Shared Ownership Flat

Poor_Leno

Hi guys,

I'm viewing a 50% shared ownership flat tomorrow which had 99 years on the lease from build in 2008. So, I assume it will have 88 left on the lease. I noticed the rule of thumb being to not let it drop below 80. The property itself looks like it'd be ideal for me in terms of getting some kind of ownership and avoiding the rental trap. I am going in with my eyes wide open of course, and having noticed that in this block of 3 storey flats (there's 30 flats in total across 3 buildings), there are at least 3 for sale. I suppose my first question to the agent will be to comment on the number of for sale signs that are up, as my inkling at this moment is that maybe if most of these flats all are awaiting a first lease extension, people are selling up before they fall towards the '80 year trap'.

But anyway, I don't know with how much trepidation I should proceed with. I'm cautious by nature anyway so I'm not going to get carried away with the viewing even if everything about the property is sound (new boiler was fitted last year). Obviously I need to be aware of the pending future cost i'd indefinitely be handed to regarding the lease, though I wonder how much leverage, if any, that might give me on the property price (85,000 for 50% share). I guess I need to be baulking at it with the lease situation, but at the same time I don't want to the estate agent to think i'm wasting their time either. Or, maybe I should'nt be caring about him. Probably.

See how it goes anyway, but thought I'd post this as its been on my mind, and I don't want to effectively fall into a trap, as I know costs can escalate with lease extensions, though I understand shared ownership leases are somewhat different.

I'm not desperate to move, but keen to soon (though I have not told any agent this). The area I'm in, rents are just getting ridiculous even on 1 bed places. I have just enough capital to make something happen soon (30k by end of this year), but also wary that at 39, time is ticking and the longer I leave it just means less time paying off any mortgage (and the less I can borrow aswell) oh and of course prices will only keep rising, especially once brexit is sorted out, the only reason prices have been flat lately is probably because of that uncertainty.

Tom99

Go and view it anyway and ask all the question you like of the EA but be wary that they are not legal experts so any questions re the lease will need to be verified from another source.
Also be aware that as it's a share ownership you will have no statutory right to extend the lease and you will be at the mercy of the HA/Freeholder.
There have been some horror stories on the forum about extending shared ownership leases with the HA apparently wanting the same price for an extension as if you owned 100% not 50%. Whether these stories are true or not I don't know.

Poor_Leno

The EA was able to provide details of the lease. He said as a 50% owner I would be expected to pay 50% of any lease extension. He said lenders normally get twitchy about leases with less than 70 years left to run. The freehold is owned by a housing association scheme. He said that prior to the point of extending the lease I should consider increasing my stake in the property and then extend the lease, as the cost of extension could be balanced out by getting an increase in share for a lower cost as the value of my share and the association's share would fall as the length of time left on the lease also falls. Well, that's ok of course if you can afford to do both. He couldn't tell me how much the lease extension would cost as apparently that is a negotiation between the leaseholder (i.e me) and the freeholder (association).

The current owners are not in a forward chain and are waiting to move upon sale. EA said there'd been two viewings already, both in private rented of at least 4 months but seller does not want a potentially extended period of delay. One thing I couldn't understand is that there's a fixed period normally whereby the developer (Sovereign Living) has a stipulation according to the rules of the shared ownership scheme that they list the property for an initial period of 8-12 weeks before it going to open market via an EA. This property has not gone through that process, I should have asked if was because they want a quick sale, but the EA pointed out while explaining this that they (EA) have an agreement with Sovereign to find a suitable purchaser because they just sold a property on the development (there was a sold sign up so that was true) that had previously been listed for the length of the initial period, and was then sold in a matter of weeks by them on open market. Of course, i'm thinking he's bound to say that, but I had the feeling they are looking for a quick sale if this is the case. I think I am going to email Sovereign about the legitimacy of those claims anyway, cos I just don't know if or how much BS he was talking. I might go for another viewing next week, as I did like what I saw inside. Just that the EA seemed fairly keen. More keen than me.

Tom99

I would say a fair amount of BS.