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AIBU?

Share your dilemmas and get honest opinions from other Mumsnetters.

Original poster

to fully buy my shared ownership property and rent it out

70 replies

WyclefJohn · 22/04/2018 05:55

I bought a percentage of a shared ownership flat about 5 years ago. My financial situation has improved, I have moved away, and I am now able to buy the whole flat, and I could rent it out as an investment. I have checked with the housing agency and they say this is fine. The flat lies in an area of mainly social housing.

Would I be unreasonable or unethical to do this? The alternative is I sell my share, and give someone else the opportunity to buy a shared ownership flat. To some extent I am removing a property from social housing.

(Full disclosure: I posted about this the other day, but I didn't clarify the nub of the problem and only got a few replies)

OP posts:
TestingTestingWonTooFree · 22/04/2018 05:59

I suppose if you buy out the HA it theoretically allows them to do it again on another place. Being a good LL would be ethical.

Hughpughbarneymagrew · 22/04/2018 06:02

Hehe you checked your ownership documents? Despite what the housing agency have told you, renting is usually not allowed and I thought the restrictions on use etc usually continued to apply for quite a while after purchasing the whole property.

Original poster
WyclefJohn · 22/04/2018 06:03

There was a clause that said I couldn't for 21 years. However, the HA has been taken over, and they have put it in writing that I could do this. Beforehand, I thought it was not possible.

OP posts:
Original poster
WyclefJohn · 22/04/2018 06:06

There are clearly several issues here - 1) whether it is legal 2) whether it is a good investment (being in an area of social housing may mean it isn't) and 3) the ethical. Here, I would like to ask about the ethical component

OP posts:
Chasingsquirrels · 22/04/2018 06:09

Only you can make this decision based on your own personal ethical position.
What do YOU think? That's your answer.

sentMai · 22/04/2018 06:11
    • The HA could be wrong and this would not overturn local legislation

  2. I own several properties in mostly HA areas. Good investments. I'd always rather buy somewhere cheap and spread the risk.

  3. I think you're acting unethically. It's amazing how quickly you've forgotten the leg-up you received and are happy to take the opportunity away from someone else in need.

Panda81 · 22/04/2018 06:14

I don't think ethics is an issue. The housing association will get quite a hefty profit from you purchasing it that they will reinvest into more properties (or should do!). I actually think that's probably better for them than monthly rent payments.

At the end of the day, shared ownership is to help FTB get a footing on the property ladder, it helped you at the time and now can afford to buy the remaining share - that's what shared ownership is meant to be for. It shouldn't mean you should be restricted on what you do with the property once purchased outright. I'd say go for it (if it's a good investment).

Original poster
WyclefJohn · 22/04/2018 06:14

I´m unsure of the ethical position. I think it might be unethical as you say, I got a leg up when I had less money. That said, the intention of Shared Ownership is to allow full purchase - I'm not purchasing a council house and taking away social housing in that way. But I see the ethical problem.

OP posts:
Panda81 · 22/04/2018 06:19

I have a shared ownership property and zoopla said it was purchased for £24k and the market value is around £200k. I'm assuming the HA purchased from the builders for £24k. If I bought outright then that's a £176k profit for the HA... think how many more properties they could buy and earn rent from with that money.

KanielOutis · 22/04/2018 06:20

I would do it. If HA want to reinvest your money when you buy outright they can. It's no more immoral than selling your SO home, and buying somewhere else to let.

OliviaBenson · 22/04/2018 06:35

Not ethical at all. I'd also be surprised if you were allowed to do this (even though they have said). There might be planning restrictions on it that would prohibit it for example.

Also (I know this wasn't your question) but being a landlord is expensive. Can you afford it? They've changed the tax rules around it too.

MaverickSnoopy · 22/04/2018 06:43

On the one hand the opportunity was given to you. You could decide to buy outright and live there. This would not be unethical. It could also be the case that 5 years down the line, having bought outright, that you need to relocate. Gone is the opportunity for it to be a SO opportunity for someone else. So you would either sell as a non shared ownership property or rent it out as a non shared ownership property. In this scenario you either sell it to someone who may or may not appreciate it and it certainly someone who does not need SO. Alternatively you be the best landlord you can be and give someone a better experience of renting.

Your issue is that you would be going straight into renting it out which feels like taking the chance away from someone else to buy. Maybe it is, or maybe it isn't, but that choice was given to you when you bought it.

Personally I couldn't do it. When we sold our SO house we put it back into SO, despite living there long enough to put it onto the open market. With SO properties you can only sell for the price quoted by the surveyor. Had we put it on the open market we probably could have made more money (expensive location in the south east with exciting new railway station opening, that was pushing house prices up and making people offer silly money on houses). For the exact same reason we put it back into shared ownership - because someone gave us the opportunity and if we'd not had it we never would have got where we had got to (buying a larger non SO house). We sold the house to a lovely family who were so grateful to have the opportunity and who I remember saying were about to give up as the were about to be priced out of the market.

I don't really think there's a wrong or a right answer here. Just your decision.

SmileAndNod · 22/04/2018 06:51

So you don't live in the SO house now? Do you not have to be living there to qualify for the SO scheme in the first place? We looked at SO and I'm sure there was a clause about that being your only residence and giving the H A first offer on the place when you sell.

Original poster
WyclefJohn · 22/04/2018 07:01

When I bought the place, I was single and on a low salary and lived there for a number of years. Then I met my now DP, who already owned a place, and both our salaries are now better. That´s where the option to buy or sell comes in

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Jessikita · 22/04/2018 07:13

I can’t believe the amount of sanctimonious people on here saying it’s unethical.

The amount of ex social housing I see rented out is vast. People who benefited from subsidised rent for years, then got to buy at a huge discount and either sell or rent out at a massive profit!!!

You will gain nothing by taking the moral high ground.

SmileAndNod · 22/04/2018 07:14

Ah I see. In that case, as someone who is now securely housed, if I was in your position I would pass on the opportunity to someone else who is in need of secure housing. But that's probably just me.
I say this as someone renting with children who has had to move 4 times in 4 years due to LL.

As long as you are happy with your decision though it matters not what random people on the Internet think.

YimminiYoudar · 22/04/2018 07:21

If you are looking to canvas the opinions of strangers on the Internet to help make up your mind, my £0.02 worth is.

  1. trust the housing association to know this.
  2. possibly not. Recent legislation changes have made it less profitable to be a small-time landlord. There are a lot of hoops to jump through and you may not make much profit unless you can be certain of significant price rises - if prices are flat you may only break even. Possibly worth it if the property is going to have significantly better transport links in a few years time due to planned major projects for example.
  3. you would be being unethical, yes. Pulling the ladder up behind you is not nice.
Original poster
WyclefJohn · 22/04/2018 07:22

If we were to do it, absolutely we would aim to do it long term (secure tenancies, certainly wouldn`t be asking people to move every year)

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Original poster
WyclefJohn · 22/04/2018 07:24

I wouldnt be asking this question, however, if I didnt have some qualms about it

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LIZS · 22/04/2018 07:35

Are you planning to fund this with a mortgage, you would need a lender's permission to rent it out. Do the HA manage all the properties and are they the freeholder, there may be covenants restricting how properties are occupied and passed on which may be separate to this and enforceable between owners. If you no longer live nearby you should look into using an agent to screen tenants and assist you with ll obligations.

Graphista · 22/04/2018 07:36

Firstly yes I think it's unethical. Personally I don't agree with social housing being sold off at all. Just my view.

Secondly, as someone who's also been at the mercy of private landlords I think this is FAR too unregulated. Which negatively affects both tenants and landlords.

Do you know what being a private landlord involves? Do you have the money to cover energencies? Hell even just owning is expensive as you have to maintain the property yourself. Insurance will cover certain emergencies it doesn't cover updating the roof, insulation, replacing ancient bathrooms etc.

Depending where you are in U.K. There's also regulations regarding gas and electrical safety checks, equipment provision, fire safety which also cost money.

And can you cope with crap tenants that wreck the place? Don't pay rent? Because it's not easy to evict them - at least legally.

And given that it's likely to be in an area where rent prices are quite low you may not break even let alone make a profit.

Minniemountain · 22/04/2018 07:37

Legally, I expect you can. Shared ownership leases are in a standard form and certain clauses no longer apply once you staircase to 100%. Your HA can chose to leave the non-rental clause in but it sounds like yours hasn't.

Morally it doesn't sit right with me. Can't you sell to someone nominated by the HA and keep the flat in the social housing stock?

Original poster
WyclefJohn · 22/04/2018 07:43

I don't think renting it out is the route to riches. The flat is in good condition, but we would need to keep money aside for the costs. We would have a smallish mortgage, as we can buy the remainder with cash.

The alternative is always to sell my share and put our money elsewhere. The HA no longer offer a list of approved buyers or waiting list. It has to go through an estate agent.

I appreciate the views, both of those who are saying it is unethical and those who say it is ok

OP posts:
MaverickSnoopy · 22/04/2018 07:57

A PP made a good point. Check your deeds.

Original poster
WyclefJohn · 22/04/2018 13:42

Would the deed on a leasehold be the same as my lease? Still thinking about the ethics of this.

OP posts: