Singing Pig

Hi, I have a friend who is buying a 50% share in a maisonette, with the other half being owned by a housing association.  I have serious doubts about this and wondered if any of you have any idea how she would fare when she comes to resell.  Logically, it shouldn't make a difference, but I feel very uneasy with the setup.  It's in a pretty good area, and is in good nick, but I just feel she could do better with her money...

Any comments would be greatly appreciated.

Cheers

Molly

This sort of arrangement has been available for ages and is considered by some people as a way to get on the housing ladder despite not being able to afford/obtain a mortgage on the entire property. Thus, in this case, they borrow half the property value and rent the other half off the housing association. As a result they enjoy the benefit of only 50% of the capital appreciation and suffer only 50% of the depreciation should this occurr. Of course, although their mortgage repayments may remain the same for years, the rent of the other 50% will increase with the market. Selling such a property is as easy as a totally owned property. The purchaser will have to be accepted by the housing association with regards to the rent, but he can also negotiate the proportion of capital that the housing association continues to invest in the property or possibly pay them off all together.

P.P.

Could this person eventually purchase the other 50% stake in the property to end up owning it 100%? Or, is it the case the housing association wants to always maintain a 50% hold in the property? Just wondering how much flexibility and control one can have with these?

hi aldric, 

As i understand it, yes, the owner of the 50% share can purchase other "bits" until they actually own the whole property.  Meanwhile, the owner pays rent on the 50% belonging to the housing association, and so they have to be vetted as a tenant, in addition to having to fulful mortgage criteria.  There are certain advantages, such as the housing association are about to install double glazing and they provide window cleaning and, i think, maintenance of the exterior of the property.  But even given all that, it still seems to me like a very second class investment, and I wonder how many other people would feel the same as me..?  This is the problem I have with the property - not that it's intrinsically unpleasant, but that it might be unsaleable.  This is a maisonette, upstairs, kind of semi, over a ground floor flat which spans the two semi's in area, and it feels like a flat. And I think that when she comes to sell, other people may well view it the same way as I do.

Cheers

Molly