Shared Ownership Mortgage Advice

davida1992

Hi all,

I am looking for some honest advice here regarding the purchase of a shared ownership property.

There is an area of new builds in quite a popular and rural location. The majority of the properties are 4 and 5 bedroom houses with 4 affordable houses which have 2 and 3 bedrooms.

The property is shared ownership at 50% for £72,500. I was explained that I can then staircase my way up and that I do have the option to buy the full 100% after the initial purchase at any time after the initial purchase.

The other 50% is paid for as rent to the housing association. This all makes sense so far and sound like a good idea to get onto the property ladder.

My concern came in with the property being a leasehold, I was under the impression that most new builds are actually leasehold properties, so I never really though much of it. After reading some horror stories online about the "leasehold scandal" it appears that there is the potential for the land rent to become very expensive very quickly. I have since emailed the housing association (who are selling the house) and they explained that they do NOT charge land rent and that we will always have the option to buy the leasehold at turn it into freehold if and when we hit the 100% ownership mark.

She did explain during our visit to the property today that they charge a service charge for the upkeep of the area, grass cutting etc, I guess this is normal?

Does this all sound normal and correct? Am I missing something here? Would you buy a shared ownership property on leasehold with the above info? Or are things likely to spiral out of control?

I am thinking of worst case scenarios here I am sure, but in the event that the housing association decided to sell their 50% and the leasehold to another company, would the next company then be able to start charging ground rent or would they have to abide by the same contractual terms in place with the original housing association, which I assume will state that a ground rent will not be charged? (I haven't seen contracts at this point, we are still at the very early stages, I am just looking to get ideas/opinions and advice if possible).

Thanks in advance

haras_nosirrah

Hi. I am a shared ownership mortgage specialist and have been for 10 yrs. All shared ownership houses are leasehold and you automatically get the freehold if you get to 100% ownership.

poppy10_2

haras_nosirrah wrote: »

All shared ownership houses are leasehold and you automatically get the freehold if you get to 100% ownership.

This is not true
OP look here for more info
https://forums.moneysavingexpert.com/discussion/5080356/shared-ownership-leasehold-that-when-100-is-a-freehold

haras_nosirrah

All shared ownership properties are leasehold for both houses and flats

The housing association has told the op they will get the freehold on 100% ownership and in my experience this is the case with shared ownership houses.

Having completed 2,000 shared ownership transactions over the last 10 years all shared ownership HOUSES I have ever worked on have converted to freehold on 100% ownership. The exception is rural lease exception schemes however these cannot be staircased above 80% hence why no freehold available.

As with everything always double check and ask your solicitor to check the lease and clearly explain to you the situation in regards to the freehold.

davida1992

From my understanding so far, I am able to staircase all the way to 100% ownership, but once the 100% ownership has been reached, then we have the option to buy the leasehold on the property from the housing association. From what I appear to have been told, once we hit 100%, the property will remain leasehold until we buy that out, it will not automatically convert.

Does this sound like it could be correct? I am emailing them at the moment to try and clear things up, I have also had the contract sent over for the property, but I don't understand a lot of the terminology and it is 50 pages long!

Thanks

haras_nosirrah

Best thing to do is ask your solicitor as they will have sight of the lease

lindens

davida1992 wrote: »

From my understanding so far, I am able to staircase all the way to 100% ownership, but once the 100% ownership has been reached, then we have the option to buy the leasehold on the property from the housing association. From what I appear to have been told, once we hit 100%, the property will remain leasehold until we buy that out, it will not automatically convert.

Does this sound like it could be correct? I am emailing them at the moment to try and clear things up, I have also had the contract sent over for the property, but I don't understand a lot of the terminology and it is 50 pages long!

Thanks

This is exactly what we did with our shared ownership house, in exactly the order you write

davida1992

lindens wrote: »

This is exactly what we did with our shared ownership house, in exactly the order you write

How did this work out for you if you? Did you have any issues? Was buying the leasehold once you reached 100% difficult or expensive beyond what you suspected?
Thanks

lindens

davida1992 wrote: »

How did this work out for you if you? Did you have any issues? Was buying the leasehold once you reached 100% difficult or expensive beyond what you suspected?
Thanks

super easy, no surprises, i cant remember the exact price of the lease but it was less than 4 figures from memory. we did it all at the same time and added the cost to the mortgage when we went up to 100%
we then sold the house 2 years later, just had to get a letter in writing from the HA that they didnt want to buy it back