Stuck in unsellable shared ownership flat with rising service charges and debt – can’t see a way out

jones_guitar

Do you know, you might not like my controversial point of view. I sometimes wondering it is better to call quits stop all payments including loans/service charge/rent/mortgage and start afresh. Yes, this mean defaulting everything including the flat. Making zero payments. If selling in negative equity? You could look at the more severe bankruptcy path.

These flats can be a nightmare, yes, they can be 600 a month. If you have little equity, letting default is an option.

You might say, how is this logical? You look at your equity, is it realistically going to sell? Is the leasehold reform act going to help... probably not. Are you even going to save some money stopping all payments until it is repossessed. Knowing what I know now, it is an option I would consider to a nightmare leasehold flat. Even if it sells, will you get anything? If your alternative is to be trapped in a nightmare, let it get repossessed and ditch it.

Just to hit home, as an example for anyone who doesnt understand. There are some nighmare leasehold flats worth walking away from - they do exist.

There are some flats now in London which have been reduced by 100k, only because they have a monthly payable service charge. That is all. Just a modest £150 monthly payment now puts people off. I have seen some with £1000 ground rent. Yes, these can also be shared ownership.

I was asked to view a flat which was reduced by 100k. The estate agent told me the service charge is payable monthly. I said no one would buy it, because yearly people can plan for. Monthly it feels more like another bill. That can reduce a flat by 100k. 400k to 300k.

jones_guitar

Also, can I ask whst made the service charge higher? Would it not come back down?

You could just not pay your creditors. Nothing will happen, they will just default. Just offer them a token payment.

But if you think the flat is nothing but hassle, just say you don't want it anymore to the bank, outline the issues with the property to the bank and tell them about stopping paying charges and mortgage.

I goodle AI searched and after repossession and the asset is sold, you can declare bankruptcy.

Anything bad with cladding, any serious issue/leasehold problem deeming unsellable. Do some serious thinking… to me your debt isn't a problem, your flat appears worse.

Altior

I think you have to compare the current costs (rent/mortgage/service) to what it would cost to rent privately elsewhere. After all, you have to live somewhere. I am a prior shared owner, I was lucky in that service charges were originally £3 pcm. Now they are £15 pcm. Overall however, the monthly cost was a lot lower than private renting or owning outright.

Must be remembered that the mortgage will eventually be paid off for the part owned, in fact I had before fully staircasing.

There may be a compelling case to cut losses, but BR is a radical step on this income, not something I would entertain personally unless it was literally the only option.

The specific terms of the lease in regard to future rent are obviously very important.

jones_guitar

Hi Altior, yes, it depends, if the flat is one of the nightmare cases which can never be sold/legal issues taken care of, why would you waste your life, or a dacade wondering if it would improve. It might. But, requires careful thought.