Shared ownership problem

Tha1_n

Hi guys hope there's a solution out there but here goes:

I currently have a mortgage on a flat which I own 50%. I have equity of around 80k in the property and have 86k left on the mortgage.

I am now looking to relocate and buy a family home but my borrowing level currently isn't as high as I would have liked.  The issue is that I would still like to keep the flat as I believe the value of it will go higher in the future. 

The terms of the shared ownership means that I am not allowed to rent out my flat but I was wondering if the bank would allow me to change my mortgage to a buy to let or would they be on the ball with this? Am I right in thinking that the only benefit of changing it to a buy to let mortgage is that it would enable me to increase my borrowing power because they would consider my additional rental income as well? Are there any other advantages? Any suggestions/solutions would be really appreciated.

Thanks for your time.

kingstreet

No. You won't be able to take a BTL mortgage on an SO property and when a BTL property is mortgaged, you usually find the lender for a residential simply treats it as self-financing and doesn't allow the rent as income in affordability calculations.

Seashell517

If you want a bigger place, sell the flat. Solictors and mortgage lenders won't let you break the SO terms because it suits you. SO is affordable housing, not an investment.

haras_n0sirrah

You can turn the property into a buy to let however you would need to staircase to 100% ownership to do so

annetheman

I would personally sell the 50%, maybe spend a year renting somewhere cheaper in your relocation place (you might find you don't even like it after a year, at least you won't have bought) with your new family and save as much as possible during that year.

It is much harder to sell S/O above 60% etc because costs become comparable to buying outright in the open market without the S/O limitations, so unless you want to take the staircase to 100% then re-sell route, I'd just sell now.

P.s. *some* housing associations do let you sub-let in extraordinary circumstances, e.g. currently due to EWS1s and conflicting life circumstances, I know a few people who have been given permission to sublet below 100%. All depends on the HA, my lease says I can ask below 100%, for example (in process of buying). Downsides to that option:
-it costs to even ask, and "I want to get a nice family home" is probably not a compelling enough reason for them to grant it
-they have a duty to keep it "affordable" so you will probably get much less rental income than you would on the open market (i.e. at 100%)
-being a landlord comes with additional problems and fees you don't seem to be in a position to pay over a period of time that make it worthwhile enough?