50% rent increase on a shared ownership property
Discussion
The title to this should read 108% not 50% - have read the paperwork today and according to my maths this is the increase! Anyway.
My sister part owns a property in Birmingham. She has a mortgage on 40% of the value and pays rent to a housing association on the other 60%. This situation suits her and her financial position and everything was great. Until this weekend when she receives a letter from the housing association telling her that her rent was to go up...by 108%. She simply cannot afford this.
No reason has been given, seriously, no reason is stated in this letter unbelievable as it sounds. The letter does have a form which my sister can complete and send back to contest the increase. My Mum is talking to an old family friend tomorrow who owns an estate agency that deals mostly in lettings to try and maybe find out more.
Any input would be appreciated, especially from any of you in the property/lettings industry or have had similar experiences.
And please, I do not want this to turn into a discussion about why people buy this type of property or similar.
As always, thanks in advance.
ETA: Further detail.
My sister part owns a property in Birmingham. She has a mortgage on 40% of the value and pays rent to a housing association on the other 60%. This situation suits her and her financial position and everything was great. Until this weekend when she receives a letter from the housing association telling her that her rent was to go up...by 108%. She simply cannot afford this.
No reason has been given, seriously, no reason is stated in this letter unbelievable as it sounds. The letter does have a form which my sister can complete and send back to contest the increase. My Mum is talking to an old family friend tomorrow who owns an estate agency that deals mostly in lettings to try and maybe find out more.
Any input would be appreciated, especially from any of you in the property/lettings industry or have had similar experiences.
And please, I do not want this to turn into a discussion about why people buy this type of property or similar.
As always, thanks in advance.
ETA: Further detail.
Edited by Rob. on Monday 2nd March 19:31
Edited by Rob. on Tuesday 3rd March 16:11
Rob. said:
My sister part owns a property in Birmingham. She has a mortgage on 40% of the value and pays rent to a housing association on the other 60%. This situation suits her and her financial position and everything was great. Until this weekend when she receives a letter from the housing association telling her that her rent was to go up...by 50%. She simply cannot afford this.
No reason has been given, seriously, no reason is stated in this letter unbelievable as it sounds. My Mum is talking to an old family friend tomorrow who owns an estate agency that deals mostly in lettings to try and maybe find out more.
Any input would be appreciated, especially from any of you in the property/lettings industry or have had similar experiences.
And please, I do not want this to turn into a discussion about why people buy this type of property or similar.
As always, thanks in advance.
On the surface that sound pretty iniquitous. Is there nothing in the contract that limits the rent increases or can they basically do what they want? No reason has been given, seriously, no reason is stated in this letter unbelievable as it sounds. My Mum is talking to an old family friend tomorrow who owns an estate agency that deals mostly in lettings to try and maybe find out more.
Any input would be appreciated, especially from any of you in the property/lettings industry or have had similar experiences.
And please, I do not want this to turn into a discussion about why people buy this type of property or similar.
As always, thanks in advance.
If they get nasty the local papers would probably be a good bet.
If they won't be sensible she should probably contact her MP as well.
Is there a lease that provides for the shared equity portion? What does that say about rent reviews? I've never dealt with one of these but I'd imagine there must be a mechanism for rent reviews.
Are you sure it wasn't some kind of "low start" set up where the rent was artificially low to start with but then got ramped up?
Are you sure it wasn't some kind of "low start" set up where the rent was artificially low to start with but then got ramped up?
Is it definitely a housing association ?Pulled this off of our local ones web site
Rent Review
We review all our rents and service charges annually. In line with Government guidelines for housing associations, we aim to keep the increases of our total rents within RPI (Retail Price Index) + 1%. Unless our costs rise, we should be able to hit this target.
Changes to your rent are made once a year, normally scheduled for the beginning of April. If we make improvements to your home that will result in a rent increase, this will not be added until the work is complete. You will be advised of the cost before we begin work, and in some cases you can decide not to have the improvements carried out.
One of our main objectives is to keep rents affordable. As a not-for-profit organisation we will only increase rents in order to cover our costs and to improve our services.
Rent Review
We review all our rents and service charges annually. In line with Government guidelines for housing associations, we aim to keep the increases of our total rents within RPI (Retail Price Index) + 1%. Unless our costs rise, we should be able to hit this target.
Changes to your rent are made once a year, normally scheduled for the beginning of April. If we make improvements to your home that will result in a rent increase, this will not be added until the work is complete. You will be advised of the cost before we begin work, and in some cases you can decide not to have the improvements carried out.
One of our main objectives is to keep rents affordable. As a not-for-profit organisation we will only increase rents in order to cover our costs and to improve our services.
That does sound odd from an HA. which one is it. I work for a few of them.. maybe they just got my Invoice 
I do know that some of them are in a bit of trouble at the moment, as they were encouraged to build loads of affordable housing on this part buy part rent deal that they now cant shift...due to motgage problems..
I do know that some of them are in a bit of trouble at the moment, as they were encouraged to build loads of affordable housing on this part buy part rent deal that they now cant shift...due to motgage problems..
Shared ownership has died a death with RSLs over the last few months... very few lenders will lend against them currently and loads of associations are seeking approvals to convert the tenure model on unoccupied schemes to an interim rented or full rented basis to rescue viability (the relevant planning authority usually has the final word on this and many will have been committed to shared ownership). Suspect this is having an impact on cash flows for associations and prolly feeding into rents that are charged on existing units.
The shared ownership lease will provide for how the rent is derived and it's also worth looking behind the lease at the s106 agreement between the original developer and the council that would have secured the affordable units at the time planning permission was granted (public document you can inspect on request). This will most likely also impose a particular formula for the annual rent... typically 5% or so of the 'market value' of the unacquired share.
The shared ownership lease will provide for how the rent is derived and it's also worth looking behind the lease at the s106 agreement between the original developer and the council that would have secured the affordable units at the time planning permission was granted (public document you can inspect on request). This will most likely also impose a particular formula for the annual rent... typically 5% or so of the 'market value' of the unacquired share.
Shared ownership is a scam. Let's face it - if you can't afford 100% of the repayments on a property then you can't very well afford to pay for part of it and rent the other part unless the rent is artificially low, something which is unsustainable for whoever is paying for the bit that you're renting. Buy a house when you can afford one. Until then, stay away. If everyone refused to get involved in these schemes then prices would have no choice but to come down to a sensible level 'cause nothing would shift otherwise. If an ordinary person on an ordinary wage can't afford to buy an ordinary home then house prices are still too high. It isn't rocket science.
MitchT said:
Shared ownership is a scam. Let's face it - if you can't afford 100% of the repayments on a property then you can't very well afford to pay for part of it and rent the other part unless the rent is artificially low, something which is unsustainable for whoever is paying for the bit that you're renting. Buy a house when you can afford one. Until then, stay away. If everyone refused to get involved in these schemes then prices would have no choice but to come down to a sensible level 'cause nothing would shift otherwise. If an ordinary person on an ordinary wage can't afford to buy an ordinary home then house prices are still too high. It isn't rocket science.
If you think that is a scam wait till you hear this one ,the HA will never lose even in a falling market the tennant/buyer always takes the hit if the property sells for less than the original purchase price Not sure if this helps, my MP asked a question the other week about "social rent" Increases...
Answer was as follows..
The former Office of the Deputy Prime Minister issued "A Guide to Social Rent Reforms in the Local Authority Sector" in February 2003, which outlined the principles of the rent restructuring programme including the formulae to be used for calculating formula and guideline rents, and the 'caps and limits' on rent charges designed to protect tenants from unduly high rent increases in any one year.
The guide makes clear the basis of the Government's policy which is that social rents should remain affordable, and well below those in the private sector. The rent formula includes an element to reflect local earnings to take account of affordability.
The "Guide to Social Rent Reforms in the Local Authority Sector" might be worth looking up
Answer was as follows..
The former Office of the Deputy Prime Minister issued "A Guide to Social Rent Reforms in the Local Authority Sector" in February 2003, which outlined the principles of the rent restructuring programme including the formulae to be used for calculating formula and guideline rents, and the 'caps and limits' on rent charges designed to protect tenants from unduly high rent increases in any one year.
The guide makes clear the basis of the Government's policy which is that social rents should remain affordable, and well below those in the private sector. The rent formula includes an element to reflect local earnings to take account of affordability.
The "Guide to Social Rent Reforms in the Local Authority Sector" might be worth looking up
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