from Bromford homes. They have increased my rent from £320/month to £420 month in 4 years, over 30%. They tell me this is because there is a clause in the small print of the lease that allows them to raise rents by inflation + 2%. Clearly this is unsustainable to anyone for a long period time as it increases exponentially.


When I challenged them about this they said the Govt. tells them how much to raise the rents by. This is a lie! They are pricing me out of my home and are now threatening me with court action, ccjs and bankruptcy.


My advice would be to everyone: NEVER ENTER INTO A SHARED OWNERSHIP CONTRACT WITH BROMFORD HOMES!!!!!!!!

ihatemyhouse

wait till you try and sell it, my mate has one, cant sell it, as the people who want to buy it arnt "local" enough for it

with a other company down here in cornwall

maninthestreet

When you bought your home, did your solicitor point out this clause in the lease agreement?

elfordio

No he didn't, and he was recommended by Bromford Homes. They have phoned me and are just hiding behind that clause in the lease. They basically said I have to keep paying the increase or they will start repossession. I can't sell as I have negative equity (bought in 2008) plus they charge a fortune for it and you have to go through them.

maninthestreet

Inflation plus 2% over the last 4 years is not 30%.
What exactly is the wording in the lease agreement in relarion to rent increases?

elfordio

£320/month to £420/month I think you'll find that's just over 30%. The inflation rate was around 5% until this year and then you add their 2% on top, then you take that total and multiply it again the next year etc etc. Unsustainable!

Amatheya81

I'm in the same position, HA keep raising the rent and the service charges (combined they increased by £100 in the first year) and I'm still in negative equity as I bought at the height of the housing boom.

There's not a lot you can do though. The HA contracts are very heavily weighted in their favour and as most people buying SO are first time buyers we usually don't realise just how stuffed we are until after we've sighned the contract.

Your best bet is to hold on a little while longer as house prices are rising steadily so with any luck you'll be able to jump as soon as you hit positive equity, this is what I'm doing.

agrinnall

I would consider challenging that rate. The information I have found points to a ceiling imposed by the government on social housing rent increases of RPI + 0.5% (and in some places an additional £2 per week is mentioned). Take a look at this thread - it's likely to be confusing (it confused me), but it might give you some pointers.

http://www.consumeractiongroup.co.uk/forum/showthread.php?384612-Clarification-of-maximum-rent-increase-a-housing-association-can-apply-for

poppy10_2

agrinnall wrote: »

I would consider challenging that rate. The information I have found points to a ceiling imposed by the government on social housing rent increases of RPI + 0.5% (and in some places an additional £2 per week is mentioned). Take a look at this thread - it's likely to be confusing (it confused me), but it might give you some pointers.

http://www.consumeractiongroup.co.uk/forum/showthread.php?384612-Clarification-of-maximum-rent-increase-a-housing-association-can-apply-for

That's not really relevant. That link is about rent for social housing tenants. The OP is an owner-occupier (albeit of quarter of a house). Plus Bromford Homes is a private for-profit business, not a housing association. They can charge whatever they like - if the OP agreed to it in the lease agreement.

agrinnall

Yes, you're right, I think I must have read too quickly and taken in the post above mine, which is about a HA tenancy.

Swafe

elfordio wrote: »

No he didn't, and he was recommended by Bromford Homes. They have phoned me and are just hiding behind that clause in the lease. They basically said I have to keep paying the increase or they will start repossession. I can't sell as I have negative equity (bought in 2008) plus they charge a fortune for it and you have to go through them.

I wonder why he was recommended by Bromford Homes? Clearly a little backhander to keep schtum on such clauses where any worthy solicitor should point them out, might even have worked for them or a connected company.

In all honesty, you should try and contest the rise, if it is legal and as written into the contract you are effectively screwed (sorry)

A lot of these HA contracts tie you in somehow, as mentioned above when you come to sell they might make you sell through them and take a big chunk and only sell to who THEY want to (as they have the controlling share) this means they might make you accept a lower offer to a 'better' buyer so they have less risk of them defaulting on the rent payments.

My mate has been screwed over by one of these, another way they get you is that they effectively can prevent you from selling in some cases, especially negative equity, you class the house as a home, they class it as an asset - my friend paid 100k for a share of her property, fell into negative equity and decided to advertise for 90k, no offers, dropped it to 80k, no offers, dropped it to 75k and got someone with the money willing to pay so they could finally get out.... HA blocked it as by selling their share for 25% less than they paid, this would mean their investment would also be devalued by 25%, they effectively said sell it for 100k+ or we wont let you sell - this in the current market isnt possible so they have they are stuck until the house prices recover to 2007 levels (could be years) and then can still only sell on their terms. All this time still paying them a massive and increasing rent to them of course!!

My advice would be to get out, if you can, some of these HA firms are really bad and should be banned, clearly some are worse than overs but I dont trust any of them now!!!