My SO Home: No. 15

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Mary McAllister* explains some downsides of shared ownership and why, if she had the chance to go back in time, she wouldn’t buy a shared ownership flat.

“Things started off on a high when I bought my first share, for obvious reasons. I was so happy with my first home, ‘owning’ 30%, despite being on a low income.”

My experience with shared ownership, my housing association, and staircasing is mixed. But the balance is tipping towards the negative.

After a career change, I managed to staircase to 60%. The housing association nearly messed up my first staircasing process, I had to turn up in their head office in person, unannounced, for them to see their error. The issue was quickly resolved and the staircasing went through, three days before the valuation expired.

I had another attempt at staircasing in 2016, but I pulled out of the process after Brexit.

Downsides of shared ownership

My experience with the housing association surveyors in 2016 was rather negative. I had two surveys, as I didn’t agree with the value they put on the flat. My main issue was that they valued my shared ownership home at the same value as private leaseholders’ homes, even though private owners have extras, that I – as a shared owner – do not have. Specifically, those flats have allocated parking and a 999-year lease (as opposed to 99-years for the shared ownership flats). Also the interiors of the privately sold flats were finished to a higher specification.

Although I could never prove it (as I am not privy to the information) I felt the balance was tipped towards the housing association in their valuation. There must be some incentives / privileges for surveyors to be on shared ownership panels.

I know now (after years of digging for info) what the housing association paid to the developer for the flat initially. And I know now the sales price was “inflated” by more than £20,000 as soon as the housing association sold the flat to me three months later. My flat generated a 15% immediate profit margin (in three months!!!) for them. I didn’t have this information at the time But with hindsight I’d strongly suggest that first-time buyers haggle on the sales price of shared ownership new builds.

Living with cladding

Now I am stuck in the flat, as cladding and fire safety issues have hit our development as well. We cannot sell, and we cannot move. We don’t even know how much we will have to pay for the remediation. I’m sure everyone is aware of the situation.

I thought the only silver lining of fire safety problems would be that shared owners could get a discount on the flat price for staircasing. But the housing association valuers won’t do a valuation, due to the cladding and fire safety issues.

When I bought my initial 30% share, the housing association helpfully suggested I should be aware that property prices can go DOWN, not just UP.

But when I approached the housing association surveyors at the beginning of 2021, they refused to do a valuation on the flat, due to the cladding and fire safety issues. I thought the only silver lining of the fire safety problems for a shared owner staircasing would be that shared owners could get a discount on the flat price, as this is the time when prices should go DOWN, which is advantageous for a buyer.

The fact that they are refusing a valuation just strengthens my suspicion that surveyors are more inclined to do a valuation in favour of the housing association than myself, an ordinary shared owner. Why else would they refuse to carry out a valuation on the basis that the flat has a B2 rating?

Housing associations and shared owners have potentially conflicting interests

Clearly the housing association wants to make as big a profit on initial sales and staircasing as they can. But this pits shared owners and the housing association against each other. The only time the housing association and the shared owner have the same interest is if the shared owner wants to sell. Then both the housing association and the shared owner want to achieve the best price possible.

In the meantime, leaseholders / shared owners are left in a limbo for more than 18 months, while the ping-pong of who is responsible for shoddy workmanship is going on between the government, the housing association, the developer, the managing agent and leaseholders. Nerves are frazzled and there is no end in sight.

Also NOBODY informed me that service charges will go through the roof after five years of moving in. Leaseholders have a constant battle with the managing agent about why they are spending over £2,200,000.- a year (yes, more than £2 million per year !!!) in service charges. (Our estate has around 570 flats).

What’s the point of affordability testing?

I had to pass an affordability test with the housing association initially to see if I could afford to pay for the share of the flat and its associated costs. But, now, nobody cares whether I still can afford it. If I could sell, I would… but I cannot.

Absolute and utter madness.

If I had the chance to go back in time, I would never touch shared ownership ever again. And it is not just cladding and fire safety issues. LEASEHOLD in itself is a HUGE problem, with a medieval fiefdom structure baked into the property market of flats.

For me it‘s too late. But I hope others can learn from my experience and make a better judgement call.

* Name has been changed.

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