Is it worth renovating a shared ownership property?

JR1000

As a first time buyer, buying on my own, in London I felt like I was left little choice but to go down the shared ownership route in order to get on the property ladder.

So, I have just purchased my first property, a 50% share in a previously social housing studio apartment.

My question now though is whether it is worth investing in refurbishing a shared ownership property? This particular property is pretty run down and really needs a full bathroom overhaul as well as flooring replacing throughout.

Hypothetically, if I invested say £5000 in improving the property is that just going to be a wasted investment considering if I choose to staircase I will presumably be making the price I need to pay for the remaining share increase.

Also, in the case that I chose to sell the property rather than staircase would I see any return on that £5000? Presumably I would need the property valuation at the point I sell to increase by twice what I invested in the refurb as I only own a 50% share....?

If anyone has any advice or tips I would be extremely grateful.

Hoploz

You need to consider whether you are improving it because you want to live in nicer conditions, or because you want to increase the value.

Yes, you will be in a way handing over half the cost to the housing assoc, but at the end of the day, a couple of grand is likely to be neither here nor there when you come to sell - it'll simply be the difference between offers of two potential buyers, and it'll probably have increased in value by then anyway.

My first flat was shared ownership. Full value was 85k when I bought 70%. I renovated and staircased to full ownership, enjoyed it for a few years then later sold at 160k. I don't begrudge the little I spent that the HA got the advantage of, as it was worth it to me.

eddddy

It depends on the HA.

Some take account of "uplift" - i.e. the value you've added by doing improvements. (and you get to keep 100% of the "uplift".) But the majority don't take account of it.

Read the shared ownership agreement or ask the HA. (If they don't know what "uplift" means, probably assume that they don't take account of it.)

But bear in mind "uplift" refers to an increase in the property's value - not what you've spent.

e.g.
Spending £10k on improvements might result in an uplift of £20k (e.g. property's value goes up from £150k to £170k)

Or spending £10k on improvements might result in an uplift of zero. (e.g. property's value stays at £150k)

Also, repairs and maintenance may not count towards uplift (as opposed to improvements)

e.g.
Replacing a 'worn out' bathroom with a new one of the same quality might be considered maintenance.

Installing a new en-suite shower room (where there wasn't one before) would be an improvement

If you do go down this route, make sure you get HA consent in advance for all the improvements - otherwise you might lose any chance of benefiting from uplift.

pself

I think the key point is if it needs a new bathroom that will significantly benefit you in doing it. When I was shared equity I had the option to inform them of changes and they would get it assessed and it would be taken into account at the stage of buying them out. In reality I decided for the cost of the process and the cost of my bathroom being replaced that I would just let it go and share the increase in value with them for doing it up.

If I had been extending the house that may be a different thing.