Shared ownership question…

Katlou

I’ve been applying for a shared ownership mortgage as it’s the only way I can afford to buy in the area I need to be in (I need to live near my family asap due to a health issue with a parent).

I completed the form with the housing association and was accepted, however during a chat with them I mentioned that my husband owns a rental property, which he has owned since before we met, and is nothing to do with me. I will be applying for the shared ownership solely in my name.

They have now advised me that if he is planning to live there, I won’t be eligible to apply with him being a homeowner, even though his property is nothing to do with me.

Is this correct? I feel unfairly disadvantaged in being able to get in the property ladder through no fault of my own. I receive no income from his property and neither does he, it is currently losing money. 

NameUnavailable

I expect this reasoning is that you should sell the rental property in order to be able to afford to buy your new property rather than rely on a shared ownership scheme (and there are horror stories about these you should look into).

If it's loss making then it seems a sensible thing to get rid of it anyway.

Katlou

NameUnavailable said:

I expect this reasoning is that you should sell the rental property in order to be able to afford to buy your new property rather than rely on a shared ownership scheme (and there are horror stories about these you should look into).

If it's loss making then it seems a sensible thing to get rid of it anyway.

Unfortunately he’s unable to sell it as the current value is a lot less than the mortgage so he would lose money.

If he were to make a profit though than that would be his profit, not mine, since the mortgage for that property is solely in his name and was for years before we even met.

The shared ownership would be solely in my name so his financial situation shouldn’t affect it?

Also, if we thought it would help we’d consider it but there is only one shared ownership property left there and pretty sure it’ll be gone soon.

So disappointing.  

housebuyer143

As above, Shared Ownership is there to help people get on the ladder. You and your husband (because legally you are one household) own a property and therefore you could just move into that or sell that and use that money to get a house on the open market.
You will also find yourself liable for the additional 3% stamp duty if you buy another house as you will own two houses. It being in your husbands name does not negate this for stamp duty purposes. That is likely to make the property unaffordable to you right off the bat. 

Why cant he sell it?

Katlou

He can’t sell it as the value is currently much less than the mortgage, he would lose a fortune, so would make our position even worse.

In the eyes of the law I have no connection to that property and never have, my name is not on the deeds, so I can’t understand how it can affect me in any way? I am a first time buyer and buying solely in my name. 

marcia_

Katlou said:

NameUnavailable said:

I expect this reasoning is that you should sell the rental property in order to be able to afford to buy your new property rather than rely on a shared ownership scheme (and there are horror stories about these you should look into).

If it's loss making then it seems a sensible thing to get rid of it anyway.

Unfortunately he’s unable to sell it as the current value is a lot less than the mortgage so he would lose money.

If he were to make a profit though than that would be his profit, not mine, since the mortgage for that property is solely in his name and was for years before we even met.

The shared ownership would be solely in my name so his financial situation shouldn’t affect it?

Also, if we thought it would help we’d consider it but there is only one shared ownership property left there and pretty sure it’ll be gone soon.

So disappointing.  

 So you wouldn't see any benefit despite being married? 

housebuyer143

Katlou said:

He can’t sell it as the value is currently much less than the mortgage, he would lose a fortune, so would make our position even worse.

In the eyes of the law I have no connection to that property and never have, my name is not on the deeds, so I can’t understand how it can affect me in any way? I am a first time buyer and buying solely in my name. 

In the eyes on the government you are a unit and therefore what is his is also legally yours. This is why if you buy a property, even in your name only you will be liable for the additional 3% stamp duty. They will deem his property to be your interest too.
I also believe you are not treated as a FTB because your husband owns that house.

Unfortunately there is no way around it - married couples are one unit where the government is concerned and this is why you will be unable to get a shared ownership property. 

If you do not want to be financially linked like this, you can consider a divorce?

Katlou

I’ve been approved as a first time buyer by more than one mortgage advisor for a regular mortgage with no issues.

Everything I’ve read online states that the only joint responsibilities in marriage are those in joint names, just like how I’m not responsible for his credit file and vice versa, I have no legal ties whatsoever to a mortgage that he’s had in place long before I even met him.

This has been confirmed by my mortgage advisor, it’s just the housing association that seem opposed to it.

Mortgage advisor has recommended speaking to the government dept that regulates shared ownership so I plan to do this. 

housebuyer143

Katlou said:

I’ve been approved as a first time buyer by more than one mortgage advisor for a regular mortgage with no issues.

Everything I’ve read online states that the only joint responsibilities in marriage are those in joint names, just like how I’m not responsible for his credit file and vice versa, I have no legal ties whatsoever to a mortgage that he’s had in place long before I even met him.

This has been confirmed by my mortgage advisor, it’s just the housing association that seem opposed to it.

Mortgage advisor has recommended speaking to the government dept that regulates shared ownership so I plan to do this. 

I do not believe this to be the case and it certainly isn't the case for stamp duty purposes. You should seek a second opinion. Not sure what you have been reading, but if it were the case it would be a massive loophole and I can assure you the government hasn't let a loophole like that slip through.

Read here for more info from gov.uk for stamp duty.

https://www.gov.uk/guidance/stamp-duty-land-tax-buying-an-additional-residential-property

You still see the following written in black and white.
"

If you’re married or in a civil partnership

The rules apply to you both as if you were buying the property together, even if you’re not.

If either of you individually have to pay the higher rates, you must pay the higher rates for the transaction as a whole (unless you’re permanently separated)."

And here for FTB relief.

https://www.theguardian.com/money/2020/feb/24/does-being-married-stop-me-from-being-a-first-time-buyer

housebuyer143

Katlou said:

I’ve been approved as a first time buyer by more than one mortgage advisor for a regular mortgage with no issues.

Everything I’ve read online states that the only joint responsibilities in marriage are those in joint names, just like how I’m not responsible for his credit file and vice versa, I have no legal ties whatsoever to a mortgage that he’s had in place long before I even met him.

This has been confirmed by my mortgage advisor, it’s just the housing association that seem opposed to it.

Mortgage advisor has recommended speaking to the government dept that regulates shared ownership so I plan to do this. 

Just to add, yes you would be acceptable for a FTB mortgage because you have never had a mortgage.. The advisor is correct. 
This is lenders criteria for how they define a FTB though. You legally are not classed as one for stamp duty reasons and clearly for however the housing association are defining it. 
I could be a FTB for instance with nationwide as I haven't had a mortgage in 4 years. I own 2 houses but they class me as a FTB. I clearly am not 

Katlou

It’s interesting as the mortgage advisor I spoke with today is an expert in shared ownership and said this sounds incredibly harsh, and that he has put through many successful applications previously for similar situations, ie one spouse being a homeowner, or one having bad credit which is not allowed for shared ownership.

Either way I am going to discuss with the government next week and will then update…