Buying a flat, but I think it's shared ownership...

mrhappyman

Hi everyone, would really appreciate your advice.

I made an offer on a 2 berdoomed flat in London. It's in a block of 16 flats, so not a large development - the local council says it's a former social housing flat though the mortgage valuation report states it's ex-local authority. The price is market rate, and just a bit cheaper than two other flats in the same block which sold last year for slightly higher, but that was at the peak of London craziness and they were slightly nicer cosmetically.

The issue is this: the flat was advertised by a fairly large estate agents (10 London offices) as normal, with basic details of ground rent and service charge. Upon enquiry from me, they confirmed that there was an 85 year lease remaining.

Following survey I got the mortgage in place and instructed a solicitor, however on searches he has come back to me to say it looks like the flat is a shared ownership, with the vendor owning only 50%. This was quite a shock as this fact was never advertised, nor revealed by the agents in any of our numerous chats or emails. The asking price is right for 100% ownership and it would be ridicilous if it were for only 50% - the agents agree and accept that and say they were apparently unaware of this, and will ask the vendor to confirm and respond to us.

Our solicitor has also formally asked the vendor's solicitor to confirm whether the vendor actually has bought the remaining share (known as "staircasing") and perhaps the paperwork hadn't been been updated. That was over 2 weeks ago and I'm getting nowhere with the agents or the vendor's solicitor.

I've set a deadline for next Tuesday for confirmation, on the basis it takes only a matter of hours for the vendor to get that request for confirmation and advise his solicitor or the agents as to the correct ownership. I'm beginning to think that this was a silly attempt by the vendor to try and sell 50% shared ownership for 100% price. I have a couple of friends who live in London and who are into property investments there and who agree that the asking price only makes sense for full ownership, nothing less.

I've incurred mortgage broker fees (luckily I cancelled the survey in time), as well as solicitor fees the bill for which I will receive once the matter is closed.

I was wondering whether anyone else has bee in this posiiton, and if they considered trying to recover their losses from the vendor and/or estate agent?

All advice gratefully received...

Hoploz

The seller is probably planning to do a simultaneous purchase of the remainder and sale. This can be done. However I think this could add to the length of time this all takes for you to buy, simply because I would expect the HA to sit on paperwork etc, but I am only guessing on that. The important thing is to make sure that the seller is already into the process, ie he has made whatever enquiries he needs to in order to do the necessary, and he has any relevant permissions.

I think two weeks is long enough to wait for a simple yes or no to the question "do you own the whole flat or just a percentage?" I would be putting a deadline on the answer and looking elsewhere pretty soon if no further forward.

mrhappyman

Hi Hoploz, thanks for the response. I didn't think of the simultaneous purchase and sale. In the circumstances, and as you agree, it shouldn't take very long for the seller to answer the question if he was bona fide. The flat is off the market so it doesn't seem he's pursuing other options either. Bit strange. But, you are right - I've set Tuesday as the deadline and will walk after that. It's just a shame I'd have incurred probably over £700 costs which will be wasted.

jaynebrat

Sounds like the seller owns 50% but the HA have said he can sell it as 100%. It involves a bit of extra paperwork as the HA's solicitors will need to be involved alongside your solicitors and the sellers solicitors, might add an extra few weeks on to the conveyancing process but I wouldn't be too concerned by it.

mrhappyman

Thanks for your response. I will check that with the solicitor..

Yttesfor

I had a similar issue - made an offer on the flat but didn't find out until I had already instructed a solicitor that only 40% of the flat had been owned. The flat was 'staircased' to 100% at the same time as I completed the purchase but the extra paperwork involved along with incredibly slow responses from the housing association that had the freehold meant the sale took over 6 months to complete and was very stressful.