FTB shared ownership concerns

dontknowdontknow

I know shared ownership is a bad idea but we're out of better options. We're giving my husband's disabled brother a deposit to buy but can't afford open market.

Some red flags we're concerned about. The developer pressured us to use their recommended solicitor. We feel a bit uneasy.

The lease has a commencement date from several months ago. Solicitor says that's when the first lease was completed and it's fine to keep that date on brother's lease. We think it should change to his exchange or completion date? 

Any help or advice massively appreciated as we're completely new to this

chanz4

your buying a house with the current amount of lease

TripleH

I assume you cannot change solicitors now?

It's never good to use the developer recommended solicitor. Any suggestions that you 'must' use them is only so you pay extra tra for a kickback to someone somewhere.

If you are uncertain about anything, ask the solicitor, don't let them fob you off (assuming it's too late to change).

Anything in the contract unnerves you? Ask here.

dontknowdontknow

Thanks. We appreciate the advice

It's a new build so lease should start from when he exchanges? The property build wasn't even finished at the time of the date on his lease 

Don't know if too late to change solicitors. We think might be best but the Housing Association is pushing for exchange, threatening to withdraw sale if we don't meet deadline 

We're nervous about this purchase. We'd prefer to wait for somewhere else but brother's landlord is selling up soon and nothing else available. He needs to stay in the area and it's somewhere places go fast

We have just this money to give to him. If we find him another rental, no money for another move if the next landlord sells up  That's why we looked at shared ownership. 

Bendy_House

How long is the lease, dkdk?

As said tho', leases run from when they were put in place, not from sale date. I wouldn't worry about this - what exact DIFFERENCE in time remaining are you talking about?

Yes, in an ideal world, you'd choose your own solicitor, and almost certainly their 'recommended' one is paying the developer what can be a surprisingly high sum for the pleasure. But, do your 'due diligence' and see if they have an ok reputation, and in any event they'll be covered by a regulating body.

You and your hubby have your own house? So you've been through this before. There's no reason I can think of why this should be different.

Just ask ask ask anything you are not sure about. Including "How much have you paid the developer to be recommended?!" 

If that were an EA doing the RECOMMENDING, then they'd legally have to declare what they are getting out of it. Same not true of developers?!

Just carry out your due diligence, and I don't think I'd personally worry about that aspect of the situation. It's very kind of you to do this for your bil, but are you confident there aren't any difficulties you might face financially?

(Last place we tried to help buy, our preferred solicitor was being used by the vendor, so we had to look elsewhere. EA recommended the co across the road "Because they don't charge if it falls through" - very fortuitous as it happened), and we were ok with this as we already knew them to be an ok conveyancer. It was only when the solicitor sent us the first lot of paperwork that we saw the EA was being bunged I think it was £175 for the privilege, and that was on fees of only around £600-odd at the time. Incredible, and 'illegal' for EA not to have told us. Anyhoo, that was the least of this EA's dodgy behaviour, so the 'no charge's part turned out useful... The actual conveyancer, tho', was perfectly good - and visibly disgusted by the EA's shenanigans.)

user1977

dontknowdontknow said:

It's a new build so lease should start from when he exchanges? The property build wasn't even finished at the time of the date on his lease 

Don't know if too late to change solicitors.

No, that's not how it works. Like the solicitor has told you. And like three of us here have now told you! Why are you asking us for advice if you're not going to believe us? 

Given this is the only issue you've told us about, is there anything else troubling you about the purchase? Why do you want to change solicitor?

Bendy_House

dontknowdontknow said:

Don't know if too late to change solicitors. We think might be best but the Housing Association is pushing for exchange, threatening to withdraw sale if we don't meet deadline 

We're nervous about this purchase. We'd prefer to wait for somewhere else but brother's landlord is selling up soon and nothing else available. He needs to stay in the area and it's somewhere places go fast.

What ARE your, and your bil's, ACTUAL options, dkdk? If he simply HAS to move, and there are ZERO short-term alternatives, then that is seemingly that? So, DUE DILIGENCE, and ask ask ask about anything you are unsure about, including on here 

WHY would you rather wait? WHY does dealing with this HA (surely better than a private developer?) make you nervous? What would you anticipate would be a BETTER option to this HA?

This is a brand new place - isn't that a plus? 

ResourcesShared

You've mentioned you consider shared ownership to be a 'bad idea' but your red flags are more generic (lease length, panel solicitor and pressure to complete to a deadline).

Do you have specific concerns about the shared ownership scheme itself which might affect your husband's brother? And, if so, do you/he have plans in order to mitigate any potential risks? For example, does your husband's brother intend to staircase? Does he intend to sell on at some point, or to remain for the foreseeable future? Are you and he aware of the process and costs for staircasing and/or resale?

Are you concerned about high inflation, and do you understand the implications for your brother's annual rent review (probably on an 'upwards only' RPI plus 0.5% basis each year)?

Research shared ownership more widely, write a list of questions and put them to your solicitor (in writing, and get answers in writing too). Hope this is helpful!