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Nationwide Warns Govt That Legal Structure Of Shared Ownership Needs To Change

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From Inside Housing (paywall) today: http://www.insidehousing.co.uk/business/development/government-schemes/lender-shared-ownership-must-change-to-expand/7015409.article?adfesuccess=1

Key points:

1) Current legal structure provides little protection to lenders; if a tenant is evicted for not paying rent the lease as a whole is lost. (Though worth noting that the standard undertaking does actually require the landlord to consult with the bank before initiating forfeiture proceedings)

2) The small number of lenders who actually offer SO mortgages have been willing to wear this up till now because the landlords were housing associations, with whom there was a relationship of trust.

3) Nationwide's head of policy is now warning that the Govt's intention to bring more private developers into the SO scheme will make the previous arrangement less tenable. DCLG are yet to comment.

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It's true, the banks don't have enough protection with bailouts, low interest rates and future bailins. The tenents get to easy a ride and MUST be made to be liable for ever! Ra-ha-ha-ha-ha! Now where did mini-me go?

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It's true, the banks don't have enough protection with bailouts, low interest rates and future bailins. The tenents get to easy a ride and MUST be made to be liable for ever! Ra-ha-ha-ha-ha! Now where did mini-me go?

Banks can only lend at secured rates if they have security. That's why mortgage rates are 3% and not the 20%+ credit cards are.

And it just shows how half baked most government policy seems to be nowadays.

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It's true, the banks don't have enough protection with bailouts, low interest rates and future bailins. The tenents get to easy a ride and MUST be made to be liable for ever! Ra-ha-ha-ha-ha! Now where did mini-me go?

+1000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000

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To be fair I have sympathy with lenders here - from the position of the shared owner and their rights.

Shared ownership is great for housing associations - the tenant owner pays the entire service charge and repairs and maintenance yet has limited protection.

I would ensure that ownership is reflected at the land registry - currently even if the tenant owns a supposed 75 per cent share the łand registry shows the housing association owns 100 per cent. So if the HA evict then the tenant would at least gets their 75 per cent share from them - technically legally they are entitled to nowt at present unless the HA feels generous.

Similarly a lot of these properties are sold on 99 year leases or less but you cannot extend the lease until you own 100 per cent so the share owned becomes unmortgageable if you need to sell and move on and can't buy outright. Buying outright on most London new builds will be impossible - who can ever buy 100 per cent of an £800k flat in Islington on the maximum permitted SO earnings of £90k.

It's bordering on scam at the moment. No wonder housing association chief executives are some of the best paid people in the public - sorry charitable - sector!

Edited by MARTINX9

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It's bordering on scam at the moment. No wonder housing association chief executives are some of the best paid people in the public - sorry charitable - sector!

They have been an appalling way of making housing affordable.

"mummy when I grow up I want to own 10% of my house"

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To be fair I have sympathy with lenders here - from the position of the shared owner and their rights.

Shared ownership is great for housing associations - the tenant owner pays the entire service charge and repairs and maintenance yet has limited protection.

I would ensure that ownership is reflected at the land registry - currently even if the tenant owns a supposed 75 per cent share the łand registry shows the housing association owns 100 per cent. So if the HA evict then the tenant would at least gets their 75 per cent share from them - technically legally they are entitled to nowt at present unless the HA feels generous.

Similarly a lot of these properties are sold on 99 year leases or less but you cannot extend the lease until you own 100 per cent so the share owned becomes unmortgageable if you need to sell and move on and can't buy outright. Buying outright on most London new builds will be impossible - who can ever buy 100 per cent of an £800k flat in Islington on the maximum permitted SO earnings of £90k.

It's bordering on scam at the moment. No wonder housing association chief executives are some of the best paid people in the public - sorry charitable - sector!

Its quite simple, they just should not lend as its risky business practice.

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Its quite simple, they just should not lend as its risky business practice.

They won't be lending. However, whenever you change the business model while turning away some profitable business you do need a decent explanation up front. Especially if changing that business model destroys a Government Policy...

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Its quite simple, they just should not lend as its risky business practice.

Maybe - or the government could simply change the rules to make them fairer for existing SO and future SO buyers.

You may not like SO and nor do I but for people who want security of tenure (you do if you pay up which does not apply to private renters), earn too much for housing benefit and can't get social housing and want to live in zones 1 and 2 in London it's effectively the only option.

Even if prices dropped 25 per cent few could afford to buy outright in those areas - and yes some people do want to live in Islington or Battersea.

Edited by MARTINX9

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