Author Topic: Shared Ownership Property Purchase  (Read 285 times)

MikeFromLFE

  • Previously known as Millimole
Shared Ownership Property Purchase
« on: July 27, 2020, 10:36:36 am »
I'm helping a family member negotiate an amicable divorce, that looks likely to be concluded during this year.
This involves selling the family home and splitting the proceeds down the middle while the other party keeps the children.
While all involved - except the individual I'm assisting - agree that they would be better off renting, they are determined to buy a place - and shared ownership seems to be the only affordable route.

I think I've got my head around the way the purchase / rental works, but there are a couple of questions for the YACF massive please:

1) Is the price listed in the estate agent's bumf negotiable in the same way as with a normal house purchase? Presumably you are negotiating with the Housing Association?
2) Is the share (typically 25 % or 50%) as listed negotiable - if the purchaser could afford to go up from 25% to 45% is that a negotiating position they can take?
3) Is a survey on a shared ownership property the done thing as with a normal purchase' - or is the fast that the 'risk' is shared sufficient?
4) I'm aware of the ground rent / service charge etc scams payments involved, but are there any other bearpits we should be aware of?
Too many angry people - breathe & relax.

Re: Shared Ownership Property Purchase
« Reply #1 on: July 27, 2020, 11:09:28 am »
I've been reading about shared ownership recently.

1, I think yes, as the asking price can go down if you're buying from the leaseholder. I'm not sure if buying from the landlord/freeholder ie Housing Association.

2, if the seller is the leaseholder, I wouldn't think so.

4, the main thing I've found out about the scheme is that it doesn't make buying a place any cheaper nor reduce what you'd need to pay per month. It allows someone to buy with a very small deposit and a small mortage (eg, 25% ownership means you only need to borrow 25% of the market value of the property). But the rent and other fees bring the monthly total to roughly the same as buying it outright.

Also, you are effectively renting with regards to restrictions on decorating etc, depending on the landlord.

ian

  • feat. Undead Jess & Finestre, Queen of Hell
Re: Shared Ownership Property Purchase
« Reply #2 on: July 27, 2020, 11:54:21 am »
Someone only marginally more cynical than me has pointed out that shared ownership combines all the worse parts of property ownership with the worse parts of renting into one single, expensive package.
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MikeFromLFE

  • Previously known as Millimole
Re: Shared Ownership Property Purchase
« Reply #3 on: July 27, 2020, 06:38:29 pm »
Someone only marginally more cynical than me has pointed out that shared ownership combines all the worse parts of property ownership with the worse parts of renting into one single, expensive package.
That seems to sum it up for me - but family member won't be budged (yet).
Too many angry people - breathe & relax.

ian

  • feat. Undead Jess & Finestre, Queen of Hell
Re: Shared Ownership Property Purchase
« Reply #4 on: July 27, 2020, 07:36:33 pm »
Well, the main benefit is that the 25% (or so) gets pegged to house price inflation. But that still leaves the remaining 75% also inflating, so it only gets them insubstantially closer to being able to afford a full place (leastways, unless they're cashing in a London price and moving to the sticks or their income changes dramatically). I looked for some friends of ours and couldn't find any good stats on 'staircasing' (as it's known) which troubles me, because they'd be easy to pull together, so if they're not doing so there's probably a good reason. (Either that or my Google-fu is (still) lacking.)

I can understand why people do it (it's the only option available and at least you own something at the end of the day), but it's a cheap gloss on the messed-up nature of our housing market, but like most interventions, exists primarily to benefit the developers and landlords.

Check carefully the rules for selling, it's never as straightforward as selling your own house, and often more costly – the shared owner is a junior partner and gets to jump through whatever hoops are deemed reasonable (they may call it 'shared ownership', but they're still a tenant, it's 'shares' in the property they're buying). Check also the maintenance fees and liabilities, these can make up a substantial part of the monthly fees (more so if they find out the cladding is a tad on the flammable side). Maintenance costs will also often cover any surrounding grounds, many shared ownership developments are private, so residents will be paying for everything. Some of the developments I've seen in London don't seem to be ageing well. Admittedly that's true for full ownership, but the shared owner may find themselves on the hook for the entire costs.
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