Selling shared ownership house

ZeeZi

Hello, hoping to get some advice and sense check my understanding of the selling process of my shared ownership house.

I bought the house in 2019 at market value 415,000 my share is 40% at 166,000 with a deposit of 13,000. Now that I plan to sell, my assumption is that I will receive back the 40% share at todays value? Which I will then need to use to pay off the remaining mortgage balance and anything left after that will be the money I take away? I'm aware there is also the early mortgage repayment fee to be paid. What I'm trying to understand is if there will be any profit to be made or at the least if I will break even (i.e get the 13,000 initial deposit paid back). I would be happy with a breakeven outcome although it does seem like a long process and a lot of paperwork to get through but as circumstances have changed it has to be done. Any thoughts welcome.

ZeeZi

I also forgot to say my lease is currently 78 years which can affect selling of the property but I'm hoping the lease extension valuation will help and there may still be buyers out there. I could be wrong.

Jaded2022

ZeeZi said:

Hello, hoping to get some advice and sense check my understanding of the selling process of my shared ownership house.

I bought the house in 2019 at market value 415,000 my share is 40% at 166,000 with a deposit of 13,000. Now that I plan to sell, my assumption is that I will receive back the 40% share at todays value? Which I will then need to use to pay off the remaining mortgage balance and anything left after that will be the money I take away? I'm aware there is also the early mortgage repayment fee to be paid. What I'm trying to understand is if there will be any profit to be made or at the least if I will break even (i.e get the 13,000 initial deposit paid back). I would be happy with a breakeven outcome although it does seem like a long process and a lot of paperwork to get through but as circumstances have changed it has to be done. Any thoughts welcome.

There are so many horror stories with shared ownership 

its like all all the disadvantages of buying with all the disadvantages of renting

you have to do 100% maintenance and still pay rent

nob wants to buy shared ownership so they are very hard to sell

ZeeZi

I'm staying optimistic, being based in London I think shared ownership is still a way into the property market for a lot of people. 

Jaded2022

ZeeZi said:

I'm staying optimistic, being based in London I think shared ownership is still a way into the property market for a lot of people. 

Yes it is
 
especially if you buy from a distressed seller who wants out

but don’t be one of the first to buy from the property company they always have a bad deal

and bear in mind you are also going to have a hard time selling in the future 

canaldumidi

Jaded2022 said:

ZeeZi said:

I'm staying optimistic, being based in London I think shared ownership is still a way into the property market for a lot of people. 

but don’t be one of the first to buy from the property company they always have a bad deal

and bear in mind you are also going to have a hard time selling in the future 

I think it's a bit late for this advice- the OP has already bought, and is now planning to sell!

DE_612183

ZeeZi said:

Hello, hoping to get some advice and sense check my understanding of the selling process of my shared ownership house.

I bought the house in 2019 at market value 415,000 my share is 40% at 166,000 with a deposit of 13,000. Now that I plan to sell, my assumption is that I will receive back the 40% share at todays value? Which I will then need to use to pay off the remaining mortgage balance and anything left after that will be the money I take away? I'm aware there is also the early mortgage repayment fee to be paid. What I'm trying to understand is if there will be any profit to be made or at the least if I will break even (i.e get the 13,000 initial deposit paid back). I would be happy with a breakeven outcome although it does seem like a long process and a lot of paperwork to get through but as circumstances have changed it has to be done. Any thoughts welcome.

Is the 415 what you bought it for in 2019?
what are you hoping to sell it for now?

canaldumidi

ZeeZi said:

I bought the house in 2019 at market value 415,000 my share is 40% at 166,000 with a deposit of 13,000. Now that I plan to sell, my assumption is that I will receive back the 40% share at todays value? Which I will then need to use to pay off the remaining mortgage balance and anything left after that will be the money I take away? I'm aware there is also the early mortgage repayment fee to be paid. What I'm trying to understand is if there will be any profit to be made or at the least if I will break even (i.e get the 13,000 initial deposit paid back). I would be happy with a breakeven outcome although it does seem like a long process and a lot of paperwork to get through but as circumstances have changed it has to be done. Any thoughts welcome.

The first thing to do is contact your mortgage lender and ask a) what is the current outstanding mortgage and b) what costs will there be in paying it off (especially as you suggest you are in a fixed term period).

Then get a realistic estimate of the value of the property today (bearing in mind shared ownership are harder tosell).

When you sell, you should receive 40% of the sale price, though as suggested above this might be lower than the market value of an identical property that is not shared ownership. So eg

current market value might be £500,000.

Sale price you achieve might be £475,000.

You get 40% = £190,000

From this you'll pay the mortgage lender (eg £150,000) (current outstanding mortgage + redemption fees) and conveyancing fees eg £1000

Leaving you with £39,000

Obviously my figures are an example only (plus my maths is pants!).

ZeeZi

Thanks Canaldumidi that's actually really helpful. Expecting the early repayment of mortgage fee to come in at 5k and yes bought in 2019 for 415. I'm currently awaiting to instruct a surveyor to do a valuation, however as the valuation needs to include the lease extension premium - the instruction has to come from the housing association otherwise I end up paying more! Getting a response from them has been a nightmare..

danjackson2021

There are many in negative equity in a shared ownership 

m their best bet is to just stop paying the rental part and stop paying the mortgage part

live out your share then wait for the bailiffs which may take many years

TBagpuss

What Canalmundi says is correct  - once you have a valuation for the house then you can work out the likely figures.

I'm not as pessimistic as some, in my are, there seems to be a high demand for shared ownership properties and they sell quickly. Normally there is a requirement to market it via the relevant housing associatin for a set period before you can put it on the open market, and that does slow things down and means you have less control over things such as asking proce than if you owned it 'normally' 

Whether you get back £13,000, more , or less, will depend on the current value of the house and how much you end up paying in ERC, lease extension costs and selling costs such as agents fees.