Shared Ownership

[pumpkinspicelattee]

Hi everyone, just after a bit of advice from people more knowledgeable than me!

I’m debating buying a shared ownership property. It’s my only way of getting onto the property ladder but the main thing that worries my is security.

If I buy a 25% share for instance, could the Housing Association sell the house from under me? I know I’d be responsible for 100% of the repairs/maintenance so I’d hate to put all that money into somewhere if they could just sell it at the drop of a hat if they own a majority share

I’m a massive overthinker so tend to think of the worst possible scenarios when making decisions 😂

no that is not the way it works.

No, they can't sell it from under you. You will have a lease to live there for however many years - the lease begins when it is first sold at say 99 or 125 years, and passes from one owner to the next.

If the lease were to fully run out it will revert back to them, so make sure it has a long lease.

If the lease goes below 80 years it could be hard to sell without extending the lease.

Basically, make sure you have a long lease, and keep an eye on the future, be it to extend the lease if need be or staircase to buy more and eventually buy the whole lot and the freehold. Some shared ownerships don't allow buying 100% so check that.

If you can't afford to buy a whole house it's a good option to get on the ladder and for housing security.

They can't sell it from under you unless you have a specific clause in the lease that says you'll default if you fall behind on payments such as service charge / ground rent.

Just on the leasehold note - I'd do my due diligence around service charges (particularly its rate of increase) and ground rent fees. Some have a 'toxic' ground rent that doubles every few years, although this is - hopefully - being tackled in Parliament.

Thank you everyone! That’s really reassuring.

The lease length is 125 years. The plan would be to buy a 25% share outright with an inheritance I’ve recently received then mortgage the remaining 75% in a few years when my credit score is better

They can't sell it from under you, but look really carefully at all the details. Others have mentioned service charges and ground rent. Also, although it's obviously a cheaper price to buy, you'll be paying a mortgage plus rent on the 75% share you don't own.

It's so difficult because for many people, it's the only way to get on the ladder (smaller deposit because it's based on the % you're actually buying) but the reality of all the monthly payments added up can be horrendous.

• No they can't just sell it
• you will be responsible for all maintenance repairs inside the property
• remember to check the service charges and ground rent. The housing association does the repairs in the communal parts of a building
• be very careful to check that there is no cladding on the building of any flat you might consider and make sure that the property has the right paperwork to confirm that it has been inspected/is fire safe. Some existing shared-owners have found themselves unable to sell flats caught in the cladding scandals and being asked to pay for expensive remedial work...
• check what heating system a building has in place. Some new built buildings come with 'community heating schemes' (so you can't choose your own utility providers) and those are businesses who can charge a higher rate for electricity/heating and are not regulated by the energy price cap.

Also, there are shared-ownership houses (including resales), not just flats which might give you something you can live in longer term.

I started on the property ladder with a 1 bed shared-ownership flat in London. It worked out for me but the housing association could be slowly in doing repairs to communal parts of the building and the service charge kept increasing.

All of the above - also try and get an ALEP accredited solicitor to check and double check the lease and do the conveyancing if you can. They specialise in leaseholds particularly and often can give good advice with regards to the actual lease terms. Good luck!

Read some of the shared ownership threads here and on Reddit. A lot of people are underwater on shared ownership after years.
Why is shared ownership the answer for you?

I bought a S/O house in 2015, only way we could get on the ladder. Rent and mortgage worked out considerably cheaper. When we wanted to sell, the HA allowed us to do this for full price on the open market. Sold the same day, made £70k. I only have good things to say about my experience with S/O properties.

Many of the issues that people have with S/O are actually issues with blocks of flats generally - being managed (often by a housing association) and having to pay service charges, slow in having repairs done, chance of big works being needed, being leasehold, needing the cladding certificate (doesn't have to be totally cladding free, but needs not to have to have any remedial works done), etc. The actual shared ownership bit is more about whether you can afford both mortgage and rent, whether you'll be able to staircase eventually, whether the flat is a bit overpriced at the full price because it isn't as obvious that there's an extra bit whacked on when you're only buying 25% ,, etc

So if you're like many of us who can only afford flats, S/O is as good as anything!

Thanks everyone. I feel a bit more reassured about the process now!

it’s a brand new build home so comes with the standard warranty with the developers but hoping repairs will be minimal given it’s new. I private rent at the moment and have had to move 4 times in the last 2 years due to landlords selling up. If I use my inheritance to buy the 25% share outright the rent on the other 75% including the service/estates charge is half what I’m paying now so seems a no brainer in my circumstances and like I say I’d plan to buy the remaining 75% when my credit score improves which should be fine with a 125 year lease. Now I now they can’t just sell from under me (I’m desperate for a bit of security!) I’m going to go for it I think ☺️

Did you end up going for the shared ownership property?