Why so many flats are sold as shared ownership?

movilogo

I have seen many flats/houses [mainly 1-2 bedrooms] are advertised as 25-50% shared ownership in RightMove.

Why is so? Who owns the other share of the property?

Is it possible to pay full price to "eliminate" other shareholder altogether?

stator

Usually some kind of housing association owns the other half. There are so many because new builds are given quotas, a certain proportion of their development must be 'affordable housing' which includes council houses and shared ownership and a few other schemes.

If it's advertised as shared ownership there is usually a maximum percentage you can buy to begin with, often 75%. You have to rent the other %.
You must read the lease very carefully, sometimes you can buy the rest of the flat later sometimes you can never buy the whole flat!

Personally I would avoid them unless it's your only option.

lindsloo

It's dictated by section 106, a condition of planning. In my previous life (career) we referred to it as the bribery act. In commercial projects the local authority might insist on a sculpture plonked on a roundabout or an updated traffic management systems in the close vicinity.

princeofpounds

It is normally possible to eliminate the other shareholder, but you normally wouldn't be able to do it on purchase. You would have to follow the 'staircasing' procedure, which varies from project to project.

stator

I've seen a lot recentlty where there is permanent cap of 75%. Possibly just in areas where there is a lot of concern about local affordability so they don't want to deplete the stock.

princeofpounds

As if holding onto 25% helps anyone...

The whole thing is a joke really. Ho hum.

moneyistooshorttomention

I've read various accounts of people going to purchase the other x% of their property and being charged more than its worth for it. It seems to go something along the lines of =

- you own 50% and decide to buy the other 50%
- the flat is worth, say, £200,000 and therefore you know it should cost you £100,000 to buy the other 50%
- you are told that the flat is apparently worth, say, £225,000 (rather than the £200k its really worth)
- therefore you have to pay an extra £12.5k on top of the £100k really due

Well - that's how I was interpreting problems people have been complaining about when they came to buy the rest of their home.

I must say that the fear of being overcharged deliberately for the remaining percentage when I came to buy it would put me off buying a shared ownership place to start with.