Shared ownership occurs when a buyer purchases a stake in a property while paying rent on the rest of the share of the property. The buyer must meet eligibility criteria for shared ownership. Eligibility criteria include a household income of no more than £60,000, a first time home owner, or a homeowner who cannot buy a house in an open market. Selling a property in shared ownership is not as easy as buying. These problems make the sale of these properties difficult and sometimes impossible. A solicitor may help you sort out some of the selling shared ownership problems.
High solicitor fees
High solicitor fees are one of the problems a seller will encounter. Most properties under shared ownership are leasehold properties. Conveyance fees for leasehold properties are usually very high. The cost for leasehold properties that are in shared ownership is even higher because of the volume of legal work and documentation required. A solicitor who is conveyancing leasehold properties must work with real estate agents or property managers, financial institutions and the freehold owner of the property. This is in addition to other routine conveyancing researches. The laws governing ownership of a shared property are specific. The solicitor should be trained in this type of conveyancing, and, even better, have a wide experience in selling shared ownership properties. This means that the seller will have to cough out huge sums of money for conveyancing.
Diminishing market for shared ownerships
While it is easier to own shared ownership property, very few people are willing to buy shared ownerships if they want to settle down. This implies that the market for shared ownership properties is very sparse. There are many problems surrounding purchase and ownership of shared properties. The buyer has to pay rent, monthly service fees and maintenance fees. Of course, he will also have to make monthly mortgage repayments if the property is bought with a mortgage. Maintenance fees can sometimes be high especially when major constructions have to be undertaken. All these expenses are unappealing to most buyers. That is why most buyers of shared ownership properties are those that have little experience in real estate or have lower incomes.
Eligibility criteria for buying shared ownership
Besides the issues surrounding occupancy of shared properties, a good number of buyers also fail the eligibility criteria for buying shared ownership properties. Most people in the UK already have homes. Those who have homes but still want shared properties have the ability to get enough mortgages to buy properties in the open market. People who can afford a mortgage for open market properties are not allowed to buy properties in shared ownership. To make matters worse, financial institutions are never willing to give mortgages on shared properties. All these result into a greatly reduced pool of buyers of shared properties.
Consent of House owner
Sale of shared ownership properties is limited by the right of first refusal. The right of the first refusal prevents the seller from putting the property in the market without the consent of the housing provider. It gives the housing provider the right to repossess the property and sell it to another person. The housing provider who claims the right of first refusal may fail to get a buyer. In this case, the seller is allowed to put the property out on the market. Failure of the seller to adhere to right of first refusal can result in punitive measures, which include payment of damages to the housing provider.