Shared ownership..are we making a mistake?

broccoli25

We have found a pre-owned shared ownership property, and we are buying a 40% share. We have run into two unexpected and costly problems, and I wonder if anyone has had anything similar happen to them...

Firstly, the current owner apparently did some work to the property which cost him £10,000. So, he is selling his 40% share for £10,000 more than 40% of the total property value. The housing association says it is ok for him to do this, and there is no negotiation, so essentially we will be paying for about 42% but only getting a 40% share. The mortgage lender would not include this in the mortgage so we would have to pay cash for the extra.

Second issue is the lease is short - 76 years. When we buy we will need to extend the lease, as I understand each year we wait it will be more and more expensive. They say the house was valued taking this short lease into consideration. However, the housing association says we cannot 'make an offer' - that we can only pay the asking price, there is no negotiation and we would need to extend the lease.

As it seems to be the only way to get onto the property ladder for us, we are still wanting to buy...but there are so many unexpected expenses and we feel like we have no rights to dispute anything! Is this normally the way it works?

questionss

What did he spend £10000 on? Is it worth £10000 to you?

If you can afford to spend circa 200000 and can access 10000 extra cash is shared ownership really your only option?

I'd personally avoid shared ownership anyway but if you are buying a 500000 place on SO you surely afford a more standard purchase?

broccoli25

Thanks, our problem is that although we can afford a deposit as we have some savings, our income is not very high so we can only get a mortgage of around 150k - and even a two bed flat around here is 300+...and we have two kids, one is in school, etc. etc. we dont want to move too far away. We are currently paying extremely high rent so this seems a better option...the total property value is 420k and so we can afford a 40% share...

We will find out what work he did exactly to see if we feel it is worth it. Thanks!

Southend1

I wouldn't touch it with a barge pole. Consider compromising on the location so that you can buy without the complications of shared ownership.

PS there is no such thing as a "housing ladder"!

Tim_Bisley

Shared ownership aside I wouldn't go near a lease that short. Have you got lender prepared to give you a mortgage for a 76 year lease?

System

£10k extra on a 76 year lease does not sound good at all.

I personally would not consider it and look elsewhere at houses in budget that can be bought without shared ownership.

The_Earl_of_Streatham

I have a friend who is stuck in shared ownership. She's endured all the privations involved in buying the place but still has to pay rent and has built up only vanishingly small equity. Half the ownership, all the liabilities. As your final paragraph says, you have little say in what goes on financially.

To reinforce what Southend1 said, there is no property ladder, there are places to live. You can rent a place or you can rent the money to buy a place. Neither is ideal, doing both looks to me like madness (nothing personal, I use the word for dramatic effect).

If I'm renting the money to buy the place I don't want to be beholden to anyone else whose interests are very different to my own.

jbainbridge

Again ... what was the £10k spent on? and is is worth £10k to you?

If I spend £10k on a kitchen for example it doesn't necessarily follow that the house is worth 10k more.

You say the price is not negotiable ... surely that addon of 10k is?

londonbabe73

Walk away and find another 76 years is too short plus you'll pay 100% of the price of the whole lease even though you only own 40%

davidmcn

jbainbridge wrote: »

If I spend £10k on a kitchen for example it doesn't necessarily follow that the house is worth 10k more.

And even if it is, if the share you are selling is 40% then that's only £4k.

Windofchange

It is posts like this that makes me convinced the world has gone mad. 200 and something grand for 40% of a flat. One day we'll look back on this period and laugh. Well, not all of us.