Shared Equity Homes Advice
Arguably shared ownership within the context of buying a share of a Housing Association is a myth.
Shared ownership tends to suggest that both owners of a property have equal rights in regard to the benefits and liabilities of owning your own home.
The reality, in my experience, dictates the following perceived facts.
The law in England and Wales as to the type of ownership over properties has still not changed since the Law of Property Act 1925. That is you can only own a property outright or rent the same, there is no in between those extremes.
The reality of the legal position in shared ownership is that you invest a sum of money in the property owned by a Housing Association (rather like buying shares in a company) and they allow you to live in that property as a tenant paying rent and service charges.
So the benefit you get out of your investment is only, hopefully, a share of a property which is increasing in value. So when it comes to you wanting to move on, on the sale of the property, you get a good return on your investment to invest say in, another property.
In my experience the down side is as follows.
In respect of service charges, the standard lease provides that the tenant has 100% liability for the maintenance of the property, and, in a number of instances, connections to utility services. This tends to generate large monthly service charge bills. A tenant has little or no say in regard to expenditure on maintenance, this being largely at the sole discretion of the landlord.
This compares badly with the private market where most privately rented properties, the landlord has to pay for maintenance not the tenant.
On newly built properties and conversions tenants do have insurance against structural defects through such schemes as the NHBC Building Scheme. However, outside the strict confines of “structural defects” the tenant has to rely on the landlord taking out adequate insurance for such things as flooding. The tenant has little or no control over when and how the landlord goes about making a claim on the same. For instance, if a tenant deems it necessary to consult a solicitor over such a matter of the impact of their home being flooded, he or she may well find that their legal costs cannot be met and any attempt on their part to make a claim, under the concept of shared ownership, will be turned down by the insurer on the basis that only the landlord is the insured.
So a tenant should consider taking out appropriate legal insurance, which could be obtained through, say, content insurance.
It is my advice to would-be shared equity tenants to fully research the consequences of investing in to the same.
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