- April 22, 2024
- Posted by: legaleseblogger
- Category: Related News
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## Seeking Advice on Housing Options
Hi, I’m in need of advice regarding my current housing situation and exploring options for the future.
I currently reside in a shared ownership semidetached property located in a prestigious area of the UK. The property is a 2-bedroom new build from 2017 with 93 years left on the lease. My wife is registered disabled, dealing with chronic pain and is a wheelchair user, although she can walk to some extent. I am earning approximately £30,000 per year. Unfortunately, my current savings are inadequate to purchase our current property outright, especially considering that a neighboring property recently sold for £550,000. Additionally, the cost of purchasing a one-bedroom property in the city is beyond my financial reach, and I prefer to avoid settling for a studio apartment.
## Dilemma of Remaining in Leasehold Property
My objective is to transition out of the leasehold agreement while also avoiding the need to commute via bus or train and sacrifice access to our exceptional medical service provider. Additionally, I am concerned about the potential financial burden of extending the lease to facilitate the sale of our house.
I am uncertain as to whether it would be more beneficial to stay in our current property, extend the lease, and manage the annual rent increases (set at 1/2% + RPI), while continuing to save money, or to explore the possibility of moving to a suitable one-bedroom residence.
If you are able to provide guidance on navigating these challenging circumstances, I would greatly appreciate it. I acknowledge that my situation may appear advantageous to some individuals, but I am simply seeking assistance in evaluating my limited choices and determining the best course of action given the circumstances. Thank you for taking the time to consider my dilemma.
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It’s not clear why you feel trapped or what the big downside to current situation is? Obviously a freehold or full leasehold would be better, but if you can’t afford that, isn’t shared ownership still better (ie security of tenure and some potential for equity growth) than renting?
The law is changing on leasehold soon some big reforms coming that seem pretty optimistic check out the national leasehold campaign on fb for advice I would say it’s worth waiting until we see what happens with leasehold reforms , I’m in an apartment that I like no issues but I can see the massive benefits to leasehold reforms !
With 93 years left, it’s unlikely you will need to pay for a lease extension before selling
Is there the opportunity to buy the leasehold and move to share of freehold?
How many other leaseholders are there?
So the rent you pay to the housing association for the part they own is not the same as ground rent you pay for it being a leasehold (that will be a separate charge for you, although it may be zero on the current place).
Any 1 bed that isn’t a 1 bed house will also be leasehold and have ground rent and service charge but if you own all of it you won’t be paying rent to a housing association as they won’t own any of the place. Leasehold is not a shared ownership thing exclusively (most leasehold properties aren’t not shared ownership)
You might find your current mortgage+rent is a lower monthly cost than the mortgage on a 1 bed place would be – you should check this out before pursuing that idea.
If you do buy somewhere else your budget will be set by equity in current place+savings+mortgage eligibility (4.5x salary max so £135k but might be lower as your wife will be classed as a dependant? Assuming she doesn’t work because of disabilities as you don’t say she has a salary). Does that get you anything in the area/s you want to be in? What is the monthly cost of that place: mortgage repayments + ground rent + service charge (latter two assuming it’s a flat). Is that figure more or less than your current mortgage repayment+rent on portion you don’t own+ground rent+service charge? That should help you work out what’s the best move.
You might be in the best position you can be if you can’t afford to buy something else based on that affordability. There was a period of time where the rent portion of shared ownership was rising slower than mortgage rates were so monthly costs were lower Vs if you had the full amount as a mortgage instead. (Your rent will also likely be going up slower than private rents – and obviously that has other drawbacks that are more difficult to quantify accurately financially). Also consider the cost of moving itself, stamp duty, solicitors fees, moving van etc.
You should if you haven’t already: talk to your mortgage provider about lengthening the term and therefore reducing your monthly payments (you will pay more interest in the long run but this could be worth it if the issue is affording the day to day costs now), look into whether it’s a good idea to approach the housing association about costs (ask neighbours possibly? Try and get an idea of they can actually offer any help, they tend to give you payment plans and such if you are for example temporarily unemployed – as they assume you will later have the money to pay it back once you get a job again – but your situation is different)
/r/HousingUK