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Bypassing Housing Association When Selling Shared Ownership Property

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I was wondering if anyone can help with some advice about selling a shared ownership flat.

I'm about to start the ball rolling with selling the 30% share I have in my shared ownership flat. The basic procedure as outlined by the housing association I bought the share from is that I get a market valuation first, then instruct the housing assoc. to sell at that valuation whereby they take a percentage commission from managing the sale. As many people going through this process have found, the market valuation given by the independent valuer is generally much lower than what they can get on the open market/ through a real estate agent.

The housing association has around 8 weeks to sell the flat and if they can't find a buyer in that time the owner can choose to sell through a real estate agent at any value they can get.

When the valuer viewed my property recently, he briefly mentioned that some leaseholders of shared ownership property have started bypassing the housing associations 8 week period and going directly to a real estate agent to sell their share, finding a buyer and selling their percentage and only afterwards notifying the housing association once they have completed, which is understandable as what they could get through a real estate agent compared to the flat market value is often dramatically different (as it would be in my case)

my question is, if someone was to go down this route, what are the legal implications (if any)? And at what point would you tell the housing association? Once the buyer has already completed the sale of the share or just when he/she has put in an offer for example? Depending on whether I go through the housing association or risking it and bypassing their 8 week period to sell could mean a dramatic difference in what I make from the property. Going by the market valuation I received I think the property will be snapped up very quickly (it's in London btw)

If anyone has any first hand experiences of this I'd be very interested to hear of any pitfalls or issues around doing this. I've not found anything researching it on the internet and of course the housing associations aren't going to tell you anything so any advice would be greatly appreciated!

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It depends on what you mean by "the basic procedure" and what the law says. Is there a formal contract between you and the HA in which you agree that the HA has first refusal on selling the property, taking a cut in the process; and if such a contract does exist, is it legal?

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I was wondering if anyone can help with some advice about selling a shared ownership flat.

I'm about to start the ball rolling with selling the 30% share I have in my shared ownership flat. The basic procedure as outlined by the housing association I bought the share from is that I get a market valuation first, then instruct the housing assoc. to sell at that valuation whereby they take a percentage commission from managing the sale. As many people going through this process have found, the market valuation given by the independent valuer is generally much lower than what they can get on the open market/ through a real estate agent.

The housing association has around 8 weeks to sell the flat and if they can't find a buyer in that time the owner can choose to sell through a real estate agent at any value they can get.

When the valuer viewed my property recently, he briefly mentioned that some leaseholders of shared ownership property have started bypassing the housing associations 8 week period and going directly to a real estate agent to sell their share, finding a buyer and selling their percentage and only afterwards notifying the housing association once they have completed, which is understandable as what they could get through a real estate agent compared to the flat market value is often dramatically different (as it would be in my case)

my question is, if someone was to go down this route, what are the legal implications (if any)? And at what point would you tell the housing association? Once the buyer has already completed the sale of the share or just when he/she has put in an offer for example? Depending on whether I go through the housing association or risking it and bypassing their 8 week period to sell could mean a dramatic difference in what I make from the property. Going by the market valuation I received I think the property will be snapped up very quickly (it's in London btw)

If anyone has any first hand experiences of this I'd be very interested to hear of any pitfalls or issues around doing this. I've not found anything researching it on the internet and of course the housing associations aren't going to tell you anything so any advice would be greatly appreciated!

Welcome to HPC new member, i see you have recently joined the forum.

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Unsuprisingly, the EA is probably lying, or at least advising a route that may be legally complex i.e expensive.

The biggest lie is selling shared ownership.

Most are almost impossible to sell. You really do need to find a bigger fool. With money.

Second lie is selling without going via the HA.

8 weeks is hardly a long time.

I doubt the buyer's solicitor would accept a sale where the seller has not followed the correct steps.

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Reminded me of the 'affordable' housing that was sold, a few units on a very nice private estate......they were only affordable to the initial purchaser, once they sold them they all became unaffordable like the rest. ;)

Edited by winkie

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It depends on what you mean by "the basic procedure" and what the law says. Is there a formal contract between you and the HA in which you agree that the HA has first refusal on selling the property, taking a cut in the process; and if such a contract does exist, is it legal?

It is a contractural part of my lease, which surprised me when the valuer mentioned that some other leaseholders have done this. I'm just not sure what the repercussions of doing it would be, i.e. whether they would just give you a 'rap over the knuckles' for breaking a regulation of the contract or if they would take the whole thing to court

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Unsuprisingly, the EA is probably lying, or at least advising a route that may be legally complex i.e expensive.

The biggest lie is selling shared ownership.

Most are almost impossible to sell. You really do need to find a bigger fool. With money.

Second lie is selling without going via the HA.

8 weeks is hardly a long time.

I doubt the buyer's solicitor would accept a sale where the seller has not followed the correct steps.

Thanks for getting back Spyguy, and to everyone else that have posted a response!

True, I trust EA's as far as I can throw them, but it was the independent valuer that told me this, not the EA. Speaking to a few EA's in the area they have said that they are selling 1 bed flats for around 430,000, nothing below £400,000 mine is a very good condition and large 2 bed flat and was valued in the low 300,000's. The EA's comments do reflect recently sold prices I've found on right move.com and zoopla.

Normally I'd agree about selling shared ownership property but this area of London has picked up a lot and other shared ownership flats in the same block have had buyers making offers within a week or two of them being marketed (probably because the market valuation is so low)

The valuer has also said that they are managing to do it so they must have found a way around the buyer's solicitors

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How can you be getting a market valuation if that market valuation differs so much from the market valuation?

Somebody is not telling the truth.

Hi Bradbury Robinson, I'm not an expert as to how an independent valuer arrives at a figure but I do know that many people wishing to sell their SO flat have had the same problem, with the market value the independent valuer gives them being far lower than what they could get on the open market. If it was unlikely that the housing association were able to sell my flat at the market valuation in the 8 week period I wouldn't be worried as I'd just wait it out till I could get a better price but it seems that the area I have the flat in is very sought after at the moment and the HA are finding buyers very quickly for these flats. I think it they line up a buyer for the market value price in the 8 week period you have to accept it

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Reminded me of the 'affordable' housing that was sold, a few units on a very nice private estate......they were only affordable to the initial purchaser, once they sold them they all became unaffordable like the rest. ;)

:lol:

Well that is like any social housing that is sold off.

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Hi Bradbury Robinson, I'm not an expert as to how an independent valuer arrives at a figure but I do know that many people wishing to sell their SO flat have had the same problem, with the market value the independent valuer gives them being far lower than what they could get on the open market. If it was unlikely that the housing association were able to sell my flat at the market valuation in the 8 week period I wouldn't be worried as I'd just wait it out till I could get a better price but it seems that the area I have the flat in is very sought after at the moment and the HA are finding buyers very quickly for these flats. I think it they line up a buyer for the market value price in the 8 week period you have to accept it

so, you have a part owned property, which you wish to sell your part, and you fully expect a third party, to buy that share and yet pay the same rate as your neighbour can charge for his 100% freehold?.

People were caught by this bigtime in the early 1990s...a scheme to boost sales...5 years later, the price was paid by the low resale values...big stink, nothing illegal, no misrep, no chance of recourse.

All repeated here when the last tranch of desperate part buy schemes were lauded as the way to get on the ladder.

stupid is as stupid does.

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It depends on what you mean by "the basic procedure" and what the law says. Is there a formal contract between you and the HA in which you agree that the HA has first refusal on selling the property, taking a cut in the process; and if such a contract does exist, is it legal?

Why wouldn't the contract be legal? The OP got the benefits of only having to purchase 30% of a property, giving them somewhere to live, and now wants to renege on part of the shared ownership process which is clearly spelled out before buying.

If the 'market value' is much higher surely people will bid against each other over this lower value until the price achieved reaches market value. :rolleyes:

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so, you have a part owned property, which you wish to sell your part, and you fully expect a third party, to buy that share and yet pay the same rate as your neighbour can charge for his 100% freehold?.

People were caught by this bigtime in the early 1990s...a scheme to boost sales...5 years later, the price was paid by the low resale values...big stink, nothing illegal, no misrep, no chance of recourse.

All repeated here when the last tranch of desperate part buy schemes were lauded as the way to get on the ladder.

stupid is as stupid does.

1st thing, none of the flats are freehold, they are ALL leasehold, in this block whether they are shared ownership or not

2nd thing, it's not what "I expect" it's what is already happening with other shared ownership flats. I can only legally sell my 30% share of the flat (I can't sell what I don't own!) but the buyer can purchase the entire 100% if they choose to by purchasing the remainder 70% from the HA, though the flat will ALWAYS be leasehold, whether they buy 100% and own it outright or buy my 30% only

"stupid is as stupid does." there was no way ANYONE purchasing a shared ownership flat could know the difficulties involved with the scheme when it was first released which is when I purchased it. At the time there were no negative experiences to look up and research. it was only when the housing market collapsed a few years later that everyone realised all the negative issues with it. Hindsight is a great thing though eh!

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snip

"stupid is as stupid does." there was no way ANYONE purchasing a shared ownership flat could know the difficulties involved with the scheme when it was first released which is when I purchased it. At the time there were no negative experiences to look up and research. it was only when the housing market collapsed a few years later that everyone realised all the negative issues with it. Hindsight is a great thing though eh!

wut?....as I posted, it has all happened before, all you had to do was DYOR.

So, you want out?...buy the other people out and sell 100%..you then have the control your desire.

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wut?....as I posted, it has all happened before, all you had to do was DYOR.

So, you want out?...buy the other people out and sell 100%..you then have the control your desire.

Spot on. Staircase to 100% at the 'market valuation' then sell at the inflated amount they go for on the 'open market'. Or is it infact that there is a premium involved for buying part share as costs of entry are lower (deposit etc).

Mortgage lenders in possession of shared ownership properties reserve the right to staircase to 100% to avoid this very issue.

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Is it possible that the workround the valuer is describing is based on the end buyer lending you the money to staircase so that you can then sell without the HA. All wrapped in short timescales and legalese?

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Is it possible that the workround the valuer is describing is based on the end buyer lending you the money to staircase so that you can then sell without the HA. All wrapped in short timescales and legalese?

Hi Justthisbloke,

I don't think so, he was pretty clear that recently some SO leaseholders had just decided to bypass the HO's 8 week period and went straight to the EA, found a buyer and after they sold their share, told the HO at which point I don't think there was much the HO could do about it (although I'm not sure about that, thus the initial post)

I wanted to quiz him more about it while he was there but I had concerns that he might have flagged it up with the HO that I was a risk of doing it

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The legal ramifications are that the main owner will have to be notified of the proceedings as is their right as the main equity holder.

Its up to them then to either block the sale, sue you or claim loss of profits from your breach of contract, or all 3.

Edited by Bloo Loo

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You need to ignore internet "experts" and speak to a solicitor.

The terms of the lease will need to be inspected together with the register of title which may contain a restriction preventing any sale by the owner without the consent of the HA.

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^^^^^^^^^^ This

of course the whole procedure would have been gone through, the purchase, the rental agreement, the method of sale, everything, with a solicitor at the time of purchase.

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of course the whole procedure would have been gone through, the purchase, the rental agreement, the method of sale, everything, with a solicitor at the time of purchase.

Aye and they did not see the risk then as it was new without president dry.gif the answer will be in the T&C`s

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You need to ignore internet "experts" and speak to a solicitor.

The terms of the lease will need to be inspected together with the register of title which may contain a restriction preventing any sale by the owner without the consent of the HA.

I think you're right Driver, my post was asking for first hand accounts of people in similar situations but there's been no such responses so far from anyone with any experience of shared ownership. I'll check it out further with a solicitor, thanks

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