Stupid question - how does that part ownership thingie work when the house isn't new

[LaurieFairyonthetreeEatsCake]

Lovely town house - this one - there is no way in this recession that it's 'worth' £325k

So if we bought a 30% share does that mean that we would be entirely responsible for it? So if it fell to only being worth £225k on the open market (realistic in my view) does that mean that our 'share' would only be 'worth' £60k.

I'm hopelessly confused as it seems like a terrible deal for the buyer - instead of losing 10% which is possible in this market the buyer of this property would lose far more as a percentage ??

bump to keep in active convo's

I think with most housing association shared ownership homes, the owner/tenant has to try to sell it at an agreed price with the housing association first (as they still own a portion of it). That could be why it is at an unrealistic price - HAs are very unwilling to bow to the market as they have invested so much money in it.

If/when they do eventually accept that the price is as unrealistic as you think then, yes, the owner/tenant's share would be worth less as well in proportion with how much they owned. I'm not sure it is a terrible deal in terms of maths: if you had bought the whole house at #325k and it was only now worth #100k, you would lose #100k, but if you owned only 30%, you would lose #32k. There is the issue that they are harder to sell though as generally buyers have to qualify to be offered them and mortgage lenders aren't very keen on them at the moment. Plus the rents on the non-owned portion (in London at least) are out of all proportion.

Nope, still too stupid to get the maths

If the price is determined by them and not the open market (and I think £325 is bonkers) then that share is really only worth £65k-ish?

I don't think it's possible to offer that though is it - if the price is determined by them and not the market?

So if you paid 100k and then the HA decided that actually those houses were only worth £225k then your share would have fallen much more than the normal market would.

I think, from having a friend who had a shared ownership flat, that to sell you have to first put it on at an agreed price with the HA but that if it doesn't sell at that price there is some mechanism for readjusting but it is all very bureaucratic and the HAs are very reluctant to let them go for less than they paid since they have so much money tied up in them. (In London, you now have to virtually be a City trader to earn the minimum amount to qualify for some of these schemes).

If you paid 30% of #325k and that seemed like a reasonable price at the time, and it then became worth only 30% of #225k then you'd have to ask whether than fall was in line with other property price falls in the area. If it seemed much steeper than non-shared-ownership houses then that might be because it's harder to get a shared-ownership mortgage and/or the market for shared-ownership houses is smaller than the "normal" market. Or it could be that #325k was always an unrealistic price and you made a bad buy in the first place.

HTH

You're exactly right. you'll own a 30% share of the house, whether it's £300 000 or £200 000. It'll still only be 30%.
I owned a 75% share of one a few years ago. I was responsible for all maintenance and I had to agree a price with the housing association when we sold it, but it was in line with the current housing market. Because they still owned 25% of the house, we had to give them 25% of the equity but they didnt have to contribute to estate agent or solicitors fees!
We sold it because the final share became out of our reach. I wouldn't buy another one. Hope that helps. x