Shared ownership flat in London

RedRuby_2

I've recently expressed interest in a shared ownership flat in London.

It was advertised as being valued at £280,000 with a 50% share being sold for £140,000 and rent being paid on the other 50% share.

I've been looking to by in London for the past couple of years and have been saving diligently. Ideally I wouldn't want to buy a shared ownership property but this property caught my eye because I like the area and most importantly I thought I could afford it and hopefully staircase as quickly as possible to own the flat 100%.

Well here comes the dilemma, the Housing Association automatically revalues the property every 3 months even when in the middle of a sale. And it's due to be revalued. So all the provisional calculations I did for mortgage/rent etc could be null and void when it's revalued as house prices in London are rising.

This would also scupper my aim of staircasing as soon as possible as I'm afraid that prices would have gone up so much within the year and the property would be revalued so high that I won't be able to afford to staircase to 100% leaving me stuck.

So my dilemma is to buy or not buy this property
a) if the price goes up now
b) if the price stays the same now and hope that when it is revalued for the staircase that it's affordable
c) Forget the whole idea as it's inevitable that I'll be stuck and won't be able to afford to own the whole property in the future because London prices are crazy and the HA is always likely to over value it.

RedRuby_2

Anyone have any advice/experiences of this or staircasing to 100% in London?

RedRuby_2

Bumping bumping bumpin

alexdrans

RedRuby wrote: »

I've recently expressed interest in a shared ownership flat in London.

It was advertised as being valued at £280,000 with a 50% share being sold for £140,000 and rent being paid on the other 50% share.

I've been looking to by in London for the past couple of years and have been saving diligently. Ideally I wouldn't want to buy a shared ownership property but this property caught my eye because I like the area and most importantly I thought I could afford it and hopefully staircase as quickly as possible to own the flat 100%.

Well here comes the dilemma, the Housing Association automatically revalues the property every 3 months even when in the middle of a sale. And it's due to be revalued. So all the provisional calculations I did for mortgage/rent etc could be null and void when it's revalued as house prices in London are rising.

This would also scupper my aim of staircasing as soon as possible as I'm afraid that prices would have gone up so much within the year and the property would be revalued so high that I won't be able to afford to staircase to 100% leaving me stuck.

So my dilemma is to buy or not buy this property
a) if the price goes up now
b) if the price stays the same now and hope that when it is revalued for the staircase that it's affordable
c) Forget the whole idea as it's inevitable that I'll be stuck and won't be able to afford to own the whole property in the future because London prices are crazy and the HA is always likely to over value it.

I don't understand, if you can afford the house, why are you not purchasing it now?

Lunge

RedRuby wrote: »

Anyone have any advice/experiences of this or staircasing to 100% in London?

Even though house prices may be rising in London, shared ownership properties are slightly different, and in my experience, you never quite get market value.

Therefore, when it's time to revalue, you may find that the increase isn't as much as other non shared ownership properties.

Mortgage lenders are very cautious when lending on shared ownership properties too, and tend to down value.

RedRuby_2

alexdrans wrote: »

I don't understand, if you can afford the house, why are you not purchasing it now?

I can only just afford to buy it now at the price it was advertised as but it's in the middle of being revalued and I think in all likely hood the price will go up.

Hence my dilemma of whether or not I buy it. It will also scupper my future plans of staircasing ASAP as I assume that when it is revalued again the price will be even higher which I couldn't afford and keeping me stuck in my shared ownership position.

Twiglet12

We've just bought shared ownership in London. If you're trying to come up with a firm budget, check my thread re. extra stamp duty. We've been stung with an extra almost £1k bill at exchange for SDLT on the rent we'll be paying on the 60% share, which you may well also face with a 50% share in London.

Bargain_Rzl

Hi RedRuby,

I haven't posted on this forum for years, but happened to find your thread when I was browsing for people's experience of shared ownership staircasing.

Bit of background: I bought a 40% shared ownership flat in November 2006 and discussed it a lot on this forum at the time. Like you I hadn't been looking specifically for a shared ownership property but when I saw the ad for my specific place - a cheap 1-bed flat in the area I'd always wanted to live in, where on the open market I'd have been lucky to be able to raise the finance even for a studio - the numbers just made sense, having done all my research. I'm now in the early stages of staircasing to 100% (valuation done, solicitor instructed, remortgage application underway). My home still suits me and I have no plans to move immediately.

For what it's worth, I was very pleasantly surprised by the valuation I've just received - that is, it was lower than I had expected based on the percentage increase suggested by the Nationwide House Price Calculator, and lower than the asking-price for any other one-bedroom flat currently advertised on Rightmove in my postcode area.

In your circumstances, I would question the logic of going into shared ownership when you think you'd be in a financial position to staircase as soon as you were allowed to. You'd be paying conveyancing fees twice in quick succession, as well as whatever stamp duty is due. You're also buying at a time of record-low interest rates, something which (unless you have a mortgage on a very long-term fixed rate) could leave you very vulnerable if you can *only just* afford the numbers as they currently stand.

Shared ownership was right for me, because it put me in a position where I wasn't crippled by my outgoings, and now several years on has left me in a position where I can staircase comfortably and still not be crippled by my outgoings. To me you sound very nervous about being able to afford this home should any small factor change - don't forget your rent would rise with inflation too - and if I'd been as uncertain when I bought the initial share in my flat as you seem to be right now, I don't think I would have done it.

RedRuby_2

Thanks Bargain Rzl for your useful post. I've just been told that the property that I was interested in has been revalued and has gone up in price by 12%.

Of course I'm not happy about this as this means that I will not be able to staircase to 100% as soon as I wanted and realistically speaking with that kind of increase I don't think I would ever be able to.