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Bristol couple stuck with £700k London flat they can't sell - because of its cladding


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https://www.bristolpost.co.uk/news/bristol-news/bristol-couple-stuck-700k-london-4675558

A couple who live in Bristol could be stuck with a London flat they do not want for years - due to the cladding used when building it.

Becky and Jamie moved from London to Bristol in June this year, but have been unable to sell their Islington flat valued at £700,000.

The outside of the building is covered in cladding and lenders are demanding to see an External Wall Fire Review (EWS1) certificate before approving a mortgage for prospective buyers.

20200413_090203.jpg

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The £700K figure is bandied about everywhere in that article, until you notice buried away towards the bottom this paragraph

Becky and Jamie are in a shared ownership scheme, but despite only getting a share of the value of their property when it sells they will still be required to pay 100 per cent of any remedial costs.

Shared Ownership again. So they own nothing except a liability. If they bought recently the percentages are probably stupidly low like 10-15% so that they can still meet the affordability criteria of the developers made-up £700K full purchase cost. 

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The £700K figure is bandied about everywhere in that article, until you notice buried away towards the bottom this paragraph


Becky and Jamie are in a shared ownership scheme, but despite only getting a share of the value of their property when it sells they will still be required to pay 100 per cent of any remedial costs.

Shared Ownership again. So they own nothing except a liability. If they bought recently the percentages are probably stupidly low like 10-15% so that they can still meet the affordability criteria of the developers made-up £700K full purchase cost. 

Hmmmm, i did not see the small print, you should get a job as a detective you are very good.

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Hmmmm, i did not see the small print, you should get a job as a detective you are very good.

Realistically, for someone his age who wants to 'buy' in central London shared ownership of an inflated new build flat has been the only option for a good number of years. If he could afford a £700K property he'd more than likely choose a house or mansion block flat.   

These places seem to have two markets: shared ownership 20-30year olds for the crappy flats and international money launderers taking the flats with a decent outlook. 

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So they don't own a £700k flat - just a share of it.

But of course under the terms of their shared ownership lease they are responsible for 100% of the service and leaseholder and repair charges - while the housing association who actually owns the majority of the flat pays zilch!

No wonder the average CEO of a housing association - and most are quite small - earns nearly £40k more than the PM! The CEO of one housing association in London received a total salary package of £410k in 2019. Nice work if you can get it - they are 'charities' after all!

https://www.insidehousing.co.uk/insight/insight/inside-housing-chief-executive-salary-survey-2020-68245

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Not sure you can rent out SO.

They aren't really stuck are they? At least they managed to move and are presumably paying two lots of housing costs. 

No you can't sub let unless the HA agrees - and they rarely do as they want a sale so they can cash in their 'profit' assuming there is one! And you must pay your rent on the unowned share - or they can repossess and you can lose your owned share too.

Nice work - for the housing association execs!

Here is a good example of a new build SO in a nice part of Islington

https://www.sharetobuy.com/properties/113832/

Full price £695,000 - you buy a 25% share for £174k (so minimum salary needed of about £45k). Monthly cost £2,000 - rent to HA £869, mortgage £795 and wait for this starting service charge £335!!

Edited by MARTINX9
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No you can't sub let unless the HA agrees - and they rarely do as they want a sale so they can cash in their 'profit' assuming there is one! And you must pay your rent on the unowned share - or they can repossess and you can lose your owned share too.

Nice work - for the housing association execs!

oh my god thats a whole new level of evil 

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Those figures just don't stack up. Paying £2k for housing costs, before any bills and only owning 25% of a place.

Nobody made these people live in Islington - there are many cheaper places that are still in London, although admittedly not as nice.

Doing shared ownership like this is simply living beyond your means. Is it really that much different from some youngster wanting to impress his mates and leasing a supercar that he can't afford.

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Those figures just don't stack up. Paying £2k for housing costs, before any bills and only owning 25% of a place.

Nobody made these people live in Islington - there are many cheaper places that are still in London, although admittedly not as nice.

Doing shared ownership like this is simply living beyond your means. Is it really that much different from some youngster wanting to impress his mates and leasing a supercar that he can't afford.

You have to pay rent on the other 75%.

So its 25% mortgage whatever that cost is and 75% of the balance as rent to the housing association. 

All done as the flat has a value of £700k. So its a "cheap rent" as a %, but its a % of an inflated number...

Edited by captainb
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No you can't sub let unless the HA agrees - and they rarely do as they want a sale so they can cash in their 'profit' assuming there is one! And you must pay your rent on the unowned share - or they can repossess and you can lose your owned share too.

It also follows that you'd never get consent to let from the shared ownership mortgage provider. 

I know plenty of people who rent out their SO on the sly though. My Brazilian friend found his current flat through a 'Brazilians in UK' Facebook Group. The actual owner went back to Brazil ages ago and she just asked him to stay under the radar (no electoral roll etc) and she'll keep the rent low in return. 

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You have to pay rent on the other 75%.

So its 25% mortgage whatever that cost is and 75% of the balance as rent to the housing association. 

All done as the flat has a value of £700k. So its a "cheap rent" as a %, but its a % of an inflated number...

The rent is nearly £900 on the 'subsidised 75% share' plus £335 service charges on my example - so over £1200 for 'affordable housing' plus your mortgage! Hardly cheap!

Edited by MARTINX9
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The rent is nearly £900 on the 'subsidised 75% share' plus £335 service charges on my example - so over £1200 for 'affordable housing' plus your mortgage! Hardly cheap!

Yep! But that is cheap for a £700k flat.. if it is a £700K flat.

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No you can't sub let unless the HA agrees - and they rarely do as they want a sale so they can cash in their 'profit' assuming there is one! And you must pay your rent on the unowned share - or they can repossess and you can lose your owned share too.

Nice work - for the housing association execs!

Here is a good example of a new build SO in a nice part of Islington

https://www.sharetobuy.com/properties/113832/

Full price £695,000 - you buy a 25% share for £174k (so minimum salary needed of about £45k). Monthly cost £2,000 - rent to HA £869, mortgage £795 and wait for this starting service charge £335!!

They don't sublet because these are intended to be owner-occupied properties, not a new outlet for BTL. As part-owners of the properties, and landlords, they have a right to say who lives there. Few tenancy agreements allow subletting.

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No wonder the average CEO of a housing association - and most are quite small - earns nearly £40k more than the PM! The CEO of one housing association in London received a total salary package of £410k in 2019. Nice work if you can get it - they are 'charities' after all!

https://www.insidehousing.co.uk/insight/insight/inside-housing-chief-executive-salary-survey-2020-68245

I haven't registered to see the article, but I do think that a package of £410k sounds a bit toppy for a housing association, even if some are pretty large organisations.

However, I don't subscribe to the view that anyone who works for a charity should live in penury and sacrifice themselves for the good of the organisations, while those who work in the private sector can roll around in money guilt free. Housing associations are effectively businesses that seek to work for the good of their members, like a building society. You need to pay the going rate to get someone with the right skills to manage it. 

 

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I haven't registered to see the article, but I do think that a package of £410k sounds a bit toppy for a housing association, even if some are pretty large organisations.

However, I don't subscribe to the view that anyone who works for a charity should live in penury and sacrifice themselves for the good of the organisations, while those who work in the private sector can roll around in money guilt free. Housing associations are effectively businesses that seek to work for the good of their members, like a building society. You need to pay the going rate to get someone with the right skills to manage it. 

 

Point is of course who is paying for this largesse - the taxpayer and the poor mugs highlighted in this article. Social housing used to be run by local councils - by people paid a lot less and were things that bad pre the 1980s?

PS it was the CEO of L&Q who earned a package worth £410k - first large one I checked so others may be more!

Edited by MARTINX9
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So they don't own a £700k flat - just a share of it.

But of course under the terms of their shared ownership lease they are responsible for 100% of the service and leaseholder and repair charges - while the housing association who actually owns the majority of the flat pays zilch!

No wonder the average CEO of a housing association - and most are quite small - earns nearly £40k more than the PM! The CEO of one housing association in London received a total salary package of £410k in 2019. Nice work if you can get it - they are 'charities' after all!

Shared ownership is an absolute scandal. Far, far more than Help To Buy. Imagine thinking you were getting a good deal using it.

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Point is of course who is paying for this largesse - the taxpayer and the poor mugs highlighted in this article. Social housing used to be run by local councils - by people paid a lot less and were things that bad pre the 1980s?

PS it was the CEO of L&Q who earned a package worth £410k - first large one I checked so others may be more!

I wondered if it was L&Q. 8,000 properties is a pretty large estate. But you are right that councils used to be able to provide this without paying a fortune.

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I wondered if it was L&Q. 8,000 properties is a pretty large estate. But you are right that councils used to be able to provide this without paying a fortune.

Ah. Not really.

Council properties are even more expensive overall. 

Not because head of maintenance is on £400k or whatever, but they outsource to private builders.. who know they are working for a council, 300% uplift on the quote and often are suspiciously related in a round about way to the sign off procedure. 

 

Don't think that still goes on? you see it coming through in the recharges (council will cover for all their still owned flats) - £2k to paint a door. Nice work if you can get it - off your mate.

https://www.theguardian.com/money/2020/feb/08/leaseholders-facing-staggering-bills-for-ex-council-flats 

And from the comments - my fav:

"The blame mainly lies with private contractors who are ripping off a council who are too underfunded to check all the invoices. I live in an ex-council flat in Lambeth. Recent charges have included £275 for a new doormat, 18k per household for a new roof that still leaks and has flooded several houses, £800 per household for tree surgery that never took place etc etc. In total I've been charged nearly 30k since I bought my flat 4 years ago and the bills keep coming. There's another 5k in the pipeline for a wall. Service charges have also doubled in 4 years. We're all struggling"

Edited by captainb
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Ah. Not really.

Council properties are even more expensive overall. 

Not because head of maintenance is on £400k or whatever, but they outsource to private builders.. who know they are working for a council, 300% uplift on the quote and often are suspiciously related in a round about way to the sign off procedure. 

 

Don't think that still goes on? you see it coming through in the recharges (council will cover for all their still owned flats) - £2k to paint a door. Nice work if you can get it - off your mate.

https://www.theguardian.com/money/2020/feb/08/leaseholders-facing-staggering-bills-for-ex-council-flats 

I was thinking about the historical model whereby the council provided the bulk of services directly. 

One of the reasons for these contracts if often that councils do not pay enough for suitably skilled staff. 

I remember during the financial crisis for example when all those councils had stuck all of their money in Icelandic banks. Professional organisations, like my own employer at time, had their money far away from the organisation at the time. The councils were allowing unqualified and inexperienced people manage millions without knowing the first thing about treasury investment. 

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I was thinking about the historical model whereby the council provided the bulk of services directly. 

One of the reasons for these contracts if often that councils do not pay enough for suitably skilled staff. 

I remember during the financial crisis for example when all those councils had stuck all of their money in Icelandic banks. Professional organisations, like my own employer at time, had their money far away from the organisation at the time. The councils were allowing unqualified and inexperienced people manage millions without knowing the first thing about treasury investment. 

Yes agree with that.

Ultimately though getting back to council v housing association.

Yes the head of a housing association is paid £400k a year. But he/she is qualified to manage and build those assets i.e the property and land bank. You need to pay that to attract someone to run a housing association rather than a property asset manager / developer - who would offer a comparable salary.

 

Council option of using Brenda on £40k a year, sounds cheap but is a disaster in the end as the developer and maintenance contracts signed end up costing hundreds of millions extra. If you give the benefit of the doubt and say Brenda signs off incompetent contractual relationships at arms length.

 

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Yes agree with that.

Ultimately though getting back to council v housing association.

Yes the head of a housing association is paid £400k a year. But he/she is qualified to manage and build those assets i.e the property and land bank. You need to pay that to attract someone to run a housing association rather than a property asset manager / developer - who would offer a comparable salary.

 

Council option of using Brenda on £40k a year, sounds cheap but is a disaster in the end as the developer and maintenance contracts signed end up costing hundreds of millions extra. If you give the benefit of the doubt and say Brenda signs off incompetent contractual relationships at arms length.

 

Am totally in agreement. You've got to have the right skills and not expect people to receive below market rate salary because an organisation happens to a charity. 

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