My SO Home: No. 31

I was fed up of flat sharing, and wanted to have my own home. Unfortunately, as a single person, buying on the open market where I wanted to live wasn’t an option. On the other hand, I didn’t want to move to an area where I had no connections. I also liked the idea of a new-build. I’ve never been interested in older properties; I wanted a modern, easy-to-heat home. In early 2020, I bought a 40% share in a shared ownership flat.

The sales team told me what I wanted to hear

I purchased the 40% just before COVID hit so it was a strange time. On top of that, I found out fairly quickly that the housing association would be challenging to deal with. Whilst the sales team were more than happy to tell me what I wanted to hear, it was a different story once I’d been passed on from sales. It became apparent that it would be a fight to get anything not up to standard fixed to even an adequate standard, and in a timely manner.

I planned to sell after 5 years

Initially I assumed I wouldn’t be able to staircase to 100%. My plan was to do five years and then sell my 40% share.

However, when I saw the difficulties people in my building were having selling their share, I became more interested in acquiring the 100% in order to have more control over the selling process.

I had a fair amount of equity in my home

When I bought my initial share in 2020, the full market value was £185,000. By 2024, my valuer said the property was now worth £225,000. Which meant my 40% share had increased in value by £16,000. Without this equity, I wouldn’t have been able to staircase. Although, if the housing association had had their way, I still wouldn’t have been able to…..

Getting a RICS valuation for staircasing

My housing association told me – in writing – that I could source my own RICS valuer. So I did this but they weren’t happy with the valuation. They tried to get me to agree to have their valuers do another RICS valuation.

I knew that the supposed ‘independent’ valuers the housing association always use had valued an identical flat, on the floor above me, at £255,000. It seemed they were trying to get a similar valuation for my flat. However, this would have priced me out of staircasing, as my mortgage broker told me that anything above £230,000 would be unaffordable.

District Valuer Services (DVS)

After I refused to have a second valuation, my housing association told me they would need to involve District Valuer Services (DVS). I had never even heard of this before. It’s certainly not something the housing association advertise. 

Having said that, my experience with the District Valuer was a positive one. I honestly believe that they applied due diligence in calculating the final valuation figure. The District Valuer compiled a rather extensive report that took into account variables including:

• the specific location of the property (and not just the general area);
• the fact the property is located near several schools; and
• the fact it is located just next to a housing estate which has a reputation for anti-social behaviour.

All of these factors obviously impact the price a buyer would be willing to pay if I sold the property on the open market. 

The District Valuer valued my flat at £235,000. This was £10,000 over my original RICS valuation but £20,000 less than the housing association’s surveyors would have valued it at. Even better, my mortgage broker managed to find me a mortgage I could afford (even if it did mean dipping into my savings).

Now that I’ve staircased to 100%, my plan is to sell on in around two years time.

Is shared ownership a stepping stone?

I am acutely aware that shared ownership remains the only option for many people who don’t want to be stuck with the uncertainty of renting. At the time, it was the best option (of limited options) for me. Still, a system that is marketed as ‘helping people’ actually makes life very difficult.

It seems to me that the system is inherently rigged to allow housing associations to make a profit but not allow for people to actually get out of shared ownership. Even though the scheme is still marketed as a ‘stepping stone on the property ladder’, shared ownership properties are actually very difficult to sell, and staircasing isn’t always affordable. In my view, this is clearly to do with valuations being too high because that benefits the housing association.

I’m not sure I see shared ownership as a stepping stone. For me it was more an alternative route that I had to take if I wanted to get out of renting. It has caused me a lot of stress, frustration and money. I don’t believe that shared ownership should be marketed as affordable housing. The reality is that, for many, it is not.

Ideally my next home wouldn’t be a leasehold property. Or, if it had to be, I hope substantial reforms would have taken place by then to protect existing leaseholders from unscrupulous freeholders and managing agents. With the recent white paper released on the plans for commonhold, I have  fears about what this will mean for existing leaseholders and, in particular, shared owners. I think buyers, rightly, will be even more reluctant to purchase existing leasehold and shared ownership properties as it wouldn’t make financial sense. Which leads me to have concerns about becoming stuck in a leasehold system which will deplete in value after I have fought so hard to get the 100%.

Featured image: Freepik

Other shared owners discuss their experience of valuations for staircasing