The way things are going it looks like this time next year might be a good time to staircase and buy a bigger share of my SE1 flat. Have any of you good people staircased and have any experience/drawbacks to watch out for/tips to share?
When I bought my shared ownership home ten years ago I was told I could staircase up (buy more shares) anytime I liked at the market value which would be established by the Borough Surveyor (who I had to pay) and that the rent on the remaining shares owned by the Housing Association would go down.
When I tried to staircase up about four years ago the Borough Surveyor (£300) refused to value my home until I told him if I was buying or selling. He would not tell me what the price difference was but admitted there was one. Presumably it is higher if I'm buying and cheaper if I'm selling (the Association have first dibs if you sell) otherwise why be shy about telling me? The valuation came in higher than I expected.
When I tried to proceed with the purchase anyway I was then told by the Housing Association that if I staircased up another share my rent on the remaining share owned by the Association would be revalued and would actually be MORE on the new smaller share they owned than the amount I was already paying now on a much larger share. When I bought the place I was told when I staircased up another share the rent on the remained would go DOWN.
So I have two questions. What is this two tier valuation system and where did that come from, and why wasn't I told about it or the fact that they re-value the rent on your remaining share when you staircase to dramatically put it up, when I bought the place? I should take it up with them but I can't do anything now until I find a job anyway.
Things may be different now. Some Housing Associations are highly geared and may welcome residents purchasing further shares, especially if they are also having to investment money buying out those in financial difficulty.
There are different rules for valuation, though these rules are designed to ensure a fair price is paid.
I am surprised by the rent issue. There are new guidelines for Housing Associations now and so it would be worth discussing with the new Tenant Services Authority.
It will be worth also looking into Stamp Duty. It depends what you did when you first bought, eg paid only on the share you bought or on the whole property. If the former you may be in for some bad news.
But in general it should be a good time to trade up, and attitudes should be different.
How can two different prices depending on whether you are buying or selling be fair? Seeing as the surveyor refused to tell me if the discrepancy was in my favour or the Housing Associations I have no reason to believe it is fair to me.
I paid all the Stamp Duty the first time round. However, seeing how everyone moves the goal posts the whole time with shared ownership it wouldn't surprise me in the slightest if it turned out I'd have to pay the full Stamp Duty again next time.
Why dont you get a second opinion from a different surveyor? My housing association Tower Homes now part of London & Quadrant supplied a list of approved surveyors to choose from although my solictor said legally I can choose any surveyor to do the valuation. If youre not happy with the Borough Surveyor just try somewhere else.
I am no expert, but am aware there is/was an issue on stamp duty. If you paid the duty on the whole value, not just your share at the start I think you are OK. The problems as I remember arise when you only paid on your share and then need to pay more.
The rules for valuation will be laid out by the Housing Association. They can include a quote from an agreed list or an average of two or something. If it is the Borough Surveyor, this is who you need to use. The idea will be to protect you. But also the Housing Association/tax payer who will be well used to the "my brother is a surveyor and he says....., and why cant I use him". Why the borough surveyor chooses to charge different rates will be up to the Borough and not the Housing Associaiton. However £300 for a valuation is not out of sync with what mortgage lenders would charge to use their Surveyors.
If you are happy in the flat, and the service charge and valuation are OK and you can afford to buy more, this should be a good time to do so.
It's in the contract that I have to use, and pay, the borough surveyor.
However it's not in the contract about two different valuations. I do not see why the borough surveyor should unilaterally make a decision about two valuations depending on whether I'm buying or selling. What is the logic?
I think I have to have it out with the association. It is them I have a contract with.