Shared Ownership - to staircase or not to staircase?

[benm3evo]

Hi all,

I am hoping to gain some knowledge/advice based on others experience & expertise please.

I have a shared ownership house (50%) which I've had for 13 years, with 12 years left on the mortgage.

The rent is currently £220 & the mortgage £277, I've also been overpaying when I can & have around 6K in reserve.
I don't have much spare cash to put in so I'd be looking at extending the mortgage rather than a big lump sum.

I'm trying to work out what is best going forward. Is it best to leave it as it is or consider buying (staircasing) more of the property.

The one thing, & probably key thing, I don't know is how much the house is worth now. It was 136k when I bought it (new build). The housing association will do a valuation for £150 if I so wish.

I did get some vague information from the housing association that if I staircased by another 10% it brings the rent down by roughly £50. I'm not sure how they calculated that.

Any advice would be appreciated.
Thanks, Ben.

[clockworks]

I bought my first house 35 years ago on Shared Ownership - Milton Keynes Development Corporation, so maybe a bit different to current schemes? I was in a rented flat (with MKDC) at the time, and tried to buy it under "right to buy", so they offered me a choice of houses as an alternative.

I started out with 30%, bought another 30% a couple of years later, and the final 40% after a couple more years. The scheme I was on allowed me to buy further percentages at a discounted rate, which worked out at very close to the initial valuation. The only proviso was that I had to live there for a certain number of years, or I'd have to pay back some of the discount.

Something to take into account is the fixed costs of remortgaging - arrangement fees and any legal expenses. Might make more sense to buy the biggest extra share that you can afford, rather than several smaller percentages, to minimise these expenses?

Although I could have just about afforded to purchase outright back then, it helped ease me into spending money on a house rather than cars and hi-fi.

[benm3evo]

Thanks for the reply.

I hadn't thought of that, there's bound to be fees etc each time you buy more shares. I think I will plan to try & buy the biggest chunk I can. If I remember correctly, I could only go to 80% but that may have changed by now so I'll look into that.

Thanks,
Ben

[Spidersleg]

Do you get to own the free hold or just leasehold?

We are kind of stuck and have not bought anymore as we cannot buy freehold. Possibly wouldn't have bought of we knew this back then. I guess it was a play on words. " Yes you can buy all of the house and own 100%" There was no mention of freeholds and leaseholds.

[PF62]

clockworks said:

I bought my first house 35 years ago on Shared Ownership

Same here at at about the same time.

With house prices rising by around 50% over the next three or four years and interest rates hitting 15% I couldn't afford to buy the remainder of the house, so really felt screwed by the decision to go for a shared ownership property.

And then in 1989 house prices fell off a cliff and reverted back to the pre-increase price so I could afford it and didn't feel bad after all.

[NickCQ]

Spidersleg said:

Do you get to own the free hold or just leasehold?

We are kind of stuck and have not bought anymore as we cannot buy freehold. Possibly wouldn't have bought of we knew this back then. I guess it was a play on words. " Yes you can buy all of the house and own 100%" There was no mention of freeholds and leaseholds.

Not necessarily an issue but obviously the terms of the lease are crucial.
There is a big difference between a 999 year lease with peppercorn rent and one of the rip-off ones you read about in the news with ground rent doubling every 10 years and exorbitant service charges.

[Spidersleg]

NickCQ said:

Not necessarily an issue but obviously the terms of the lease are crucial.
There is a big difference between a 999 year lease with peppercorn rent and one of the rip-off ones you read about in the news with ground rent doubling every 10 years and exorbitant service charges.

We had a lame 99 year lease, rent is very cheap which is the upside and luckily service charges aren't high. It'll be the shortish lease we might have a problem with when we come to sell. I've read that renewing a lease can cost thousands.

[NickCQ]

Spidersleg said:

We had a lame 99 year lease, rent is very cheap which is the upside and luckily service charges aren't high. It'll be the shortish lease we might have a problem with when we come to sell. I've read that renewing a lease can cost thousands.

80 years is the magic number when things get difficult.
Cheaper to extend the earlier you do it, you have (IIRC) a statutory right to buy 90 extra years. Adding 90 to 90 should cost 'a few' thousand rather than thousands I think.