Shared Ownership - Being bought out

ChocoLabbo

Hi, after living with my partner for 5 years in our shared ownership home, we have now sadly split. She is looking to take on the house herself which I am not arguing due to my personal financial situation, but I do want to ensure I get what I'm entitled too our of the house.

We are currently going through the transfer of equity process, I don't know if the normal equity rules apply to shared ownership homes. I also have some concerns over the valuation we have been given for the house.

The house in 2019 was worth £285,000. We got a 30% share of the house which was £85,500 and we got a mortgage for £81,225.00 with a £4,275 deposit that we put down together, I can't remember how we split the deposit.

The valuation we had done by the mortgage company (who are handling the transfer of equity) with a RICS surveyor valued the house at the same price as in 2019. I personally feel this cannot be right. Who would I go to to query this figure as I believe it should have gone up ever so slightly? I cannot afford another RICS survey but I am looking at local house prices to try and build a case to show the property should have made a slight profit. I have requested a copy of the survey to review as well.

In our latest mortgage statement as of December we had a mortgage balance of £72,523.44

From what I understand our 30% should be worth £85,500, so after deducting the mortgage balance (£72,523.44) it should leave £12,976.56 of equity. Which would mean I should be owed £6,488.28? 

Do I take off the deposit before halfling the remaining equity?

Is that the right way to work this out or is shared ownership more complicated?

Any help would be greatly appreciated!

Brie

I too would question why the property hasn't gone up in value in 5 years.  As a start have you googled the local housing market sites to see what similar properties are selling for?

GDB2222

Is there any deed of trust showing how the property is owned? 

annetheman

Was the house a new build? That may be why it hasn't increased - new build premium on first sale is no longer applicable. 

SO isn't really ever going to make you a profit, unless you are able to sell at a price you want or keep it for many years (I am luckily in that position but understand it is rare) - especially when you balance against costs (rent, service charge, fees). It's a more stable form of long-term renting which allows you to save a bit of equity (your mortgage plus any overpayments).

If you've agreed you will split the equity, then yes, that is exactly the right way to calculate the amount owed to you (before fees/costs to sell).

ChocoLabbo

Brie said:

I too would question why the property hasn't gone up in value in 5 years.  As a start have you googled the local housing market sites to see what similar properties are selling for?

I'm in the process of doing some research to see - I've seen a few where they have sold for around £330,000 so I feel the valuation isn't right

ChocoLabbo

GDB2222 said:

Is there any deed of trust showing how the property is owned? 

I don't think we were ever given/signed a deed of trust. It's both our names on the leasehold 

ChocoLabbo

annetheman said:

Was the house a new build? That may be why it hasn't increased - new build premium on first sale is no longer applicable. 

SO isn't really ever going to make you a profit, unless you are able to sell at a price you want or keep it for many years (I am luckily in that position but understand it is rare) - especially when you balance against costs (rent, service charge, fees). It's a more stable form of long-term renting which allows you to save a bit of equity (your mortgage plus any overpayments).

If you've agreed you will split the equity, then yes, that is exactly the right way to calculate the amount owed to you (before fees/costs to sell).

The house is a new build, I did wonder if that would affect its value, but I spoken to a couple who own the same property down the road. They went through a re-mortgage I were told they'd 'made' £50K. I'm hoping they'd let me see the details of this just as more evidence to show the property is worth more.

Thanks for confirming my math is right! 

chanz4

depends who suveys is as open to views

annetheman

ChocoLabbo said:

annetheman said:

Was the house a new build? That may be why it hasn't increased - new build premium on first sale is no longer applicable. 

SO isn't really ever going to make you a profit, unless you are able to sell at a price you want or keep it for many years (I am luckily in that position but understand it is rare) - especially when you balance against costs (rent, service charge, fees). It's a more stable form of long-term renting which allows you to save a bit of equity (your mortgage plus any overpayments).

If you've agreed you will split the equity, then yes, that is exactly the right way to calculate the amount owed to you (before fees/costs to sell).

The house is a new build, I did wonder if that would affect its value, but I spoken to a couple who own the same property down the road. They went through a re-mortgage I were told they'd 'made' £50K. I'm hoping they'd let me see the details of this just as more evidence to show the property is worth more.

Thanks for confirming my math is right! 

No worries. Definitely see if you can get more info from them, if they're open to it. They won't have 'made' anything if they were just doing a remortgage - perhaps they are saying they released £50k equity, or they added £50k more borrowing?? - but if it isn't a sale, they didn't 'make' anything.

New build premium is likely the culprit with your lower valuation and it is notoriously difficult to challenge, but not impossible. Ultimately it depends on what you sell it for IF you are allowed to sell at your own price.

My Shared Ownership - I bought in 2020 for £355,000 full market value. I received a RICS valuation in 2024 for £340,000 - new build premium loss. I am currently selling (in the legals stages) for £372,000 - I was able to do this because the area is extremely popular - it is a large commuter town which has a London Overground, Underground (Metropolitan line) and direct fast trains to central London, within M25. I've heard of people making profits in London as well. SO extremely oversubscribed and I received a total of 6 offers.

If you are given the option of selling at your own price and you're in a popular area, you can make a small profit. Obviously check your HA allows you to keep the difference between RICS and sale price, too - some will split it equitably to the shares owned.

Edit to add: when I add the rent I've paid over the 4 years, subtract my estate agent fees and unfortunately early mortgage exit fee, and costs to sell, overall my 'profit' is small. It's mostly just my equity and overpayment on my mortgage! Interesting as I'd never calculated it before!

Hope that makes sense!

GDB2222

ChocoLabbo said:

GDB2222 said:

Is there any deed of trust showing how the property is owned? 

I don't think we were ever given/signed a deed of trust. It's both our names on the leasehold 

Unless there was some other agreement, which would normally be in a deed, the house is owned 50/50. 

silvercar

Your calculation is basically correct, but by leaving you leave behind the liability for renting the shared ownership part and the future selling costs. There is also an argument that, if you can’t agree and the property was sold there would be estate agent fees and possibly mortgage redemption costs, reducing your share of the equity. So there is definitely some negotiation to be done. I would say your higher valuation and no other costs gives you the highest amount of equity you could achieve, but I’d expect some downward negotiation.

Also the question of whether the lender will allow the mortgage to go into one name. I’m not sure if the HA also needs to agree.