Selling a FTBI Flat (2018)

dpr666

Hi all’

Firstly apologies if this has already been posted before, if so I’m struggling to find any posts!

A bit of background - I purchased a flat using the First Time Buyers Initiative (FTBI) in 2012. At the time I bought the flat at £115k and I have a mortgage on the 50% that I own and the other 50% is owned by the housing agency. I have been here 6 years and it has worked out great! Now I am looking to sell as my situation has changed and I am tiring of the city life.

I know the process of how to sell but my question is regarding the equity that has increased over the last 6 years. The property is now worth approx £165k (+£50k). The housing agency’s share is now worth approx £125k meaning there is an extra £40k of equity over what I owe them.

Do I keep this £40k equity to be used towards my next property as a deposit, or does the Housing Agency take 50% of this also?

It’s a massive deal for me and i’ll Give them a call tomorrow but I’m hoping someone on here has some experience. To me it’s the difference between having a £70k deposit for my next property or a £45k deposit!

Thanks I’m advance for any help!

mije1983

You owe 50% of the total value it sells for to the HA/government.

If it's worth £165k you owe £82.5k to the HA/government. How did you arrive at the £125k value if the property is worth £165k?

How much is left on the mortgage?

dpr666

mije1983 wrote: »

You owe 50% of the total value it sells for to the HA/government.

If it's worth £165k you own £82.5k to the HA/government. How did you arrive at the £125k value if the property is worth £165k?

How much is left on the mortgage?

Thanks mije,

The housing agency adds an interest/inflation percentage each year. Based on this I get a yearly statement which says that if I wanted to buyout (staircase) the other 50% from them then I would have to pay them half of £125k.

This is why I’m confused - if I had the funds I could just pay them off for £62.5k and then sell the flat for £165k myself pocketing the extra £50k equity accrued over the last 6 years.

If you think of it that the HA are getting their profit from the next tenant who will be buying the property at £165k it makes sense that all equity is mine to take towards my next property. Imagine if I did a lot of work on the flat, new kitchen etc. Why would the HA be entitled to 50% of the sale value if my own work had increased the flats value?!

I’m probably just being too hopeful but you never know.

Cakeguts

You only own 50% of the flat. Half of the value. So the housing association owns the other half. When you sell you get the money for the half you own and they get the money for the half they own. Whatever you sell it for they get half as payment for the 50% they own.

kingstreet

Here's a link to the website of the organisation which manages schemes such as FTBI, FirstBuy, HomeBuy Direct and now HTB Equity Loan;-

https://www.myfirsthome.org.uk/

HampshireH

If you chose to upgrade the interior of your house you would be doing so in the knowledge you only owned 50% and therefore would only benefit from 50% of any increase in value.

This will all be in the Ts and Cs of your purchase.

You can't earn on more than you own.