Shared Ownership: Right of First Refusal

Jacob's_Dad

Hi everyone,

I know the pros and cons of shared ownership have been played out over and over here, and I am not interested in them. We have been fortunate enough to staircase from an original purchase of 30% to 100%, and are now proud owners. The catch, of course, is that when we come to sell, the HA has the right of first refusal.

What I would like to know is, has anyone else found themselves in this position and did the HA exercise its right? Ours 'is currently not', but that doesn't really mean anything.

Thanks in advance for your time and help.

Lunchbox

Check your lease - the HA almost always loses right of first refusal when you own 100%

libf

Lunchbox wrote: »

Check your lease - the HA almost always loses right of first refusal when you own 100%

Often it's a number of years after the staircase to 100%, so that the housing association can return it to shared ownership to maintain their stock.

Jacob's_Dad

Thank you for your replies and apologies for taking so long to reply...

Lunchbox wrote: »

Check your lease - the HA almost always loses right of first refusal when you own 100%

Unfortunately I don't think that is usually the case - up until you own the property 100%, the HA has the right to find a buyer within a certain amount of time. It is once you own it 100% that they have the right to buy it back, based on a market valuation that the owner has to pay for!

libf wrote: »

Often it's a number of years after the staircase to 100%, so that the housing association can return it to shared ownership to maintain their stock.

Yes, it's 20 or 25 years by our lease, I don't recall which. My concern was that they would want to buy it back to maintain stock, thus meaning regardless of how desirable our flat is we can't benefit from the competition of the free market. I was hoping to find someone who had staircased to 100% and had since sold and been able to use the free market and not sell back to their HA.

nomoneytoday

Why would it matter who buys the property, as long as you get a fair price?

selloptape

Hi hobrucker,

I had a 50% share in a Shared Ownership scheme for around 6 years which I sold back to the HA in 2014.

My contract stated that I had to market the property myself for 6 months (if I sold during this time they would not obstruct) then offer back to the Housing Association (and at this point pay for an independent valuation). They then took 4 months to decide whether they wanted it so had to tell the Estate Agent to stop marketing it until I knew what the HA were doing. They did decide that they wanted it and I had to then pay their conveyancing costs.

A lot of them seem to have different processes but mine was outlined in the contract. They had been flaky and inconsistent in the past so I also rang them and asked them to put the process in writing to save hassle later down the line.

Hope this helps,

Shenl0101

Just to quash some inaccuracies:


1. The right of pre-emption was an option in certain shared ownership leases that after staircasing to 100% the Housing Association had the right of first refusal to buy the property back at market value.


2. The right has since been completely abolished and no longer exists for any standard shared ownership leases - there are situations in rural areas where this will continue to exist.


See news feed on HCA website regarding the announcement.

Jacob's_Dad

nomoneytoday wrote: »

Why would it matter who buys the property, as long as you get a fair price?

There is a difference between what a RICS surveyor says your property's value is, and it's possible price on the market. If, for example, one were to get two or more interested parties for a property, it's possible the end sale price may increase due to a bidding war. This is removed when the HA can straight up buy it off you.

selloptape wrote: »

A lot of them seem to have different processes but mine was outlined in the contract. They had been flaky and inconsistent in the past so I also rang them and asked them to put the process in writing to save hassle later down the line.

That does help, thank you. Although the process for us is essentially reversed as far as I understand it, I will ensure we get in writing a clear explanation of the process and everybody's rights.

Shenl0101 wrote: »

2. The right has since been completely abolished and no longer exists for any standard shared ownership leases - there are situations in rural areas where this will continue to exist.

See news feed on HCA website regarding the announcement.

That's interesting, thank you. Where do people stand who have this already written into their leases; surely this would only apply to newly written leases?

I found it! 'This change applies to existing grant funded shared ownership leases as well as new leases issued from April 2015'. So essentially all leases no longer contain the pre-emption right, if they are homes funded by the HCA, and they are staircased to 100% - link here. Question is, are all shared ownership homes funded by the HCA to begin with?

danslenoir

My concern was that they would want to buy it back to maintain stock, thus meaning regardless of how desirable our flat is we can't benefit from the competition of the free market

.

There is a difference between what a RICS surveyor says your property's value is, and it's possible price on the market. If, for example, one were to get two or more interested parties for a property, it's possible the end sale price may increase due to a bidding war. This is removed when the HA can straight up buy it off you.

The problem with your position, and the removal of the housing association's pre-emption rights, is that you enjoyed a range of benefits by purchasing an affordable share in a housing association property and staircasing your equity. Why, therefore, is it right that you should be allowed to sell it freely on the open market, and in turn deprive others of the benefits you enjoyed by contributing to a reduction in housing association stock, without the housing association having the opportunity to purchase the property from you at a fair price to mitigate this?

Housing association properties should not be seen as investment vehicles, they should be seen as affordable homes. You knew the rules when you decided to buy one.

beeg0d

danslenoir wrote: »

.



The problem with your position, and the removal of the housing association's pre-emption rights, is that you enjoyed a range of benefits by purchasing an affordable share in a housing association property and staircasing your equity. Why, therefore, is it right that you should be allowed to sell it freely on the open market, and in turn deprive others of the benefits you enjoyed by contributing to a reduction in housing association stock, without the housing association having the opportunity to purchase the property from you at a fair price to mitigate this?

They still can buy the propety back at the market price just as before (Assuming a RICS valuation would give the true market price then a HA buying on the open market would spend exactly the same as if buying via a first refusal clause).

Shenl0101

Only the Housing Association could tell you however it almost certainly is grant funded as the vast majority of Shared Ownership social housing schemes are.