VERY LONG Keyworker Home Owned Hell - please please someone with legal knowledge help?

[AdelaideJo]

Hi All,

DP and myself are in the most godawful fix we've ever been in and are facing financial meltdown. I'll try to be brief but clear.

2 years ago we bought a one bed SHARED EQUITY flat in London. We were assured repeatedly that reselling the property would be 'simple'. We knew that we had to sell through an estate agent, but that we had to give the developer/freeholder first option to purchase. There are all sorts of clauses in the lease which restrict us ie. NO SUBLETTING, have to share part of the profit on resale etc etc.

After the birth of our DS we realised we couldn't stay here (its 44 square metres, 2 rooms, with one room incorporating kitchen, and lounge/where we sleep). When he was almost 1 year old (January) and we'd lived here over a year, we contacted the developer in writing and told them we wanted to sell, and could they advise us how to go about it. in JUNE, they replied! We set about putting it on the market.
(at this point, we opened negotiations with them as to wether they would waive the no subletting clause because of our family circumstances - a company Director got involved and we obtained consent to sublet).
Suddenly, we got an offer on the flat, so far so good.

This morning, after weeks of legal work being done by both us and the purchaser (and legal bills run up), we found out that the buyer was pulling out because.....................SHE COULDN'T GET A MORTGAGE OFFER!! This person had 40% deposit, no chain etc. They wouldn't lend to her because of the type of shared equity lease! Obviously we are devastated and several hundred lighter thanks to the draft contracts having been written up (but not signed obviously).

Our situation is now - we are due to take possession of our new rented home in 2 weeks. The rent is almost 800.00. Our mortgage on this place is almost one thousand. We have no buyer.

Imagine our horror when the developer/freeholder begin today to talk to us as if the consent to sublet has never existed!! They are basically backtracking, saying that they need to think about wether to allow us to rent the property out for a short amount of time while we catch our breath after this failed sale.

Issues:

1. Our buyer couldn't get any lender to give her the money because of the type of weird lease it is ie. shared equity. This makes the flat virtually unsellable, yes?

1. Why are they saying we can't sublet when they said we could?

1. The biggest issue. I am pregnant. We will be a family of four here (just can't happen).

We move in 2 weeks. We can't afford independant legal representation. We can't stop paying the mortgage but we can't afford to pay for 2 homes.

We want to get repossessed but even that seems to be fraught with problems?

we feel we've been truly duped (along with all the other keyworkers here) into buying a property where you are basically stuck here due to the unsaleable nature of the lease.

Could anyone advise? I am petrified of whats going to happen when we move in 2 weeks and we can't pay our mortgage after the next month. Citizens Advise were very ignorant of what type of situation we were dealing with (the keyworker scheme nightmare in London).
I'm in a total state about it all, can't stop crying.

Tbh I'd advise you go to bankrupt. You won't have any equity in the flat - it's just a liability and you want (need) to move on with your life.

Honestly, f*ck paying the mortgage - life is too short to drive yourself insane with such worries and you have two lovely children to worry about instead.

You bought at the wrong time - no two ways about that - so you're either going to "pay the price" and pay this ridiculously expensive 1000 quid a month mortgage on a property that isn't even yours 100% or you say "fuck you" - get slap on the wrist - and move on with your lives.

I would suggest posting your dilemma over at www.housepricecrash.com and moneysavingexpert.com where you'll be pointed in the right direction.

Good luck.

I should add - I sold my house last year - I had some equity in it but not actually that much once the bank had taken their chunk + the "leaving the mortgage early" blah blah blah. I was never quite able to get on top of the mortgage/bills and in the end I just kind of threw my hands up in the air and said "fuck it". I'd signed a contract on the house which meant my buyers had to buy and complete within 4 months. I rented somewhere else 50 miles away and stopped paying the mortgage. By that point I simply did NOT CARE any longer - the first night in my new rental house was the first decent night's sleep I'd had in months. When it all came down to it I thought "what are they going to do? send me to prison for not paying my mortgage?" - which kind of gave me the giggles anyway - because at least in prison I wouldn't have to find the money to pay the "rent"!

You'll be OK I promise - but you don't need to punish yourself for the rest of your life just because you bought a part-share in a flat in 2007. Life really is too short for that.

Thanks for that brilliant reply ski.....me and DP didn't sleep a bloody wink last night, watched the sky get light and then got up at 6 for work...joy of joys.

Then two things happened. The first was that the other freeholder/owner left a message on my phone which said "we've decided that you should be allowed to rent the apartment out for a fixed period of time"

Then another voicemail was from a letting agent saying he'd found a young couple who wanted to rent the flat and could they move in the day after we move out next week?

I swear last night things couldn't have been any worse - DP rang the mortgage co. today so tell them to prepare for us defaulting!

So suddenly its okay. But they WILL make us sell this flat, and its likely they'll make us market it in a few months time. But at least I won't be living in it with 2 kids under 2 and doing 13 hour days as a healthcare professional!

I agree with you that the 'stigma' attached to repossession is long gone. This country is in such a bloody state now and i'm glad you frred yourself from the confines of financial stress and misery.

The lesson in it is - keyworker homes are nothing more than deals with the devil.

I'm so glad it's all working out for you!

Forget the stigma, anyone who looks down on you for falling on hard times isn't worth your effort - anyone who loves you and cares for you won't give a damn and certainly won't blame you!

It caused me so much stress and misery I'm not sure I actually ever want to buy again - I'm afraid I'm rather jaded and didn't enjoy it at all. Funny really, when I bought I thought it was going to make me feel more secure - it was the opposite - I spent 4 years worrying that the boiler might explode.

My boiler did explode actually this february - but it was my landlord's problem and not mine!

I think once the sale is agreed it's pretty safe to say "fuck paying the mortgage" - I mean what are they going to do? make you sell it?

I found this interesting as we have been on a keyworker scheme since last October and have now been told that all the funding has gone in the south west and there won't be any more. Was gutted as it really is the only way we will ever be able to buy a house but a few people have said that we are better off out of the keyworker scheme thing and that we were lucky we didn't do it. Still renting but as skilhorse said, some things are more important, we have a roof over our heads and 2 beautiful children.

I was able to get a shared ownership home as a keyworker in 2003. We sold earlier this year to a lady who had £50k in cash to buy our share then she just pays rent on the bit she doesn't own. She's in her 50s - not a keyworker. Luckily it worker out OK but I still found it really stressful. Good luck to you.

But if you hand back the keys / stop paying the mortgage a la skihorse, won't it make a huge impact on your credit report and leave you unable to satisfy landlords' criteria for renting????

Glad things worked out skihorse. Reading with interest as I brought with a fixed equity keyworker loan, we are selling (trying to) the loan we had won't affect us selling, but we haven't made any money and so can only afford to buy bigger if we get a shared ownership house. We were weighing up whether it would be better to do this or rent..
All hypothetical until we sell, we too are in a one bed with a toddler.

Errrnonymous - yes, of course it will affect your credit record - but, I am of the opinion that there are more important things in life than being able to apply for a credit card/get through the credit check of a rental house I probably can't afford anyway. You have to weigh up the options for yourself, what sort of quality of life do you have if once you've paid the bills you're living on rice & mayonnaise? There comes a point where none of us can "take it anymore" - most people don't throw in the towel at the first hurdle.

I've read everyone's views with real interest.

We've had a dreadful experience and we weren't even in shared ownership but shared equity, which was mean't to make things easier for us when it came to selling. There are only a small handful of real shared equity schemes in the country.

My absolute heartfelt advice to anyone considering buying into a scheme like this is; if you have a family, don't do it. If you are a single person or a youngster who doesn't plan a family for 5 or more years, go for it. They are often new builds which may be finished to a high spec. and look lovely, but the walls will be paper thin. Furthermore, they are (government regulated) mixed tenure developments - some of the people who will live in the immediate area may not be the kind of people you'd like to have as neighbours.

Wonderstuff - I know renting seems like going backwards, but it won't be I promise.

Regarding credit reports and renting, we have actually, in our late thirties, had to have one of my parents act as a guarantor to rent the flat we are going to, even though just ONE of us earns enough to cover the rent twice over. This is because my DP is on a monthly debt management plan so he has poor credit. The agency wouldn't allow me to rent the property for us alone .