Shared Ownership Not So Shared After All

[hellsbells]

Apologies if thia has been covered before. I recently read an article in a local rag (no link sorry) by a property solicitor warning about legal loopholes that mean shared ownership wasn't what it seemed, and very strongly advising against buying a shared ownership property.

The article mentioned a particular legal case as an example.

I think this link referes to the case:

http://www.forbessolicitors.co.uk/stay-inf...d-Heart-Limited

Quote:

"The above case should therefore serve as a timely warning for all shared ownership leaseholders. Given the credit crunch and down-turn in the economy, as well as the growth in popularity of this type of lease, this could prove to be a grave problem for a lot of tenants if they allow themselves to fall into debt. As can be seen, the nature of shared ownership leases and the way in which their terms are worded means that if a tenant falls into arrears it could turn out to be financially catastrophic. If the arrears aren't cleared within a relatively short time – in most cases that would mean as long as it takes for the relevant notice to expire and a hearing to be listed – they then risk losing everything that they have invested."

This article also refers:

http://nearlylegal.co.uk/blog/2008/09/lack...ared-ownership/

Would any of our legal eagles care to comment? If I were to ever consider shared ownership, the implications of this would totally kill it for me.

[Imp]

That's bad.

[Guest adp]

That's bad.

I know next to nothing about the details of these schemes but what is the legal position if the builder goes bust?

[Guest tbatst2000]

What a horrible mess. Given the apparent lack of any ownership, I wonder how mortgage companies view this? It sounds like the judgement turns secured loans into unsecured ones.

[Leonard Hatred]

Does anybody know anyone in shared ownership and negative equity who hasn't shot themselves yet?

[Justice]

What you need to know our fixed legal system is on the side of housing associations and corporations because they are the ones who run to our so called MP's with bribes to get laws past to protect themselves.

Would you beleive me if i told you that most MP's are solicitors or lawyers ?

Now remind me what did the french do to these type of people ?

Yes gentalmen we have Mafia style goverment and it's gone so far that the pretence of haveing a democracy will soon be dropped as goverment uses the police in the same way as Hittler used the SS.

[renterbob]

'Justice'

What you need to know our fixed legal system is on the side of housing associations and corporations because they are the ones who run to our so called MP's with bribes to get laws past to protect themselves.

Would you beleive me if i told you that most MP's are solicitors or lawyers ? YES

Now remind me what did the french do to these type of people ? Cut their f**** nuts off!

Yes gentalmen we have Mafia style goverment and it's gone so far that the pretence of haveing a democracy will soon be dropped as goverment uses the police in the same way as Hittler used the SS.

So, what can we DO about it?

[Y-QUERK]

So, what can we DO about it?

Work on that supressible gag reflex.

[renterbob]

Work on that supressible gag reflex.

[0q0]

Very important thread, thanks for this.

Reminds me of Hire Purchase where the good is not yours until the very last payment is made.

[Wayo]

Apologies if thia has been covered before. I recently read an article in a local rag (no link sorry) by a property solicitor warning about legal loopholes that mean shared ownership wasn't what it seemed, and very strongly advising against buying a shared ownership property.

The article mentioned a particular legal case as an example.

I think this link referes to the case:

http://www.forbessolicitors.co.uk/stay-inf...d-Heart-Limited

Quote:

"The above case should therefore serve as a timely warning for all shared ownership leaseholders. Given the credit crunch and down-turn in the economy, as well as the growth in popularity of this type of lease, this could prove to be a grave problem for a lot of tenants if they allow themselves to fall into debt. As can be seen, the nature of shared ownership leases and the way in which their terms are worded means that if a tenant falls into arrears it could turn out to be financially catastrophic. If the arrears aren't cleared within a relatively short time – in most cases that would mean as long as it takes for the relevant notice to expire and a hearing to be listed – they then risk losing everything that they have invested."

This article also refers:

http://nearlylegal.co.uk/blog/2008/09/lack...ared-ownership/

Would any of our legal eagles care to comment? If I were to ever consider shared ownership, the implications of this would totally kill it for me.

I would have thought that if it had been marketed as 'shared ownership' you would have a good case against them, as if this decision stands, they have paid 50% and own nothing.

http://www.thisislondon.co.uk/standard/art...ster/article.do

http://www.guardian.co.uk/society/2005/jan...firsttimebuyers

and further analysis of the Midland Heart Ltd case:

http://nearlylegal.co.uk/blog/tag/shared-ownership/

[Elizabeth]

Looks like she has been let down by her social landlord, by the refuge, by the council, by every one in fact. If she had tried to call the Citizens Advice Bureau she probably would have got an engaged phone. This is one of the rare instances where Housing Benefit should have covered both properties at least until the details could be sorted out since she was fleeing domestic violence. But clearly she didn't get the advice she needed from anyone. And as for the ruling, it makes it clear that these are just an expensive tenancy by any other name, so she was being mugged for the 'rent as morgage' as well as the equity. And now the council will have to rehouse her as well. Good job all. So much for the ever increasingly complicated welfare state that ain't into welfare.

[Lone_Twin]

Interesting quote from the comments section. From a woman trying to either buy out the rented % or

sell out her "owned" %.

when I got a valuation to try I was told by the Borough surveyor that there were two prices, one for if I'm buying and one for if I'm selling.

Just goes to show what kind of filth are running these schemes. I'm so glad I never got into one of these

scams. Miss Ted and I went to have a look but the build quality was always terrible especialy the quality

of fixtures and fittings (tin-foil sinks) and the numbers never made sense.

.

Little did we know then what a trap it would have been.

.

ST

Edited September 14, 2008 by Super Ted

[muggle]

...and the numbers never made sense.

.

Little did we know then what a trap it would have been.

.

ST

Sooooooooo true.

I looked a one a couple of years ago. ($hit area, next to a railway, no parking etc, etc). Needless to say, when I sat down and did my own calculations, the numbers did not add up.

I noticed one of the flats in the same development sold at auction last week for half of what I nearly paid for one. So much for a 50% share. Wait two years and get the whole thing for the same amount.

I wonder what will happen if I wait another two years?!

[Lone_Twin]

I wonder what will happen if I wait another two years?!

My guess....you definitely won't want want it unless you need really easy and

frequent access to crack dealers.

.

ST

[muggle]

My guess....you definitely won't want want it unless you need really easy and

frequent access to crack dealers.

.

ST

[Elizabeth]

Sooooooooo true.

I looked a one a couple of years ago. ($hit area, next to a railway, no parking etc, etc). Needless to say, when I sat down and did my own calculations, the numbers did not add up.

I noticed one of the flats in the same development sold at auction last week for half of what I nearly paid for one. So much for a 50% share. Wait two years and get the whole thing for the same amount.

I wonder what will happen if I wait another two years?!

Yeah, I was looking into it when I joined this site. I am so glad that I got shot down with the theory then, although nobody had any idea how darstadly the deal really was.

[Harry Sacks]

Does anybody know anyone in shared ownership and negative equity who hasn't shot themselves yet?

Yes. Seriously I do.

I would like to add; on the estate in question half the houses are rented, the other half are shared ownership. As for the two valuations, I've said this all along. The "buying" valuation was the market value for a tiny house on a private estate at the top of the market. The actual "selling" valuation is for half a council house.

These schemes appeal to followers and those so concerned with their perceived social status that it clouds their judgment.

[Rain'ard]

I don't think in this particular case shared ownership is to blame here. The fault is in the defence. The judge can only apply the law as it is in the leasehold field. The focus should be on the definition of Sole Residence and the payment of benefits. Being in a refuge is not having another rental arrangement. People who are in a refuge reside under a licence, which is the same a bed and breakfast and hotels have.

[Wayo]

Reply received from Iain Wright (signed on the Ministers behalf behalf anyway).

Thank you for you letter regarding shared ownership schemes......

Shared ownership is a means of helping people who cannot afford to buy outright....

Shared owners buy a minimum 25% share in a new home from a provider, usually a housing association and pay rent on the remainder. Gradually, further shares can be purchased untill the property is owned outright. When purchasers buy a flat or house on shared ownership terms, they are granted a long lease usually for 99 years. This entitles the shared owner to live in the hoome as an owner occupier with similar rights and responsibilities. Shared owners whose landlords are housing associations are usually assured tenants The shared ownership scheme has been around as a model since the 1980s..... 110,000 housholds helped into home ownership since 1997.......

I am aware of the recent county court decision (Richardson v Midland Heart) The housing association was granted an order of possession under the HA 1988 against a shared owner following rent arrears. In these circumstances, the court concluded that the shared owner had no entitlement for any reinbursement in respect of the premium she had paid for her lease. The case is subject to an appeal by Ms Richardson, and we are awaiting the outcome.

Our priority is to ensure the protectiion of both purchasers and landlords.

I hope this is useful.

Iain Wright

-----------

Well with Marge Beckitt's defence of Frank Dobson, council house dwelling cabinet minster, council homes for life under the mantra of creating mixed communities, and this non-entity, rest assured we can sleep sound in our beds.

I'm sure Ms Richardson is chuffed to know HMG is content for her to single handedly take on the legal establishment in getting this decision overturned without lifting a finger for the other 110,000 affected households in the meantime who think they have a share of a house, but have actually paid over the odds for a lease.