Anyone know about the rules for shared ownership

zoemk12

Hi

my daughter is looking to buy a shared ownership as her first property. She’s found a lovely new build which would be perfect & has contacted the housing association. They’re advertising shares available from 25% which is what she wants but the agent is now telling her that he need to get an average of 45% for all properties on the development & that would mean someone else wanting 65% which he doesn’t think is going to happen. I thought the point was to allow people to buy an affordable share and then staircase as they earn more? Can they say the properties are only available to those who can afford to buy 45%? 

She’s got her deposit and all the fees, she’s got a good job and no debt so I don’t understand why she would’nt be an excellent prospect. She would make the income multiplier for 45%. 

Just wondering if anyone knows the rules and if this is perfectly ok, if it is we will move on! 

Thanks 

user1977

There's no rule saying she can force them to sell 25% to her, if that's what you mean.

eddddy

It's possible that the Agent is misleading you.

It may be that the rules of the scheme mean they have to allow 25% sales - but the Housing Association don't really want 25% sales (or the Agent doesn't want 25% sales, because they don't get very much commission).


In your daughter's position, I might try writing an email to the agent and/or Housing Association saying something like...

"I'm interested in buying a 25% share, can you confirm whether this is allowed under this scheme?"

... to see if they will confirm what they said in a written reply. (Sometimes Agents will say 'dodgy' things face-to-face or over the phone, but they are more careful if they have to write it down.)


But if the Housing Association are really anti 25% sales, they might keep putting hurdles in the way, and finding excuses to reject your daughter's application.

 

zoemk12

user1977 said:

There's no rule saying she can force them to sell 25% to her, if that's what you mean.

Of course but my question is do agents selling S/O have to offer a range of % or can they set a % and refuse to drop below this? It seem a little against the spirit of the scheme. 

zoemk12

Thanks for the advice. I’ll tell her to do just that. 

Altior

Is the property listed on right move et al? If it is, then in my experience the selling price is equivalent to the minimum share that they are selling. Ordinarily, that will correlate with the rental element on the listing. 

Just for info, I'm sure this will have been well researched , but there are several 'traps' involved in a shared ownership purchase. My rental element was linked to RPI (it was increased by RPI + 0.5% annually). This seemed nominal in the low inflation era, but I'm glad that I staircased to 100% before the global inflation spike. With compounding, that rent won't look pretty now, along with potentially high interest on the mortgage element, a double hit.  

zoemk12

Altior said:

Is the property listed on right move et al? If it is, then in my experience the selling price is equivalent to the minimum share that they are selling. Ordinarily, that will correlate with the rental element on the listing. 

Just for info, I'm sure this will have been well researched , but there are several 'traps' involved in a shared ownership purchase. My rental element was linked to RPI (it was increased by RPI + 0.5% annually). This seemed nominal in the low inflation era, but I'm glad that I staircased to 100% before the global inflation spike. With compounding, that rent won't look pretty now, along with potentially high interest on the mortgage element, a double hit.  

It is on RM. I didn’t realise they could specific a minimum share. I thought the minimum was set by the government- 25%. However, if that is the case we will have to look at other options. 

I’ve had a few S/O over the years and I do agree there a lots of downsides but she will never be able to afford to buy otherwise. I will help a bit but don’t have 100k kicking around 🙁

Altior

The minimum share possible is set within the legislation, but the portion that the HO will actually sell at the outset will be dependent on other factors, such as their own financial position, cashflow, local market conditions etc.  

Yes it's definitely better than renting in my view, but an 'eyes wide open' type scenario. My timing was unlucky as the gvnt launched HtB shortly after I entered into SO. HtB is/was definitely a stronger proposition for a purchaser in my view, however we can only take the best option available at the time. My mortgage to fully staircase was approximately the same as the original full purchase price, as the valuation grew around the same value as my purchase share. In some ways it feels like I was walking up a down escalator, and stayed at the same place I got on! 

housebuyer143

zoemk12 said:

Altior said:

Is the property listed on right move et al? If it is, then in my experience the selling price is equivalent to the minimum share that they are selling. Ordinarily, that will correlate with the rental element on the listing. 

Just for info, I'm sure this will have been well researched , but there are several 'traps' involved in a shared ownership purchase. My rental element was linked to RPI (it was increased by RPI + 0.5% annually). This seemed nominal in the low inflation era, but I'm glad that I staircased to 100% before the global inflation spike. With compounding, that rent won't look pretty now, along with potentially high interest on the mortgage element, a double hit.  

It is on RM. I didn’t realise they could specific a minimum share. I thought the minimum was set by the government- 25%. However, if that is the case we will have to look at other options. 

I’ve had a few S/O over the years and I do agree there a lots of downsides but she will never be able to afford to buy otherwise. I will help a bit but don’t have 100k kicking around 🙁

They can unfortunately. My sister bought recently and the minimum share was 40%