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creasey

Shared Ownership Advice....sell At Loss Now?

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hi guys, all comments/opinions welcome.

I bought 50% of a shared ownership flat about 3 years ago, back when i didnt earn much and i was living on my own. It seemed to make sense at the time and EVERYONE (friends, friends who are estate agents, colleagues) told me to go for it. I was even silly enough to get a 100% mortgage for the 50% (£83k).

now i live with my girlfriend who shares the bills and thankfully i earn significantly more than i did 3 years ago. our outgoings are small and we manage to save a bit. basically we want to move and can in theory afford a reasonable house.

my flat was just valued (by a chartered surveyor) at 145k so as expected a loss. i believe i have to sell at this price as part of the shared ownership deal so there is no scope for marketing it at more than that.

so to sell now would put me about 10k down. Whilst living in the flat is cheap and we are saving i get the feeling that the longer i stay here the larger my loss may be (put it this way i think its dropping faster than i am saving)

my question is do i stay somewhere that is perfectly comfortable and cheap and try and save/ride the market out. or sell for a 10k loss and start again, at least i would be chain free when i am ready to move?

It sounds like most people on this forum will advise me to sell, but i would love a range of opinions if anyone does disagree!!

thanks in advance!

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my range of opinions include draining the river...makes under bridge residence so much more pleasant.

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my range of opinions include draining the river...makes under bridge residence so much more pleasant.

:lol::lol::lol:

oooooooooh You're in a naughty mood tonight blue ;)

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my question is do i stay somewhere that is perfectly comfortable and cheap and try and save/ride the market out. or sell for a 10k loss and start again, at least i would be chain free when i am ready to move?

Oh dear, a £10K loss? So tell me, how much how much PROFIT were you expecting to make for having lived in your perfectly comfortable and cheap flat for 3 years?

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Shouldn't there be an "Advice to homeowner" thread on this forum ?

One time caller Bela asked a similar question yesterday I believe .

If you believe your "economically viable to run" half share flat is going to lose value why would you want to buy something which would lose more value ?

Before anyone else says it , "She'll only leave you when the going get's tough" so don't rely on 2 incomes .

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Just to clarify, do you only have to cover half the loss?

If £83k is 50%, then 100% is £166k. If the flat is valued at £145k, then £166k - £145k = £21k. But you only talk of a £10k loss. When I looked into shared ownership I thought that if the flat lost value then I would be liable for the full loss, not half. That was one of the main reasons that put me off.

Out of interest, if you are only liable for half the loss. If the property were to gain value, do you get only half the increase?

From what I remember when I was looking at shared ownership it was basically if the value goes up, they get half, if the value goes down I was liable for all of it.

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......

From what I remember when I was looking at shared ownership it was basically if the value goes up, they get half, if the value goes down I was liable for all of it.

Ouch! That would be a horrible sting in the tail. There are some flats a couple of miles from me that have been sticking for the last 18 months, and they're trying to sell them using vehicles like shared ownership. I hope the marks that may be buying them are fully clued up.

Anyway, to address the OPs original question; if I could get away with a 10k loss in the current climate I'd be tempted to take the loss and move on, and put it down to experience. This because on the balance of probabilities I think flats are more likely to lose values over the next few years than gain in value. Just wait till interest rates go up after the election!

Riding the market out could take a loooong time - it would have taken nearly 10 years from the late 80s crash point, and this bubble was bigger than that. Plus being a FTB could put you in a strong enough position to negotiate away that 10k loss with your proposed house purchase.

That's my two pennys worth anyway.

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Just to clarify, do you only have to cover half the loss?

If £83k is 50%, then 100% is £166k. If the flat is valued at £145k, then £166k - £145k = £21k. But you only talk of a £10k loss. When I looked into shared ownership I thought that if the flat lost value then I would be liable for the full loss, not half. That was one of the main reasons that put me off.

Out of interest, if you are only liable for half the loss. If the property were to gain value, do you get only half the increase?

From what I remember when I was looking at shared ownership it was basically if the value goes up, they get half, if the value goes down I was liable for all of it.

Looking at the T and Cs for HOMEBUY, I think:

a. The amount of equity loan payable on sale depends on valuation.

b. The amount of money available to pay the equity loan depends on sale price. Any proceeds from the sale are split between agent and "owner" after the conventional mortgage is paid off.

The calculations are going to be complex, but if the valuation is low, and you manage to sell it for significantly more than the valuation, you should reduce your loss. But, if the valuation is over-optimistic and the property is sold for less than valuation, you lose out even more. Also if you have arrears, the mortgage provider seems to get first call, and is allowed to clear the mortgage (their 50%) before the Homebuy agent (who gets it's 50%), then the "owner" sorts out the remainder.

That's how I would interpret what I've read, though I'm a non professional, with no experience of the scheme. You need a solicitor and an accountant.

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so to sell now would put me about 10k down. Whilst living in the flat is cheap and we are saving i get the feeling that the longer i stay here the larger my loss may be (put it this way i think its dropping faster than i am saving)

my question is do i stay somewhere that is perfectly comfortable and cheap and try and save/ride the market out. or sell for a 10k loss and start again, at least i would be chain free when i am ready to move?

10k over three years, hmm so about 300 a month for half your rent, what were the overheads of buying?

I mentioned this because for a lot of people there's a physcological block to moving if they think there's a loss involved, if you take into account rent saved it might make the loss smaller and easier to deal with, and hey the loss could have been greater right?

If you want to move go for it, otherwise the place becomes a burden. I talk from experience i soooo want out of my flat right now.

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Just to clarify, do you only have to cover half the loss?

If £83k is 50%, then 100% is £166k. If the flat is valued at £145k, then £166k - £145k = £21k. But you only talk of a £10k loss. When I looked into shared ownership I thought that if the flat lost value then I would be liable for the full loss, not half. That was one of the main reasons that put me off.

Out of interest, if you are only liable for half the loss. If the property were to gain value, do you get only half the increase?

From what I remember when I was looking at shared ownership it was basically if the value goes up, they get half, if the value goes down I was liable for all of it.

So the OP expects that the value of his flat has gone down by only 13%??

Look at how much most flats have lost and its a heck of a lot more than that.

The appraisers value isnt some magic number which you'll automatically get. And in the current market thats more true than ever.

Also why sell if your simply going to rebuy another property if your concerned about losses and this is your main reason for selling??

You still have a house loosing value with the added costs of selling/buying/moving home

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Creasey, you sound like a man on fire.

My advice to you is to sell now, take the hit, and rent for a year or so. House prices are about to go off a cliff.

For goodness sake. How long does it take before someone walking round with a "The End Is Nigh Billboard" realises that the end ain't nigh at all?? Assuming they are sane of course.

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now i live with my girlfriend who shares the bills and thankfully i earn significantly more than i did 3 years ago. our outgoings are small and we manage to save a bit. basically we want to move and can in theory afford a reasonable house.

Let's simplify it.

If you buy a house you will be taking 100% of the losses on a larger amount.

If you rent a house, it will cost you more than your controlled HA rent.

Your equity share losses may be outpacing your saving rate, but your future house (hopefully) will be falling in value even faster.

Stay put.

Edited by Laughing Gnome

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Yes prices are going to fall 30-40% soon, but equally everyone is fooked. The equity you are losing is irrelevant if you're happy and you can afford the place you live

Everyone needs to stop thinking £. Because, don't kid yourself, this government with it's criminal negligence has bankrupted us all. Any attempts to bail or or correct now are pointless

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It seemed to make sense at the time and EVERYONE (friends, friends who are estate agents, colleagues) told me to go for it. I was even silly enough to get a 100% mortgage for the 50% (£83k).

Well if that's the case, I'd have bought three.

:lol:

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Sell as quick as you can. You've only got a small loss so far.

Prices have to drop further, and flats more than houses. The worst type, yes, shared ownership. These will be impossible to sell, as people will be able to buy flats outright.

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For goodness sake. How long does it take before someone walking round with a "The End Is Nigh Billboard" realises that the end ain't nigh at all?? Assuming they are sane of course.

How long does it take before some perma bull walking around with a "properdee only every goes up billboard" realises that we are in major financial strife?? Assuming their head isn't totally buried in the sand, of course.

John Major: "We have never seen anything like this, in your lifetime or mine". There are many knowledgable voices making the same call.

http://news.bbc.co.uk/1/hi/uk_politics/8134963.stm

Massive job losses, ever increasing tax, the US in financial strife with record numbers claiming food stamps, financial collapse threatening country after country, increasingly difficult to get mortgages. But no, it won't affect house prices, eh mate? Wait until interest rates go back up.

We are facing times the like of which we have never seen before, and the only reason you can't see it is your illogical belief that it 'can't happen here'.

Edited by Prime Realist 8

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