How can I get rid of my shared ownership property?

Gary1885

In June 2015 I moved into my shared ownership flat, having purchased a 50% share at £47,500.  I was the first occupant despite the building being two years old - a fact I now realise is down to several defects with the building which the Housing Association has always denied and kept under wraps.

My initial Shared Ownership mortgage had a terrible APR (around 4.5% I think), but was the best I could do at the time.  In 2017 I left my full-time job in favour of self-employmen.  Unfortunately, the first mortgage was a 3 year deal, so I was unable to come out of that without a severe penalty and before they realised I had just become self employed.  This meant I had to go onto the variable rate from around June 2018, when I was still fully self-employed.  The APR ended up at 5.69%.

At that point, I looked into either a product transfer (still a higher APR) or staircasing to 100%.  I was unable to staircase as my income was not considered high enough, but a product transfer would lock me in for a further two years into a product I wasn't happy with; the APR still being around 4.5% from my existing lender.

In January 2019 I obtained a part-time job to supplement my self-employed income, but this was only just under £17k a year, so I only had that and self-employment for which I still didn't have sufficient accounts - many lenders wanted 3 or at least 2 years and it seemed I would be pushing it.

Eventually I relocated entirely and moved in with my girlfriend, which happens to be closer to where my self-employed work takes me (I'm in a band and earning pretty good money for 2 nights a week).  This enabled me to obtain a full-time job which has been faily flexible.  I finally got into a position where I could sell up and get rid of the place. With still only around £3,000 equity in the mortgage and the service charge and/or rent increasing every year, I was keen to get rid of the place. However, there had been ongoing problems with the building throughout this time.  The roof had leaked on a number of occasions, with water coming in through the balcony of the above property.  This had never successfully been repaired and the Housing Association were always very slow to react to such things.  I reported the issue in October and was still chasing the Housing Association up in December.  After Christmas, I continued chasing them and it wasn't until around late February that things finally started to happen.  Work was only completed in the second week of March, after which I was able to have the property valued.  The valuation came in at £62,500, so I finally went through the process to put the property on the market.

Then - lockdown happened!  I'm now stuck with the place until after this happens, and there's still no guarantee that it's going to sell!  Following an out-of-the-blue offer last week from someone who thought they were buying the full share, I reduced the asking price to £60,000.  There is nothing in the rules about not being able to sell for less than the asking price/valuation, although I'm not allowed to go higher.  However, my fear now is that property prices may crash.  If I sell the flat at the price I originally paid, after fees I will walk away with absolutely nothing - as though I'd just rented for 5 years.  So much for the idea that I'd be investing in my future in some way!

Currently, I'm paying £261 per month on my mortgage.  Only around £60 of this pays off the mortgage balance, with the rest being interest.  Would I be better off doing a product transfer, even though I may sell?  As it's so unpredictable, I really don't know.  The Housing Association have had the audacity to say they won't buy it back, even after causing me 5 years of total Hell with the number of problems with the building, lack of maintenance, tripling the service charge, allowing neighbours to fill the car park (including my space) with clapped-out cars and even have council tenants of the adjoining houses assault me when I confronted them about the parking situation.

So, do I risk locking in to a new mortgage deal with rates still being low?  Do I try to take legal action against the Housing Association or will I not have a leg to stand on?  Alternatively, do I stick with the mortgage as it is and just keep paying that high interest?  I thought of staircasing and then selling the full flat, but that's going to be worse; people will perceive £130,000 for a 2 bedroom flat in that location to be a little on the high side, even though it's the best in the area.

Help!

Gary1885

I realise that's a bit of an essay, but I was trying to give all the information so that I didn't waste people's time!  It is a bit of an impossible situation to be honest, but here's a brief version:

1. I own 50% of my flat and want to sell my share for £60,000.
2. I put it on the market a couple of weeks before lockdown was announced and will owe PurpleBricks £1,300 come October.
3. I have very little equity in the property as - through a necessity to continue on the variable rate - I have been paying a very high interest rate.
4. Nobody knows what's going to happen to the housing market and I may end up having to sell for close to the initial purchase price.
5. If I sell for the initial purchase price, I will walk away with absolutely no money.  I do not want this to happen, but neither to do I want to continue paying a mortgage - with interest - on a property I don't live in and can't rent out.
6. I feel that the Housing Association is largely to blame for the situation I find myself in, due to their incompetence in dealing with important repairs which they took years to resolve.  I could have sold up last year if it had been sorted on time!
7. PurpleBricks seem to think a video tour will help, but would you buy a house based on a video of it?

I would appreciate anyone's ideas as to what I should do, because I'm at a complete loss!

theartfullodger

Apologies for being blunt but I can't see prices doing anything other than falling for a bit: (I too am trying to sell a property).

Suggest you declare yourself bankrupt & start again with a clean sheet. Shared ownership has had loads of critics for many years.

The myth that property is a sure-fire bet has always been wrong, I've seen it happen significantly during my lifetime (aged 72).  And I had a (for the time large..) mortgage in Thatcher's time, when Bank of England interest rates hit 17% (1979) having been "only" 7% 2 years earlier.  Believe me, that was painful, even with two decent salaries at the time.

Best wishes, hope things improve, health being IMHO more important than money. Stay safe everyone.

[Deleted User]

No, I would not buy a house on the basis of having seen a video.  You don't want to walk away having made no money on the property yet you don't want to continue paying the mortgage on a property you no longer own.  Given the state of the economy I think you will have to pick the lesser of two evils because I can't see you getting both.

numbercruncher8

Where abouts is the property? 
It may not be a surefire thing that prices will go down. How is it priced relative to the local market and what is the competition? 
Not sure a video tour makes much difference, but if it's doesn't cost any extra why not?
Is it possible to make any improvements to it to make it more sellable? If you don't live there, you could give it repaint and recarpet for instance and clear it out.

YoungGentry

I have had my SO property now for 4-5 years and understand your frustrations. Let me break down your statement.

1st. The Housing Association are head lease, they agree the headlease, and a managing agent(this can be the HA) will be appointed to manage repairs, maintenance.  When the Housing Association obtain head lease potentially a year after completion of the build they may survey the property, and as such may not be aware of defects.   You had the property surveyed, legally you accepted a property, the Housing Association is not at fault, you would never win that argument.

2nd.  if you are having problems with management, raise a complaint with the HA and go through their procedure. If that doesn't change the problem, then go to the Ombudsman.  Or fix it yourself.

3rd The HA are under NO obligation to ever buy back your proportion, either you sell, staircase, or you hold the property

4th If you have reduced you Loan to Value, then remortgage at a lower rate.

5th If you are unable to make overpayments, staircasing wouldnt be feasible for you. 

Suggestion:  Don't sell.  Remortgage, you after 5 years you have equity in the property.  Catalogue the issues, raise a complaint to the HA through the proper procedure.  Fix the issues that you can.  You aren't a renter, you have to fend for yourself with some things.  Get off purple bricks 1300 is a ridiculous amount of money of money considering your property value.  I know you hate your HA, most are awful, I have had 6 officers in 5 years.  But always remember this, no house or flat is perfect, they all have issues, fix yours and you will be golden.

letsbetfair

Sorry you're in a tough situation but - unless I'm missing something - not sure why you'd hurry to declare bankruptcy. You haven't had the property on the market for long at all before lockdown. If what you want to do is to sell it ASAP, seems worth trying to sell after lockdown rather than getting tied into another mortgage or similar. If you can drop your asking price by 20% and still pay off fees and mortgage then that gives you a decent amount of wiggle room. If you're struggling with mortgage payments now, it's worth discussing options with the bank.
If it makes you feel better, I sold a shared ownership flat about 10 years ago (out of work, and needed to move for a job). I'd been there just under 5rs and I certainly didn't make money on the selling price - lost something like 2 grand after fees. The move went well, and I'm now in a better financial situation - though I've still not made any money out of house price rises!

GDB2222

You're unlikely to sell with just a video, but it will help to get people interested.  The place is empty, so unaccompanied viewings can take place, with suitable distancing. (You or the agent leaves the door open, the viewers go inside and have a look round. Or, you give them the key and they let themselves in.)  Clear any valuable gear out first.

I'm not sure why you can't let it?  Is that an HA rule? Clearly, if you're not living there and cannot let it, you have to sell it.

So, the only questions are how much can you get and how best to market it.  My advice is to price it keenly (unless there's an HA rule about that?). If you under-price it, you'll have competition between the buyers. If you over-price it, nobody will be interested. It's a bit like one of those ebay auctions that starts at £1.   

Should you hang on for a year or two, paying for everything, in the hope you'll get a better price then? Possibly, if you could let it out during that time, but it is an expensive gamble if you are keeping it empty.

Most fixed rate mortgages incur an early redemption charge. It is bonkers to worry about shaving a bit off the £200 a month interest but land yourself with a £3000 early redemption charge.

Gary1885

OK, thanks for all the responses.  I feel I need to clarify a couple of things:
1. I'm not struggling to make the payments; they're only £261 per month, but £201 of that is interest and I just don't want to be throwing that amount of money away every month.
2. If I do a product transfer, most have an early settlement charge which could work out at roughly the same amount as the extra interest I'm curently paying, so I'm just giving them extra money in a different way.  There are limited shared ownership mortgages available, with most having higher interest rates (although I've seen some cheaper over the last couple of months).
3. The Housing Association were solely responsible for the latent defect in the fabric of the buidling.  I have spent the last 5 years calling them.  The Ombudsman is a toothless organisation who exist only to listen to you and then do nothing else.
4. I really don't want to drop the asking price as I don't have money to put back in to cover the losses.  Before moving there, I had been privately renting and I must say, that was less of a waste of money than this place has turned out to be.
5. I have no option but to sell.  Why would I keep the flat?  I have relocated and live 150 miles away from the place!
6. To answer the question of where it is, it's in Rainhill, Prescot, Merseyside L35... I'm sure you'll find it on Purplebricks and find that it doesn't need any work doing!  Yes, the bed is hideous, but it was a freebie when I moved in and doesn't come with the flat! 

GDB2222

It looks good in the photos.

MovingForwards

Welsbey Court?

Only things I would say is not having floor sizes and some of the photos have been taken with a wide angle / fisheye lens 'bending' the walls and making it difficult to judge the size of the room.

When starting a mortgage, hardly any of the loan is paid off, which is why you are not seeing any equity from it. This is why it's not advisable to buy anywhere unless you are going to live in it for 5+ years.

Renting / buying keeps a roof over your head.

Options are keep it, but don't do anything aside from pick a fix from your lender (as you could have done when the original fix ended) and make overpayments (lenders expect you to live in the property) 
Or

sell, get it over with and move on, what's the point hanging on to it if you've made a life elsewhere?