Ex shared ownership property

Ybe

Are there any down sides to buying an ex shared ownership flat? I.e. the current owner owns 75% and a housing association owns the rest. But it is now being offered on the open market with back to back staircasing where the current owner staircases to 100% ownership at the same time as you buying 100%. 

DullGreyGuy

So the HA will be the freeholder? Is it a subordinate lease?

No particular issue with it formerly being a shared ownership, obviously there can be certain stigmas associated with ex social housing or affordable properties. 

Ybe

That’s not clear. On land registry, none of the sales are registered other than 1 person who owns it 100%. I presume this is either the owner staircasing to 100% or selling on the open market and sold as 100%. 

I’ve read some ex shared ownership properties can have housing association restrictions left on the lease even after you own 100%. 

BarelySentientAI

Ybe said:

I’ve read some ex shared ownership properties can have housing association restrictions left on the lease even after you own 100%. 

Many properties have restrictions even if you own 100% - they're called covenants and can stop you doing all sorts of different things.

Ybe

BarelySentientAI said:

Ybe said:

I’ve read some ex shared ownership properties can have housing association restrictions left on the lease even after you own 100%. 

Many properties have restrictions even if you own 100% - they're called covenants and can stop you doing all sorts of different things.

Is there a reason ex shared ownership properties are normally cheaper? They are normally relatively new but cheaper than a new build or build from last 10 years which has always been open market. Is it just the stigma? 

BarelySentientAI

Ybe said:

BarelySentientAI said:

Ybe said:

I’ve read some ex shared ownership properties can have housing association restrictions left on the lease even after you own 100%. 

Many properties have restrictions even if you own 100% - they're called covenants and can stop you doing all sorts of different things.

Is there a reason ex shared ownership properties are normally cheaper? They are normally relatively new but cheaper than a new build or build from last 10 years which has always been open market. Is it just the stigma? 

Some say that the standard of construction can be lower when properties were built directly for shared ownership and other schemes.

I have no direct experience, so don't know if that is just rumour or not.

Ybe

BarelySentientAI said:

Ybe said:

BarelySentientAI said:

Ybe said:

I’ve read some ex shared ownership properties can have housing association restrictions left on the lease even after you own 100%. 

Many properties have restrictions even if you own 100% - they're called covenants and can stop you doing all sorts of different things.

Is there a reason ex shared ownership properties are normally cheaper? They are normally relatively new but cheaper than a new build or build from last 10 years which has always been open market. Is it just the stigma? 

Some say that the standard of construction can be lower when properties were built directly for shared ownership and other schemes.

I have no direct experience, so don't know if that is just rumour or not.

I think it’s the only shared ownership block and only flat on the estate. All others are private and houses. The owners says it’s all the same fixtures and fittings. One thing I noticed is the balcony has wooden decking. Is this likely to be an issue? 

annetheman

Disclaimer: I'm selling my shared ownership because I want to get as far away from leasehold as humanly possible, so my opinion is biased. There are the same downsides to buying a leasehold flat that was shared ownership as any other, because you are buying it in the "normal" way. The lease that is prepared is that of the "normal" 100% sale, so any leasehold covenants that are relatively standard for a purpose-built flat will apply. There is nothing special because it was shared ownership.

I know because I had the option recently and had to decide, and chose to sell my share instead (I have 6 asking price offers for my share and 1 low offer for b2b staircase and sale). With gratitude to my past self I made a full market value election at the purchase of the shares during the 2020-21 increased threshold period, so luckily no stamp duty was payable for me, so that didn't factor into things (a lot of people don't do the b2b for stamp duty complexity reasons).

The reason I didn't sell to the b2b person is 2-fold. First, I would be liable to pay much higher solicitors fees as the 2 transactions are charged seperately - 1 for the staircase to 100%, 1 for the sale of 100%. I also had more Housing Association fees to pay - so I needed a higher sale price in order for it not to be a loss at which I couldn't proceed with my onward purchase. The offer was £340,000 vs the £372,000 full market value of the share sale - no brainer for me.

W.r.t wooden balconies - they can often mean remediation is recommended per an EWS1 rating of A2 or B1, but it doesn't necessarily make it an "issue" as the risk is deemed acceptable - almost certainly your freeholder won't bother with the costly remediation if it's not required. It is more an issue if the balconies are 'stacked' vs 'staggered'. A wooden balcony that is staggered will not pose as much fire risk as one that is stacked.

E.g. my building is a B1 rated EWS1 due to the stacked balconies (albeit aluminium composite, covered underside).

You will get all this fire risk and EWS1 report info (if the building has one; the fire risk report only is mandatory) in the management pack if you proceed to legals stage, so you can review and make sure you're happy. Avoid if the report gives A3 or B2 rating - many lenders won't lend on B2 anyway. A1 is the best.

Happy to help with any other questions but also to note Housing Associations differ in their terms - mine allowed me to sell at whatever price after a nomination period and keep all profits; some only allow a sale at RICS valuation or split any profit. So that might change what your seller does.

But yeah - good luck!

Ybe

annetheman said:

Disclaimer: I'm selling my shared ownership because I want to get as far away from leasehold as humanly possible, so my opinion is biased. There are the same downsides to buying a leasehold flat that was shared ownership as any other, because you are buying it in the "normal" way. The lease that is prepared is that of the "normal" 100% sale, so any leasehold covenants that are relatively standard for a purpose-built flat will apply. There is nothing special because it was shared ownership.

I know because I had the option recently and had to decide, and chose to sell my share instead (I have 6 asking price offers for my share and 1 low offer for b2b staircase and sale). With gratitude to my past self I made a full market value election at the purchase of the shares during the 2020-21 increased threshold period, so luckily no stamp duty was payable for me, so that didn't factor into things (a lot of people don't do the b2b for stamp duty complexity reasons).

The reason I didn't sell to the b2b person is 2-fold. First, I would be liable to pay much higher solicitors fees as the 2 transactions are charged seperately - 1 for the staircase to 100%, 1 for the sale of 100%. I also had more Housing Association fees to pay - so I needed a higher sale price in order for it not to be a loss at which I couldn't proceed with my onward purchase. The offer was £340,000 vs the £372,000 full market value of the share sale - no brainer for me.

W.r.t wooden balconies - they can often mean remediation is recommended per an EWS1 rating of A2 or B1, but it doesn't necessarily make it an "issue" as the risk is deemed acceptable - almost certainly your freeholder won't bother with the costly remediation if it's not required. It is more an issue if the balconies are 'stacked' vs 'staggered'. A wooden balcony that is staggered will not pose as much fire risk as one that is stacked.

E.g. my building is a B1 rated EWS1 due to the stacked balconies (albeit aluminium composite, covered underside).

You will get all this fire risk and EWS1 report info (if the building has one; the fire risk report only is mandatory) in the management pack if you proceed to legals stage, so you can review and make sure you're happy. Avoid if the report gives A3 or B2 rating - many lenders won't lend on B2 anyway. A1 is the best.

Happy to help with any other questions but also to note Housing Associations differ in their terms - mine allowed me to sell at whatever price after a nomination period and keep all profits; some only allow a sale at RICS valuation or split any profit. So that might change what your seller does.

But yeah - good luck!

Thanks. It’s stacked balconies. In this case, the owner tried to sell 75% for 6 months but couldn’t find a buyer so has had it on the open market for over 3 months now at the RICS valued price.  It makes me wonder why it hasn’t sold still. It’s a very nice area, flat is in good condition and it’s well connected too. 

GDB2222

Ybe said:

BarelySentientAI said:

Ybe said:

BarelySentientAI said:

Ybe said:

I’ve read some ex shared ownership properties can have housing association restrictions left on the lease even after you own 100%. 

Many properties have restrictions even if you own 100% - they're called covenants and can stop you doing all sorts of different things.

Is there a reason ex shared ownership properties are normally cheaper? They are normally relatively new but cheaper than a new build or build from last 10 years which has always been open market. Is it just the stigma? 

Some say that the standard of construction can be lower when properties were built directly for shared ownership and other schemes.

I have no direct experience, so don't know if that is just rumour or not.

I think it’s the only shared ownership block and only flat on the estate. All others are private and houses. The owners says it’s all the same fixtures and fittings. One thing I noticed is the balcony has wooden decking. Is this likely to be an issue? 

You mean the balcony just has wood as the floor? Or there's some wood that has been laid on top of a concrete balcony floor? 

Ybe

GDB2222 said:

Ybe said:

BarelySentientAI said:

Ybe said:

BarelySentientAI said:

Ybe said:

I’ve read some ex shared ownership properties can have housing association restrictions left on the lease even after you own 100%. 

Many properties have restrictions even if you own 100% - they're called covenants and can stop you doing all sorts of different things.

Is there a reason ex shared ownership properties are normally cheaper? They are normally relatively new but cheaper than a new build or build from last 10 years which has always been open market. Is it just the stigma? 

Some say that the standard of construction can be lower when properties were built directly for shared ownership and other schemes.

I have no direct experience, so don't know if that is just rumour or not.

I think it’s the only shared ownership block and only flat on the estate. All others are private and houses. The owners says it’s all the same fixtures and fittings. One thing I noticed is the balcony has wooden decking. Is this likely to be an issue? 

You mean the balcony just has wood as the floor? Or there's some wood that has been laid on top of a concrete balcony floor? 

It’s wooden decking on steel frames. So yes it’s wood as the floor.