How negotiable are shared ownership housing associations?

Annabanana23

Me and my partner are considering buying a 25% share of a newly built one bed canalside flat in hackney which has been on the market since last year. The full price was originally 285k, but has since been revalued twice, first to 260k and now (2 days ago) to 250k, they have also offered us a £1000 cashback on completion. Its the last flat in the block to be sold so im thinking they must be quite desperate to sell it.

My instinct is to try and get another 10-20% reduction on this price. Does anyone know how negotiable housing associations are? Given the property slump/credit crisis.

We have a 20k deposit and would get a 45k mortgage to cover the rest of the 25% share, rent would be £390 (which is 2.5% of the remaining 75%) plus £83 monthly service charge.

I know SO's are not that popular on this forum, but any advice would be much appreciated.

Incisor

Annabanana23 wrote: »

... My instinct is to try and get another 10-20% reduction on this price. Does anyone know how negotiable housing associations are? Given the property slump/credit crisis.

We have a 20k deposit and would get a 45k mortgage to cover the rest of the 25% share, rent would be £390 (which is 2.5% of the remaining 75%) plus £83 monthly service charge.

I know SO's are not that popular on this forum, but any advice would be much appreciated.

Leaving aside my thoughts on SO, my instinct would be to go for a higher proportion of SO rather than a cut in price, in that I would imagine that the cash would be what they were after - and I would expect you would squeeze them for more that way. As ever, is the risk of equity loss on resale shared according to equity, or does it all land on you?

Annabanana23

the risk is shared: if we buy 25% at £62500 and the HA owns 75% at 187500 then if the value goes down by 10% our share would be worth £56250 and theirs £168750. So not sure it makes sense to buy a bigger share if the market is dropping?

neverdespairgirl

The combination of "new build", "Hackney" and "SO" brings shivers down my spine!

If prices drop significantly, as they may do, you'd be stuck there a very long time.

Annabanana23

I guess Hackney doesn't appeal to everyone - its such a lively urban borough. We like living round here as most of our friends live nearby, there's great nightlife, bars, markets (columbia rd and broadway mkt), lots of green spaces and parks, there's even a city farm up the road with sheep and chickens. its also very central, you can walk to the city of london or liverpool st station in about 20 minutes.

Right now we live in Tower hamlets just off Hackney rd, in a short life housing co-op. Its cheap(ish) but very small (tiny studio room between 2 of us) with low ceilings, miniscule kitchen and very tiny bathroom thats honestly not much bigger than a cupboard!!

As its short life housing we dont know how long we will be able to stay, could be months/years, or we could, in theory, receive a letter tomorrow telling us we have to move out in 4 weeks.

So the prospect of finding a home that we can stay in indefinitely is very appealing. The SO property is a 1 bed flat, but its built on two floors so the open plan living area downstairs has double height ceiling so feels v spacious, and there's large glass doors to balcony overlooking the canal, theres also massive windows at back so its light and airy, not pokey like most new builds.

We've considered renting but its very expensive. Some friends of ours are about to move into a one bed flat (1 mile north) in the same borough and its costing over £1200 per month just in rent!

neverdespairgirl

Annabanana23 wrote: »

I guess Hackney doesn't appeal to everyone - its such a lively urban borough. We like living round here as most of our friends live nearby, there's great nightlife, bars, markets (columbia rd and broadway mkt), lots of green spaces and parks, there's even a city farm up the road with sheep and chickens. its also very central, you can walk to the city of london or liverpool st station in about 20 minutes.

There's a lot to be said for Hackney - I think it's a very interesting place. But I don't think it'll hold up well when house prices are going down, that's why I said it.

In total, you'll be paying about £770 a month in rent, interest-only mortgage, and service charge, is that about right?

I think you might want to consider renting a slightly bigger place than you have at the moment, on an AST. I can see that living in a studio with 2 of you could get quite boring! But it doesn't have to cost the earth:

Following are a quick selection of 1 bed places to rent in LB of Hackney:

(1) 1 bed, between Hackney Downs and Clapton stations, £150 a week

http://www.rightmove.co.uk/viewdetails-21126044.rsp?pa_n=2&tr_t=rent

(2) 1 bed, bang next to Homerton station, £150 a week

http://www.rightmove.co.uk/viewdetails-18120931.rsp?pa_n=2&tr_t=rent

(3) 1 bed, Georgian terrace conversion, £160 a week, near Hackney Downs:

http://www.rightmove.co.uk/viewdetails-21548621.rsp?pa_n=2&tr_t=rent

(4) 1 bed Victorian flat with garden, £185 a week, near Clapton:

http://www.rightmove.co.uk/viewdetails-15150223.rsp?pa_n=4&tr_t=rent

or staying in Tower Hamlets:

(5) 1 bed church conversion, near tube and DLR - £160 a week:

http://www.rightmove.co.uk/viewdetails-21265334.rsp?pa_n=3&tr_t=rent

(6) 1 bed long-term rental, £170, near Limehouse tube:

http://www.rightmove.co.uk/viewdetails-18093721.rsp?pa_n=3&tr_t=rent

(7) Large 1 bed, near 2 tubes, £170 a week:

http://www.rightmove.co.uk/viewdetails-7836373.rsp?pa_n=3&tr_t=rent

All the above are cheaper than the SO place, even missing out the capital repayment part of the mortgage, if any. And there is a REAL risk of prices tanking, and newbuild flats with SO are particularly at risk, I think.

Ulfar

Have to wade in here sorry.

In shared ownership properties normally you take all the risk, this is even more so in shared equity.

Should the property fall it is your share that loses out.

You need to look at the terms and conditions very carefully. You may need a microscope to find all the small print.