Shared ownership - what happens at 100% ownership

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Hi,

I’m considering buying a new build at 75% ownership to me and renting the remaining 25%. I’ll be buying the 75% cash from house sale equity.

In a few years when I’m more financially stable (divorce, long story) I’d like to buy the remaining 25%. Does this then become a freehold property and remove all the lease terms?

Are there any other pitfalls to be aware of?

House?

How old is it?

Presumably the freehold/leasehold issue is noting to do with the ownership though?

I own two properties - a freehold house and a leasehold flat. I don’t have the option of purchasing the freehold for the flat.

Would you have the option?

Sorry, I’ve just seen you said newbuild.

When you staircase to 100%, the landlord will also do a transfer of part of their freehold to you so you own a freehold. They can’t charge a price for that but I think they can charge their surveyors (for valuing the share you are buying) and legal fees.

Sometimes you can’t do this if the property is in a protected area where they want the housing stock to remain as social housing. The seller will be able to tell you that now.

If it's a flat this seems very unlikely to me. I would think you remain a leaseholder. But I think you really need to find out the details about that specific shared ownership property in case there are different rules for different builds.

@Malteser71 being able to buy the freehold is standard for shared ownership houses built after a certain date.

Ah apologies, it's a house.

There could well be pitfalls yes but it will depend on the specific management company and property. Don't use the conveyancing solicitor that theychelpfully offer you, appoint your own independently to verify your actual liabilities and rights. There are likely to be ongoing service charges and you'll stay liable for those even once you own 100%.

With 75% of the cost of a new build available as cash, I reckon you could find a decent non-newbuild place that you could buy outright or with a small mortgage. New builds are notoriously overvalued and like cars they lose a significant chunk of the ostensible value the moment you take possession of them.

Thanks for your comments. There’s two options I’m interested in, a semi or a detached, not much £ difference.

Unfortunately, I can’t get a mortgage due to my ex and there’s absolutely nothing available to buy in my price bracket within a 15 mile radius.

Service charges are normal on new build estates these days. So you can expect a charge even once you own the freehold.

Conveyancing solicitors have to be independent of the seller who recommends them, so don’t necessarily avoid them. Look at online reviews before deciding.

With some SO properties you do not always have the right to staircase to 100%.
If you can/do, and it's in an estate, it will be what is now known as fleecehold. You will still have unregulated and uncapped service charges to pay and possibly "permission" fees e.g. putting up shed, building/extending/keeping a pet etc.
Use an independent leasehold specialist to go through the lease terms with a fine toothcomb..

Ironically the few (weak) rights that leaseholders have to challenge unreasonable service charges does not apply to freeholders (fleeceholders). They do not have the option of FTT.
I believe changes are afoot to change this ridiculous situation.

I previously had a shared ownership house that I staircased to 100%. When you buy the remaining shares it remains leasehold unless you choose to purchase the freehold from the leaseholder.

The positive is you have the whole market of mortgages available to you once you reach 100%. However, when you go to sell it's best to check the clauses in the contract. We had to give the HA who had previously owned a proportion of our house first refusal before being granted permission to place on the open market.

What I would say is the process worked for us, got us on the property ladder and enabled us to buy something we could have never afforded otherwise. Good luck.