To be really pissed off with EA and vendor?

[Homesfromhell]

First time buyer. Found a property (flat) I love in a beautiful location. I’ve been looking for a while and this one really stood out to me. I have a very small deposit after having saved for a few years. It’s a shared ownership property, where I would own 70% and the housing association would own the remainder. Went through all the mortgage checks etc and have been accepted. I put my offer in last week which was accepted (yay!). Solicitors letters came through the post on Wednesday and some of the questions related to the other share holder (in regards to the rent etc) so I phoned then up to request the information.

The lady on the phone didn’t have a clue what I was talking about so she took my details and said someone from the team would be in touch shortly. Yesterday morning I received an email from them apologising and explaining that they weren’t aware that the property was for sale (it’s been on sale since January) and that the EA and vendor should have requested permission to put the property up for sale months ago. They then explained that I needed to fill out some forms including an affordability check. I was approved with everything apart from the affordability check. It came back that I would only be eligible for a 25% share (very strange as I’ve been approved for the mortgage so I don’t see why this is an issue!).

When I spoke to the EA yesterday, she did apologise and explained that the housing association had contacted them in regards to this matter. She then said that it shouldn’t be a problem as long as I fill out the forms. I’ve rang the association this morning to discuss and to see if the 25% share is a done deal (as I bought the house on the basis that it was a 70% share and it can’t be sold for any less) and I’m just waiting to hear back. AIBU to really angry about this? As I said the property has been up for sale since January and even if the vendor didn’t know she had to do this, surely the EA should have?. I don't believe the association weren't fully aware either as my mortgage advisor has rang them a couple times over the last fews to gather information.

I’ve done everything on my end (even waiting 3 weeks to view the property because the vendor was useless at getting back to the EA). I’m preparing myself to be disappointed and possibly have to pull out as if it does come back that I’m only eligible for a 25% share then I won’t be able to do it. I'm the one having to run around and deal with their cock up now! Surely this shouldn’t have happened?

No advice, but that is a bit of a foul-up isn't it?

@ahoyshipmates indeed it is! Honestly it's like a bunch of clowns are running the circus

It seems a bit odd - because if the owner of the property owns 70% and the HA the other 30% - why are they suggesting you can only buy 25% - what happens to the other 45%??? - Have they confused you with someone trying to buy a new HO/SO property? - when all they might be prepared to sell you is the 25%.

Unless the vendor is forced to sell the 45% back to the HA - but that doesn't happen in the area I live.....

You're buying a shared ownership property not only from the vendor but also HA who is a vendor too.

It doesn't sound like you got advice from HA about how much % you could buy in to the flat versus to rent from HA. There are strict gov guidance rules on affordability for this Help to Buy scheme

https://assets.publishing.service.gov.uk/media/56e97c56e5274a14d7000000/Sharedownershipp6.1.3--SharedOwnershippaffordabilityguidancee-Novv_15.pdf

It's not for the EA or other vendor to calculate that on your behalf- that's about your private finances and between you and HA.
I think your solicitor or you dropped the ball here as I'd have expected you to have done this affordability assessment with HA promptly on the back of discussing potential mortgage amounts with lender and it's taken you 6-7 months to do so

@Mumdiva99 it is 25% of any property I think. Not this particular one, if that makes sense?

Tbh I'm still trying to my head around it all and understand it myself!

People are misunderstanding how shared ownership works

For each new purchaser of the same flat goes through sustainable affordability test on how much % they can purchase and how much they can rent of the flat. The person vendor of his/her share doesn't decide that, it's a government scheme.

I included a link . There will be lots on the Housing associations own website about how it works that OP ought have been following. The EA, solicitor and OP are liaising. Shared ownership is slow sometimes. All the forms need to be done and decisions made. It sounds like it is progressing although annoyingly OP could have /should have done this % calculation form far earlier

[quote Homesfromhell]@ahoyshipmates indeed it is! Honestly it's like a bunch of clowns are running the circus[/quote]
Or that you didn't do your research and left it all for EA to tell you. They will but it's not their job to hand hold you as a purchaser, they work for the vendor.
It's a government scheme. This part was more your responsibility to look into and chase up.

Hold on, we had no idea we had to do this as nothing was ever mentioned. It wasn't even put up for sale and now they've had to put it up for resale and sort out all the house valuations etc. My mortgage advisor has even contacted the housing association over the last few weeks to ask questions and at no point did they say the property was not actually up for sale.

You are buying a shared ownership flat. It has criteria about who can buy it.

Have you checked the HA's guidance and advise links on shared ownership scheme? You are not planning to buy 100% flat from vendor but also to enter this scheme

For eg this is one HA's guidance on SO resale

How Do I Sell My Share of My Shared Ownership Property?
The actual legal process when selling your share of your Shared Ownership propertyy_ is no different from selling a non-Shared Ownership property. What is different, is that you must comply with the terms of the Shared Ownership lease in relation to whom the property can be sold to as opposed to placing the sale directly in the hands of an estate agent.
New Homes Law, one of Peabody’s panel solicitorss_, looks at the process of selling a Shared Ownership property.
Who can I sell my Shared Ownership home to?
Since the aim of the Shared Ownership scheme is to provide affordable homes to first-time buyers, you won't be able to sell your property to just anyone. The lease will require that you must inform the housing association by written notice of your intention to sell so that it can then look to nominate another suitable purchaser for the property.
The lease will refer to the “assignment” of the property. This is the term used for the transfer of your interest in the lease to another party. Once a new purchaser has been selected you will need to appoint a solicitor to act on your behalf in connection with the sale of the property and the repayment of your mortgage. The Sale and repayment will be done simultaneously.

Hang on, I do think Notwavingbutdrowing3 is being a bit unfair here.

If the current occupants have advertised 70% of the house for sale, and OP has come along and said 'yes, I'd like to buy 70%' then I really don't think it's fair to blame OP for not checking that the sellers had the right to sell it! It sounds like, effectively, the vendors have to sell it back to the HA, who then sell whatever % they deem affordable to OP? Even if it is all in the one transaction.

Surely it's literally the estate agent's job to know that and advertise accordingly? Surely it should have been advertised as 'up to 70% dependant on affordability checks'?

So I am just trying to explain to you OP, that you had due diligence to do as you were wanting to join a shared ownership government housing scheme to buy this flat

Which require you to be agreed as a SO member (purchaser/renter) to join their scheme meeting their criteria - so that's why you ought have been reading HA website about this scheme yourself.

You're not buying an ordinary flat!

Anyway, all is not lost, you need to discuss with HA and look at changing your mortgage offer

Resales can work well when purchaser has deposit larger than %vendor is selling , and the purchaser also meets the SO HA criteria for purpose of those properties and low income for purposes of the gov scheme.

So that says pretty clearly that the vendor needs to tell the SO scheme they want to sell, and they can't just put it in the hands of the estate agent.

Presumably if the vendor had done what they're supposed to do, then the EA would have been given all the information about what a prospective purchaser would need to do, and OP would have been properly informed.

I really don't think this is OPs fault!

Exactly @Faranth thank you. All you have to do is look on right move/zoopla at all shared ownership properties and it will be advertised similar to that with information regarding affordability checks etc. Not in this case.

OP - if you can afford 70% and a bank will lend to you, look carefully at the financials of shared ownership. There are lots of disadvantages and yes its a scheme that helps people get on the ladder (and hopefully move on up). But if you can get on the housing ladder independently of such a scheme you will probably find the long term £££ look better. The amount of rent you pay (doesn't go against your mortgage) in terms of liability, you usually have to pay the full cost (100%) of any repairs (ie not a % that reflects your ownership), shared ownership is slower to sell if your circumstance change, restrictions on improvements/changes/subletting.

Faranth
Hang on, I do think Notwavingbutdrowing3 is being a bit unfair here.

Lol!!! I'm explaining the part OP is complaining about.

was actually something they ought have been looking into & understood

It's not hard to Google "shared ownership scheme" snd then name of block of flats or the housing association

Anyway all may not be lost , OP can still be able to join this scheme for this beautiful flat but with a different % ownership than she hoped for. Shared ownership affordability Criteria are there for a reason to help support people not to overstretch

@Notwavingbutdrowing3 the housing association said themselves that they would have contacted me and explained the process had they known the property was actually up for sale so I honestly can't see why this is my fault tbh . Thank you for your advice but they've already explained to me that if I'm not eligible for the 70% share then I can't purchase the property.

I have filled out all of the forms now so I'm just waiting to hear back, hopefully before the end of today 🤞. Thank you all for your messages and advice

One would expect the estate agent would be familiar with selling shared ownership properties, but on this occasion they appear to have missed something that should have been fairly obvious (to them as industry professionals).

An innocent purchaser with no prior knowledge (such as the OP) is going to be relying on the expertise of professional people, and would naturally expect that everything would be in order.

I hope it all works out for you OP.