How does shared ownership work?

I can see that this has far more pitfalls than benefits !
Perhaps I won't go down this road after all.

My tenants are in no position to buy a house around here since they are in jobs with low incomes and a helping hand would be invaluable to them...
..but then with a low income, they probably woldn't get a mortgage anyway.

Even with an "option to buy" in 5 or 10 years time, doesn't guarantee the tenants can get a mortgage at that time.

Reply to the comment left by "Mark Alexander" at "22/02/2014 - 11:06":

Hi Mark

Apologies for the inclusion of links outside scope of the thread rules and thank you for your interest.

All of these are dealt with in the agreement. In the case of tenant default the landlord gets the deposit fund but the tenant is still much better off than he is likely to be if he defaults on the mortgage in the early years and gets repossessed. Tenant dies all money back, landlord defaults, repossessed, bankrupt, then tenant gets all his deposit money back as it is protected and could potentially sue the landlord for losses. Landlord dying, the outcome will depend on a variety of variables but tenant will get the deposit money back at very worst. Interest on the account is added to the fund at time of completion/resolution at an interest rate rate set out in the agreement.
Tenant could put money elsewhere but would not have a binding agreement with the landlord at the price the tenant is willing to pay in 5 years time. A deal 5 years ago the tenant would not be in a good place. 5 years time might be an entirely different situation. Property is a risk and dealing with people is a risk. Choose the people you deal with as carefully as you choose your property.
If you want to talk more you have my email.

Reply to the comment left by "Roger Lancaster" at "22/02/2014 - 12:44":

Thanks for your response and for your understanding Roger 🙂

I have to say, I think the tenant buyer gets a bit of a raw deal if the deal becomes legally frustrated in the event of the death, insolvency or or mortgage default of his landlord. That said, at least he gets his capital back I suppose but that's unlikely to be of much comfort if he can no longer buy the home he's had his heart set on and a legal agreement that he can buy it.

Have you considered that your own PI policy could get claimed upon under these circumstances?

Does the tenant buyer always obtain independent legal advise?

If not, I very much doubt that any disclaimer used by the agent of the owner would save the agent from a claim under the Unfair Terms in Consumer Contract Regulations would it? That being the case I suppose it's another layer of protection for the tenant/buyer but quite a vulnerable position for you as the agent.
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Hi Mark
The agreement document has been scrutinised by experts and most agree it is by far and away the best scheme currently available for both parties. We advise in writing that tenants should seek legal and technical advice prior to entering the agreement and most do. If they choose not to take advice having been told that they should then that is down to them. There is only so much one can do to help people.

To some extent these deals coming to fruition can to a degree ultimately protect against mortgage default and insolvency as they release cash which can be used to relieve financial pressures.

For landlords it is a great way of getting rid of uneconomic properties from their portfolio, secure rental payments while removing all but legal maintenance costs.

For the tenant it is a great way to get on the housing ladder if they currently have no deposit, a poor credit rating they can repair or no credit history without the risks associated with defaulting on a mortgage in the early days. Even if they cannot get a mortgage at the end they can advertise the property, get a buyer and then buy and sell on the same day and take whatever profit from the deal assuming prices have risen.

As you would expect we think it is a good deal and so do most of our tenants but like most things related to property it can be abused in the wrong hands. We try to do it right by all concerned and minimise the risk to everyone.

Reply to the comment left by "Roger Lancaster" at "23/02/2014 - 09:30":

Hi Roger

I'm not trying to put a downer on the scheme, I'm just raising a few points for discussion which have occurred to me since I first discussed the arrangement with Glenn Ackroyd a few years. At that time, Grant Shapps was housing minister and he officially recognised that these schemes could be done properly. I then referred Glenn to the Chairman of the Council of Mortgage Lenders at the time and I know Glenn was very grateful for that introduction as it gave him an opportunity to present at a CML members event.

I believe you business has done very well since, indeed ewe haven't had anybody saying you have fleeced them so far that I know of 😉

I love all the sheep related marketing stuff on your PDF by the way >>> https://s3.amazonaws.com/EwemoveGeneral/Rent+Now+Buy+Later+Guide.pdf
.

Reply to the comment left by "Mark Alexander" at "23/02/2014 - 10:07":

Hi Mark

Never thought for a minute you were putting us down. Just giving me a chance to answer the question everyone tends to ask with these schemes. Glad ewe like our Ewenice, Rambo and co. We hope it appeals to people fed up with the same old approach and appearance and that they come flocking to us.

At the franchise show the stand was by far the busiest in the show with nearly 50 more leads that the next nearest exhibitor. Ewe will be seeing a lot more of Ewenice
and her friends in future.

Didn't realise you had recommended Glenn to CML. I obviously have ewe to thank for the 8 properties of our own that we now have on RNBL with two hopefully completing at the instigation of the tenants 2 years early.

Reply to the comment left by "Roger Lancaster" at "23/02/2014 - 11:02":

I, neither, wish to put it down, but I have a few thoughts:

It seems a commendable scheme, particularly for buyers, but as a landlord who might like to sell to my tenant, I can't really see the benefit for me:
I'm tied into a fixed price, losing any rise in price in the next 5 years, and if prices drop, then I may lose my buyer anyway.
I could sell at any time on the open market for the best price....

..can you give us landords some more reasons to sign up to the scheme ?

When I asked about this type of sale, shared equity from tenant to seller, I had in mind the property being sold in stages, across several years so as to reduce CGT, could this be some sort of feature of the scheme, although I realise it might make it mighty complicated !! ?
- - It might make it alot more attractive to sellers .

Roger, I think I met u din’t I at one of them Housing Benefit meetings, when I got asked by the people at the top, to go sit with u new HB landlords when u were being educated on HB & I was to pick fault in what the trainer was telling u, yet the message din’t get down to the trainer nor u lot why I was there, & everyone thought I was just being horrible to the trainer, yet I was there to say what really happens when she tells u the procedure that don’t work in real life.

Anyway, yes that’s what I’m on about, that Glenn Ackroyd thing (Thanks Mark), looks very good idea for me, but then Jeremy’s last comment about sums up all my questions to the scheme?

Reply to the comment left by "Roger Lancaster" at "22/02/2014 - 10:43":

Hi Rodger your line of work seems very interesting, is this nationally? i.e. including properties in London?

Reply to the comment left by "Roger Lancaster" at "22/02/2014 - 10:43":

Hi Roger, I'm very interested in this, how can I get in touch to discuss?