To think a new bathroom WILL add value?

[Puppymonkeybaby1]

DH and I are having a disagreement about what work to do on the house this year.

Our house is 'shared ownership' (50/50) and when we bought it, we were told by the housing association that when we sold, we would only ever be able to sell it for 'market value'. No issue with this, it makes perfect sense that people don't make huge amounts of profit once they sell on social housing.

We've done a lot of work over the last few years including a new kitchen as the existing one was falling apart. We're always very aware that we won't necessarily see a return on the money we put into the house and that's fine.

However, the bathroom now needs doing and DH doesn't think it's worth it. I think it will add value, ok not a lot, but it will also make the house more sellable.

Who is right??

PersianCatLady

That’s what I said. But I know nothing about this. I also don’t understand why if op obtained 100% ownership of the property that it would remain social housing. To me, social housing is 100% non owned. This is shared ownership and therefore different, isn’t it?

My flat is shared ownership and we've just had it valued. What market value means is that a surveyor values it, and they set the price it's sold out. That price is the market value based on the current market. The surveyor came to our flat to value it and researched sales in the local area.

This protects both the buyer and the seller. It means that that there can't be any gazumping and gazundering. The main point of it was to stop bidding wars inflating the price, which isn't happening in the current climate anyway. It makes the buying and selling process much more transparent and less stressful.

Op in your position I'd find out from your housing association who their approved surveyors are. Then give the surveyor a call and find out if a a new bathroom would be taken into account. Anyway even if they wouldn't, I'd do it anyway as it's more pleasant for you and will make the flat more desirable to potential buyers.

My first house was 50% shared ownership. I had the choice of replacing the bathroom (avocado green suite) of replacing the single glazed windows-could afford both.

Decided to go for replacing the windows.

Painted the tiles in the bathroom magnolia, fresh magnolia on the walls and new flooring. As the room had a ceiling window it had a fresh airy feel and could get away with the suite colour.
As you plan to stay for a few years it all depends on how much you dislike the bathroom. How about replacing it without going mad over price. Now would be an ideal time to get a showroom display suite on offer. It only needs to last until you leave as the new person may want different anyway.
When you sell you will get 50% of whatever it is valued at. I decided rather than buy extra shares in the house, which was a large one bed, I wanted to save the money for a house with more bedrooms. If you are even considering buying more of the house, wait until after to renovate.
I ended up with people on the waiting list having found places elsewhere and not removed themselves from the list, but it sold within 48 hours of estate agent listing it and for asking price despite the bathroom. (that was 10 years ago though and it was an entry level property on a popular area).

Are there lots of shared ownership properties locally? If they are like gold dust then don’t bother, it will sell anyway, if there is a glut then making yours more appealing than others would be worth it. Market value is just what the market st that time dictates someone will pay. We made money on ours as property prices had risen generally, we had only painted and replaced a couple of carpets.

Dragon
As long as this is the same as every other SO home I have ever dealt with then it is like this.

Currently the OP and the HA each own 50% and the HA own the freehold.

If the OP "staircased" to 100% then she would own the whole home and the HA would transfer the freehold to the OP as well.

I appreciate that some HAs may be different but this is my experience from many HAs.

Occasionally there will be no buyers for a particular SO home so it will be sold on the open market as a 100% freehold home and the HA gets slightly more of the money than the owner on a 50/50 split due to admin charges.

Usually HAs have waiting lists of people for their SO properties.

Im sure the op understands the scheme. Of course you have the option to buy it outright and own 100 per cent. However, if you are in an estate which is all shared ownership there is a cap as to what people will pay for it in the open market because it is seen as social housing. If you have one which is in a predominantly private area its a different story.

PersianCatLady and AJP
thanks for the explanation.

It's a very sought after house in a good area. Period features etc... as opposed to new build which is very rare.

As someone else explained, we can only put it on the market for what it's valued at. None of this "it's worth £250k but put it on for £265k and see how you go" so even when we do sell, we'd never get an inflated price for it so I don't see the point of staircasing.

Bathroom is fine. White suite, grey floor tiles. Just a bit grubby. I'll stick with it I think, and save the money for the next house.

Once you own 100% of the house, you also own the freehold and it is like any other private home.

The market value refers to selling it onto another family on the waiting list for a SO property.

I am sorry OP but do you still have your documents, you need to read them again because you have got some of your thinking wrong here.

If you own it 100% you can put it on the market for whatever you want, it’s yours.

When we were thinking about selling our house a few years back I asked the EA whether we should replace the bathroom to sell (think old coloured suite but not as bad as avocado and clean etc).

He said not to bother as some people always replace the bathroom whenever they buy a new house so it could be money wasted. Who knew?

He said to only consider it if we couldn't shift the house and people said it was because of the bathroom.

No they mean the market value as per the surveyor. The language is more technical and probably different to the way the public understand market value.

OP you WILL get an inflated price for it- it will reflect any increase in house price in the area. They don’t value it at book value (the value of bricks and mortar which is nothing)

Honestly they don’t keep a special valuation for you. All it means is you won’t get offers and gazumping as a previous poster said

I was assuming a new build on an estate. Is it surrounded by other shared ownership properties?

Francis
With SO properties, if the OP only has her 50% share and wants to sell, the HA will arrange a valuation and that will be the price to which it will be sold to someone on the HA SO waiting list.

If it is being sold ad a SO, it usually doesn't go on the open market unless there is no one who wants yo buy it on the SO list.

Surely the market value thing is just a protection thing for the HA so that, if the householders are not paying rent and the HA regretfully decides that the agreement must end and the house be sold, the householder can't put the house on the market for way above what it's worth in the hope that no one will buy it.

My Mum's friend (this was many years ago) hadn't paid her mortgage for ages and the bank foreclosed - but she carried on living there for years because she "couldn't sell it" - this was a complicated property however with business attached, not as straightforward as a house.

OP you need to carefully read the SO pack relating to sale/ valuations. As a lawyer, I dealt with 2 SO companies and both had clauses within their terms and conditions that any improvements were not taken into account when a valuation was done for sale of any % below 100%.

Your scheme may be different but it's worth checking before laying any money out.

well a new bathroom can cost a small amount to a huge amount.

Our bathroom was very dated and the estate agent said we wouldn't get the money back of replacing it so it wasn't worth changing it just to sell. He gave us the impression that the entire house had to be in 'just decorated new condition' to command a premium price or a total wreck to be a low price and middling properties isn't wasn't worth investing in updating one room.

But if we were staying for a few years we'd have got a few years of pleasure from it too which might have been worth it to us.

I think that the only point doing it is if you are going to live there and get the benefit of it. If you can spruce it up with some nice accessories when you come to sell then I think it's not worth the investment. Only you know how bad it is and if it could actually detract from a sale.

When we sold our SO house we had to pay (£1k!! ) to a surveyor to come and view and value the house. And it had to be deemed a fair price, as it is affordable housing.

So we paid 315k in 2008 and it was ‘only’ worth 400k by 2015, whereas had it been a private house we probably would have marketed it around 450. We owned a 25% share so we received 25% of the increase in value.

It does have the advantage that everyone knows exactly where they stand, to haggling etc.

It sold in six days.

So we paid 315k in 2008 and it was ‘only’ worth 400k by 2015, whereas had it been a private house we probably would have marketed it around 450. We owned a 25% share so we received 25% of the increase in value
If you had owned 100% of it then you could have marketed and sold it for whatever you could have got.

That is the point of staircasing TO 100%.

Unicorn
Was your SO home ever publicly marketed or did the HA find the buyer from their waiting list?

Yes, but the fees for doing so were pretty high if I remember rightly. We wanted to move area anyway, so it was the right decision.

We couldn’t have got the house we needed/wanted in 2008 so SO worked for us in that sense and I don’t regret doing it. However, friends who bought privately saw their equity shoot up and enable the next step up the ladder a lot easier. Eg, friends bought a flat less than ten min down the road for £175 in 2009 and sold in 2016 for £400k.

Sorry just seen your question.

It went straight up on rightmove.

There was a SO specialist estate agent who dealt with it. (If they didn’t sell in 8/maybe 12 weeks we were allowed to go via a normal agent).

Whilst the staff themselves were very nice they did very little work for their 1% fee. They never visited the house. We had to do all photographs and viewings. Luckily there were only 4 viewings if I remember rightly. I think it went so quickly as we lived in a pretty nice area, good schools etc, 15 min walk to the station and then 25 min to central London etc. It was a new build estate in 2008, only 4 SO houses, which are apparently quite rare and it was the first time one had done up for sale. There were far more SO flats on a few local new build estates and they never seemed to sell as quickly.

Unicorn
Thanks.

Some HAs do the 8/12 week thing themselves if they have people on their waiting list or use a specialist agent like your did.