Leasehold house purchase

LK12

Can anyone help?
im trying to buy a shared ownership house, it’s 25% share but the property is leasehold
ive been advised it has 61 (yikes!) years remaining on the lease. Impossible for a first time buyer to get a mortgage on it, so is this defeating the point of ‘affordable housing?’
the housing association owns the freehold - as it’s a house not an apartment, do I qualify for a new lease on purchase? Anyone who could afford to purchase the freehold in this case, wouldn’t be eligible for shared ownership? 

The whole sale seems really strange but I really want the house

NameUnavailable

I think something is lost in translation. Shared ownership is usually on a leasehold basis, until you can buy out the remaining share and then usually the freehold is transferred to you.

Maybe that's the position here?

princeofpounds

Replies in bold below:

LK12 said:

Can anyone help?
im trying to buy a shared ownership house, it’s 25% share but the property is leasehold . ive been advised it has 61 (yikes!) years remaining on the lease. 
OK. One of the big issues with SO is that leasehold 'owners' are specifically exempted from being able to extend their leases through the statutory process. Many people were originally sold SO properties with leases that were only a few years longer than a level that is considered short and hard/impossible to mortgage (~80 years). They can only extend their lease through negotiation with the freeholder, who is usually their co-owner. Many/most freeholders in this game only allow lease extensions when the leasehold 'owner' has staircased to 100% ownership or very close to it (NB Not all are bad like this, but many are - it's supposed to 'encourage' staircasing). 

Obviously a lot of people are now finding they are stuck without the funds to either extend their lease or staircase to a high level of ownership. So they can only sell to a cash buyer, which requires the property to be sold cheaply. But usually the co-owner/freeholder has a veto on any marketing price, so that's often not a realistic option either. So the lease runs down, ripping-off the leasehold 'owner' slowly.

Impossible for a first time buyer to get a mortgage on it, so is this defeating the point of ‘affordable housing?’
Don't ever think that 'affordable housing' schemes were ever created with the primary goal of delivering affordable housing. If we really wanted to do that, we would give loads of planning permission on undeveloped land and permit dramatic increases in housing density on developed land. Schemes like this are much more about appearing to do something about affordable housing, and usually the lower upfront cash costs of the scheme is balanced by less transparent costs later in the lifetime of 'ownership'.

the housing association owns the freehold - as it’s a house not an apartment, do I qualify for a new lease on purchase? 
No, it doesn't work that way. In a normal leasehold property, the vendor could apply for a lease extension and then transfer that process to you as a buyer (something called a Section 42 notice). In SO, they cannot do this - they need the freeholder to agree voluntarily to award a lease extension.

Anyone who could afford to purchase the freehold in this case, wouldn’t be eligible for shared ownership? 
Yes, in more expensive areas the property price and the eligibility criteria often seem mutually exclusive. Lots of people who benefitted from affordable housing schemes like SO were able to do so because they were financed by relatives or partners, and/or using business structures to conceal their true incomes. 

The whole sale seems really strange but I really want the house
OK, either make a cash offer, or enquire if the owner can start the lease extension process and transfer it to you as part of the transaction. The answer will likely be no, but you won't know without checking.

rachel230

Would run a mile from this property.

NinjaTune

Unless you are planning to live there until you die (and are leaving everything in your will to the local cats home) then I agree with Rachel - run like the wind.

The property will decrease in value as the lease continues to drop and it will be extremely difficult to sell unless you extend the lease.  Extending the lease will cost you an arm and a leg due to the marriage value.  Personally I wouldn't touch it with a bargepole.