Shared Ownership - questions

TF03

Hi all,

Got a few questions about shared ownership that I would really appreciate some help with.

Current situation: Living in a leasehold maisonette which is now on the market. We own this outright as was purchased with cash from inheritance and savings. The property is in my partners name, thus technically making myself a first time buyer.
Firstly, I am confused with the qualifying criteria for shared ownership. We meet some of them, such as earning less than £80k a year together, but not others. Does the criteria only apply when buying a new property from the Housing Association or in general?

The property we have seen is being sold privately (not the HA). The current owners have a 70% share and Orbit Housing 30%.
The 70% is valued at £230k which with the sale of our property and a small £50k mortgage means we can get this easily. Nationwide have already said we can get a mortgage with them but we haven't asked them about a mortgage for a SO property as we hadn't considered it till now. Would this effect what they are willing to lend us, or even if they would at all?
The 100% is valued at £330k.
We may be able to stretch ourselves to a £150k mortgage but would be well out of our comfort zone which is something we really want to avoid but could mean we could buy outright at £330k and own 100%. Is this even possible in this situation or do HA's not like people doing this?
The reason why we are so keen on the house is that it ticks all our boxes, means we can live in the area we are already in and is affordable in our current situation. Our aim would be to staircase over the course of 5 years to 100%. Be it in steps or in one lump sum.
When staircasing, is there a minimum you have to do each time?
Could we for example, if we got better paying jobs (which is our aim over the next couple of years) could afford to remortgage to purchase the remaining 30%? I have read that when remortgaging you have to get the HO's approval?
Alternatively, we could afford to save each month to pay off in cash, say in 10% intervals over 5 years but I'm led to believe that each time you staircase there are fees etc involved so the less times you do it, the better?

Finally, when reaching 100% am I right in saying that the freehold goes into your name as if a "normal" house purchase?

Sorry if that's complete nonsense. We have never even considered this before, but have fallen in love with the house and want to make it work!

Cheers

TF03

Also,

Has anyone got any success/good news stories about SO? I've seen a lot of people who have had issues or problems but not a lot of good stuff?

Lunchbox

Hello We live in shared ownership and have various issues with our HA freeholder but these are the same as those who own 100% so it!!!8217;s a general leasehold issue not an SO one. We bought it a few years ago and are very happy with it.

With regard to your specific questions;

Not all lenders will do mortgages for shared ownership so you need to check. The amount you!!!8217;ll pay in rent on the unowned share, and any service charges will be taken off your affordability and reduce the maximum loan amount.

With regard to everything else, you!!!8217;d need to check the lease for this specific property, particularly with regard to eligibility as this varies from HA to HA and whether new or resale. Things to be aware of; some leases prevent staircasing to 100% (which would not only prevent you owning outright, many lenders won!!!8217;t lend on such properties). If you can staircase to 100%, it may remain leasehold. Remortgaging hasn!!!8217;t been a problem for us, it does require the HAs sign off (as they are part owners) but this wasn!!!8217;t an issue.

TF03

Lunchbox wrote: »

Hello We live in shared ownership and have various issues with our HA freeholder but these are the same as those who own 100% so it!!!8217;s a general leasehold issue not an SO one. We bought it a few years ago and are very happy with it.

With regard to your specific questions;

Not all lenders will do mortgages for shared ownership so you need to check. The amount you!!!8217;ll pay in rent on the unowned share, and any service charges will be taken off your affordability and reduce the maximum loan amount.

With regard to everything else, you!!!8217;d need to check the lease for this specific property, particularly with regard to eligibility as this varies from HA to HA and whether new or resale. Things to be aware of; some leases prevent staircasing to 100% (which would not only prevent you owning outright, many lenders won!!!8217;t lend on such properties). If you can staircase to 100%, it may remain leasehold. Remortgaging hasn!!!8217;t been a problem for us, it does require the HAs sign off (as they are part owners) but this wasn!!!8217;t an issue.

The affordability for the mortgage shouldn't be an issue as it's well less that what we have been told we could "in theory" borrow even taking into consideration the monthly rent which will be £200.
From what I've read on the property description, staircasing is possible to 100% but obviously I am in the process of checking this and whether the freehold is transferred. Orbit are closed today which is a pain.
I've seen as well that some of these SO situations require the owner to offer it back to the HA when they come to sell. I'll double check this also.

I've seen some of the horror stories about people losing money, negative equity etc. I can't see that happening with this property. It's in a sought after village in East Sussex, on a quiet close with lovely neighbors. No other HA properties close by. It's been invested in with an extension already added and has planning (although now expired) approved for a loft conversion to take it to a 3 bed, which is something we would do after owning it 100%.

TF03

I have also just answered my own question from Orbits own paperwork in regards to remortgage to buy the remaining share -
"If you are using the extra borrowing to buy all
of the remaining shares in your property we do
not need to approve the mortgage as on
completion the mortgagee protection clause
will no longer apply "

TF03

Does anyone else have any thoughts or advice?

HanPop

Hi, we have just purchased the rest of our shared ownership property (originally owned 75%) with a lump sum of money. The freehold is currently being transferred to us. I would check your lease which will state whether you can staircase to 100% and whether the freehold is then transferred to you. We have a mortgage with nationwide and I don!!!8217;t think it made much difference to them that it was shared ownership originally. I would staircase as little as often as we have had legal fees to pay, I think you need to staircase by at least 10% at a time.
Overall I have had a really good experience with shared ownership! It allowed me and my husband to buy a property with slightly less deposit than if it was full price and also we wanted a smaller new build which they don!!!8217;t tend to sell full price.

TF03

HanPop wrote: »

Hi, we have just purchased the rest of our shared ownership property (originally owned 75%) with a lump sum of money. The freehold is currently being transferred to us. I would check your lease which will state whether you can staircase to 100% and whether the freehold is then transferred to you. We have a mortgage with nationwide and I don!!!8217;t think it made much difference to them that it was shared ownership originally. I would staircase as little as often as we have had legal fees to pay, I think you need to staircase by at least 10% at a time.
Overall I have had a really good experience with shared ownership! It allowed me and my husband to buy a property with slightly less deposit than if it was full price and also we wanted a smaller new build which they don!!!8217;t tend to sell full price.

Thanks for your thoughts and experience.

Hopefully I can get a few answers to the questions tomorrow when Orbit are open.

Hoploz

My advice would be, if you can afford to buy without SO then do that. It will work out much cheaper in the long run as you won't have any rent to pay (the extra will go towards paying off your mortgage!) the fees when staircasing, legal costs, plus you'll be able to do as you please with no HA breathing down your neck. And sell when you want, to who you want.

I speak having bought 70% SO back in 1999 - it worked brilliantly for me as a single person. I was a newly qualified key worker and couldn't have bought 100%. I staircased to full ownership when my salary increased. Then bought a family house with my now husband.

Your situation is different. If you are already a couple, you might be considering a family in the future, in which case your income may drop and your expenses increase. Max out now for a couple of years and you'll have the breathing space later on, rather than hoping your finances improve in 5 years time. Obviously I'm making lots of assumptions here rightly or wrongly, but that's my view for you. Hope it's helpful

the_quick

I have bit of experience with Orbit and SO, mostly positive. Rent and service charges are very reasonable and never went much up, last year service charge even went down, tiny bit. No problem there.
When it comes to buy SO on second hand, most of the limitation disappear, only limitation is 80K you household earns - you don't even have to be first time buyer.
If you would buy 100% straight away - no limitation what so ever - you just buy property from 2 parties at the same time.
With buying the share, it is valuated by RICS surveyor and vendor can't sell for more than the valuation. You mortgage offer has to be approved by Orbit (it should be a problem at all) and each time you going to re-mortgage, they have to approve that deal.
With stair casing, I would do it in one go - otherwise each time you have to pay Orbit fees, solicitor fees and mortgage fees. I think minimum is 10% each time. It just make more sense to wait bit longer and do it just once. Not sure about freehold, sorry.