Australia markets closed

    -11.00 (-0.15%)
  • ASX 200

    -13.40 (-0.19%)

    -0.0047 (-0.71%)
  • OIL

    -1.79 (-2.56%)
  • GOLD

    -1.40 (-0.07%)
  • Bitcoin AUD

    +596.82 (+1.43%)
  • CMC Crypto 200

    +14.79 (+2.48%)

    +0.0019 (+0.31%)

    +0.0004 (+0.04%)
  • NZX 50

    -14.13 (-0.12%)

    +162.08 (+1.29%)
  • FTSE

    -131.50 (-1.75%)
  • Dow Jones

    +75.14 (+0.23%)
  • DAX

    -290.12 (-1.91%)
  • Hang Seng

    -133.96 (-0.67%)
  • NIKKEI 225

    -34.36 (-0.13%)

Shared ownership downsides: meet the Londoners struggling to sell their homes

Samantha Henry bought a 25 per cent share of a £465,000 flat in 2018. She is struggling to sell it for £400,000  (Matt Writtle)
Samantha Henry bought a 25 per cent share of a £465,000 flat in 2018. She is struggling to sell it for £400,000 (Matt Writtle)

Project manager Alexandra Porter, 29, was thrilled when she bought a 25 per cent share of a £500,000, three-bedroom flat in Kidbrooke in 2018.

“I felt like I was being sold a dream,” she says. “But it all came crashing down.”

She is just one of thousands who have signed up to shared ownership. Under the scheme, you use your deposit and a mortgage to buy a share of a new-build property; a housing association owns the other share and you pay it rent and a service charge.

There are 202,000 households living in shared ownership homes in the UK, and London has the lion’s share. The idea is that it helps people on to the housing ladder — the problem is, many are finding that selling their property is much harder than buying it.

Porter decided to sell her flat in November 2021 and put it on the market for £540,000 but, by September 2022, she’d only had three viewings.

“I rang up the housing association and they admitted there were applications that had been sitting around for two weeks.”

The housing association, Moat, needed to approve everyone before they could view it and has strict criteria about who can live in the block, including that a household must have an annual income of between £73,000 and £90,000.

It’s these strict rules, along with “Moat’s negligence in dealing with applications”, that Porter cites for the lack of interest.

Porter says she was told she could reduce the asking price but it would have to come out of her share and Moat would not be reducing its own or the service charges. Moat denies this policy. It says: “We would not refuse a customer if they decided to reduce the price of their property and they would not ‘forfeit the reduction out of their share’.”

With the mortgage, rent, service charge and household bills, Porter has been paying more than £2,000 a month for a flat she didn’t live in as she had moved to Cambridge.

“I ran out of money in June. At that point I’d only had two viewings. I wasn’t selling the property and I wasn’t paying the rent because it was empty, so Moat added the rent to my mortgage.”

In September 2022, Moat agreed that Porter could rent the property out. “The tenants had to meet the affordability criteria and I wasn’t allowed to make any profit from letting it out.” However she had issues with the tenants.

Porter asked Moat if it would buy the property back. “I said, ‘I’m going to go bankrupt,’ but they said that they don’t do that.” She says she had no other choice but to offer it to the bank for voluntary repossession. Porter is now hoping that the property will be sold at auction and she will get some of her deposit back. She says she wants her story to be told so others aren’t put in the same position.

Moat says: “We try to be as flexible as we can to help our customers sell their homes as quickly as possible. If we know there is a particular area that homes are slow to sell in or the seller has a high-percentage share to sell, we will waive our nomination period to speed up the process and allow customers to go directly to the open market.”

It added that it is not just shared ownership properties but the property market in general that is facing difficulties.

‘I thought at least I’d get my deposit back’

Samantha Henry, 40, has also had a difficult time selling her shared ownership flat in Hornsey. “I’m trying to move to Essex to be closer my family. It’s quite urgent: my stepfather died last year and my mum needs help.” She runs a dog accessories business, Pup Chic Boutique, and bought a 25 per cent share of a £465,000, one-bedroom flat in 2018.

She first tried to sell it in March 2021 and had to pay for a RICS independent valuation. “They said it was worth £415,000 but my neighbour, who was the floor below, had sold for £440,000 so they agreed to £440,000. It’s a loss but I thought at least I’d get my deposit back.” She gave the housing association, Sanctuary Homes, eight weeks to sell the flat but nothing happened.

I’ve found houses twice, paid for the searches twice and lost them both

Henry was then allowed to put it on with a regular estate agent and found two buyers who both pulled out. Each time she has had a new buyer, she has paid for another valuation as the share of the flat they were buying was different from hers.

“I’ve had to pay out for three valuations, at a total cost of £1,000. I’ve found houses twice, paid for the searches twice and lost them both.” Henry doesn’t understand why a new valuation is required if the share is different as the overall value of the flat is the same.

She decided to drop the price to £400,000 in November 2022 and sent over examples of flats sold for this to the housing association. The valuers for Sanctuary Homes disagreed, saying that “the market will pick up”.

This is despite her having no viewings since July and one buyer who said her flat was overpriced.

“The housing association doesn’t make it easy and takes forever to respond to things. They won’t qualify a buyer to check they can afford the property until they send over a memorandum, which requires them appointing a solicitor. When I bought, I wasn’t even allowed to view the flats until I had been checked.”

A Sanctuary Homes spokesman says: “We will continue to work with our customer on the sale of this property and can reassure her that we are committed to offering any support we can.”

Martin Boyd of the Leasehold Knowledge Partnership says the problem is partly to do with how the housing associations are typically incentivised. “They prioritise new properties over old ones as their targets are on selling the new-builds,” he says. “There’s no bonus based on reselling homes but there is on building and selling new ones.”