Shared ownership

missvp

Hi all

In a predicament and I don't know what else to consider.

Looking at shared ownership houses as in my area these are all I can afford after a relationship break down. Renting for now isn't an option due to the prices in my area (almost double that of a mortgage!!!) and house prices are just silly. I also can't move back in with parents long term due to space, and friends have either no room due to children or are still at home themselves. I'm at a loss.

My (ex) partner will keep our current property and will buy me out which is in process (can't afford to buy him out as he put in a bigger deposit etc).

I have applied for SO housing stating relationship breakdown and also that I will eventually be off current mortgage prior to completing on any property (there shouldn't be any disagreements between me and ex as it's still relatively amicable). Will this mean that they will reject my application (I've found two in my area which are the only I can afford), or will they take into consideration my situation? Also, if I made an offer to the estate agents will they accept it whilst I am awaiting application, or will they say no?

I just want this sorted so I can stop feeling so stressed and begin to move on

missvp

Anyone at all?

andybenw

Shared housing in my opinion is a scam.

You would be buying leasehold as opposed to freehold. (Leasehold is effectively a long term rent). Typically 99 years.

If/When you come to sell later down the line this can cause huge problems. Two that come to mind are you will not be able to set the sale price by yourself, and the lease will be shortening every year you are in the place.

missvp

Thanks Claire.

The least is still about 73 years and clearly this would not be a permanent property! I also am well aware that the housing association set the value (usually at market prices) and I will only take any equity etc for my part of the share should I choose to sell ie 30% equity if that's what I bought. I realise there maybe other fees to consider too, but rental prices here are extortionate compared to even a full mortgage or shared ownership (and as you say at least I'm not chucking all my money away, as I would be with renting). The only issue is that I don't have a big enough deposit and can't get a big enough mortgage for normal houses around here.

My aim is speak to the estate agents and housing association first thing Monday. The estate agent is aware I am very interested and want to move forward with an offer. I'm slightly confused though as I've spoken to a couple of estate agents and one said you make an offer and then getting approved by the housing association is part of the process (which works for me as then I'm less likely to get trumped by another already approved buyer!). The other said no you have to be approved first, which causes issues as I'm not sure how long it takes and I could be trumped by an already approved buyer. They did say just a simple yes I should be eligible is ok to get the ball rolling.

I feel so stressed because at present these are my only options, and I've no idea where to start, or what to do should it not be possible

Please_change_username_2

A 73 year lease is OK, if you take a 25 year mortgage there's still 48 years left after the mortgage is paid off. But the longer the lease the better, obviously.

However if you’ve owned the property for at least two years you are entitled to demand a 90 year extension to be added to your existing lease from your freeholder. You'll have to pay for it but the law's on your side. However I'm not sure how this would work with the Housing Association and shared ownership.

Best to ask them.

Good luck.

Elfbert

I think some SO properties can have odd clauses to do with lease extensions - OP, ensure you ask about this before committing any money! And when you view the property try to ask the seller why they haven't extended the lease - they may be able to tell you if the HA have been a PITA (or they may look at you blankly, not having a clue what you're asking about!)

Lots of people are down on SO properties, but I live in one, and it's fine. I've had money back from my service charge every year, this year my rent and service charge actually went down, and there's a healthy market in buying/selling SO flats in my block. I know they're not all good, but they're not all the horror that some people on here warn of! Best of luck to you.

missvp

Thanks for the replies.

Elfbert - what was the process when you bought? Were you already approved for shared ownership or was applying and being approved part of the offer process?

I will certainly ask about the lease and extension and what impact this has. If I did get a shared ownership properly it certainly would end up only for 3-5 years max until I'm back on my feet.

Either way this situation sucks and it's adding a huge amount of stress to what is an another already heartbreaking situation

csgohan4

clairewych wrote: »

Wow Andy way to be unhelpful when OP is clearly feeling down on their situation already! -Where in his post is he judging or 'rubbing' it in?? These are facts. Sometimes the truth hurts the most, there's no point in coating it with sugar and hoping for the best. This is a large investment that needs the OP to be full informed. Not to be tree hugged.

I'd rather have an SO property and pay £600 to a mortgage and £200 in rent than give £800 to a landlord that I most certainly won't ever see again. - Renting gives you a roof over your head, so you are getting something

2 points. At the end of the day the MARKET typically sets the value of the property, regardless of what the asking price is. A housing association isn't going to sell it at less than it's worth because it's a business and the house is an asset. - You run the risk of never being able to buy the other bit you don't own because of market forces rising faster than you can save/earn

If OP buys a house with a 90 year leasehold and sells 5 years later with an 85 year lease, this is barely going to be a problem. Nobody buys a proprty intending to live in it for 80 years. Perhaps let's rephrase your advise to, be wary of buying properties with short leaseholds because it might be easier to avoid the hassle of renewing. - Why buy a house if you don't intend to live in it long term, more so if it's SO?. It is not the time you spend but the lease that is a problem




OP with regards to your questions you would need to read through the FAQs of the association you are applying to. Each will have its own rules. I'd give them a call and express an interest in those two properties and find out how long they expect it will take to approve your application. I would keep pressure on your ex to sort the paperwork ASAP, fingers crossed the process is smooth for you.

I am sure you aware that the shorter the lease, the more expensive it becomes to renew the leases, especially below 80 years. Also some mortgage companies refuse to lend below a certain point.


If you intend to buy a SO and run the lease down, that really is money down the drain. Noone will buy your share off you with a very short lease. It will cost you a pack to increase the lease.


I am also sure you aware SO exposes you to the same costs as a full home owner for leasehold. Hence service charges and maintenance fees that HA notoriously ask for.


We're not talking about a cracked bathroom tile but re reroofing, exterior painting and replacing windows/lifts.


These costs are shared amongst the leasholders and come in the thousands if not tens of thousands.


So whether you own 50% or 100% you will pay your share as a full home owner, so no discount.


Not to mention you can't cry to a landlord if you need a new boiler or new cooker, because you have to sort it out yourself.


There is no shame in renting and the culture today of must owning a home is misguided. More so for Shared ownership..


I also agree it is a scam tbh.


Here is a nice summary of 'factual' issues with SO: https://www.cml.org.uk/news/news-and-v/626/


Don't forget applying for SO also has costs such as legal fees, mortgage fees e.t.c

Pixie5740

I don't necessarily think SO is a scam if you plan on living there long term and can and are planning to eventually staircase to 100% if you can't buy in the traditional way. It gives you a bit more security than renting especially in areas of high housing demand.

I'm not sure I'd want to buy anywhere though (SO or not) if I only planned to be there for 3-5 years. In those circumstances it might actually work out cheaper to rent once you've looked at the full cost of home ownership.

SO properties can be more difficult to sell on because you have a smaller pool of buyers compared with other properties on the market since your buyer will also have to fit the HA's criteria. Add to that a 73 year lease which will really need to be extended before you can sell in 3-5 years and you'll limit your pool of buyers even more.

Whether or not you are eligible for SO whilst still named on the deeds for another property whilst you and your ex sort out your financial situation is something only the HA could answer. Then there's the question of trying to get a mortgage whilst still named on another.

missvp

Csgohan4, thank you for replying and showing the other side of the coin of which I will take into consideration.

Renting is not an option- because of where I live the prices are extortionate in a very competitive market.... The cost of rent would be nearly double what a mortgage would be (if I could get one big enough!). It's actually not a sustainable option.

Regarding maintenance etc, do you then have to go through the housing association, rather than doing it yourself? And will they want to make changes regardless of whether it is needed ie new windows as you pointed out? The property I have looked at does require some work (painting, new carpets), but I think the onus is on the buyer to undertake these, and so I can do as much or as little as I like. have I got this wrong? I had a friend who lived in shared ownership and she never had issues with then suddenly undertaking maintenance and charging her for it?

From what I understand you have to sell through the housing association but if it doesn't sell within a certain time frame you are welcome to open it up to the market?

The property I want to consider is actually very, very good value for what it is, but of course I will ask the question why. I can staircase to 100%, I do know that much.

I just don't know the process to be able to apply and be approved. Whether I have to make an offer first, or have to be approved first.

The only other option is to stick out being between the property I own with my ex and parents until I find somewhere. But that of course could take months and months ��

Pixie5740

You're comparing apples with oranges. It's not as straight forward as your mortgage payments will be less than rent. For starters you'll be paying mortgage + rent for shared ownership. Then you have to factor in SDLT and the costs of buying and selling so there a few thousand for you, plus the cost of extending a sub-80 year lease. That's before you even get into maintenance and repairs.

If you can't afford to rent a 1 bedroom place then look at a house share or being a lodger. There are other options available.