Anyone have any experience of shared ownership?

[jon doe 3000]

Hi

I am considering shared ownership but I am finding it hard to find
anyone who has actually had any experience with it. In particular I
would like to know whether they have found it difficult to move on and
actually sell their house.

 

[Peter Gradwell]

Hi

I am considering shared ownership but I am finding it hard to find
anyone who has actually had any experience with it. In particular I
would like to know whether they have found it difficult to move on and
actually sell their house.

Shared ownership with friends of partner? I've done it with an
ex-girlfriend. Splitting up the house wasn't wonderful (I bought it
off her) but it wasn't terribly difficult.

Ultimately, the problems will be whether the other person wants to
stay, and if so, whether they can afford to buy you out.

If not, then you have to stay put until you both want to move.

peter

 

[JF]

X-No-Archive: yes

I am considering shared ownership but I am finding it hard to find
anyone who has actually had any experience with it. In particular I
would like to know whether they have found it difficult to move on and
actually sell their house.

Some second hand information from a close friend. About ten years ago he
and his wife and four other families clubbed together to buy a large
country mansion set in about fifty hectares on the outskirts of my
village. They all pay in GBP2K a year into a sinking fund.

They set up a private limited company to own the estate, each group
owning one fifth of the shares. If any party wishes to sell their
shares, the prospective new owner/occupant has to be approved by the
other share holders.

True there are problems with CGT and other such snags with running a
private company, but none of the original group has wanted to sell out
yet, and I can't say I blame them. They have two tennis courts, an
indoor swimming pool, billiards room, games room, ponies for the kids --
amenities galore which they'd never otherwise have with a conventional
purchase.

 

[Alan Frame]

Shared ownership with friends of partner? I've done it with an
ex-girlfriend. Splitting up the house wasn't wonderful (I bought it
off her) but it wasn't terribly difficult.

Ultimately, the problems will be whether the other person wants to
stay, and if so, whether they can afford to buy you out.

If not, then you have to stay put until you both want to move.

I don't know how it would work with houses, but I've heard of a scheme
for shared ownership of boats:

Either party can get out at any time.

If party A wants out, they offer to buy out the other party (B) and
state their offer.

B can either accept the offer, take the cash and leave
*or*
Pay that amount to A and take complete ownership.

In either case, the party that ends up with 100% ownership is free to
sell and keep all the proceeds.

Seems fair, but, of course, finance & mortgages will complicate things
for houses.

rgds, Alan

 

[Ronald Raygun]

I don't know how it would work with houses, but I've heard of a scheme
for shared ownership of boats:

Either party can get out at any time.

And the Moon is made of Wensleydale cheese.

If party A wants out, they offer to buy out the other party (B) and
state their offer.

If party A wants out, they'd want to sell their share, not buy the other.

B can either accept the offer, take the cash and leave
*or*
Pay that amount to A and take complete ownership.

Isn't it more usual to try to find a substitute partner, i.e. to sell
one's share on the open market? Since one of the main reasons for
going for shared ownership in the first place is probably that sole
ownership is too expensive, it seems a bit pointless to expect the
other partner to buy you out, since it's likely he couldn't afford
to. But yes, first refusal should be offered even if it will probably
not be taken, and perhaps the other co-owner knows someone who would be
interested in coming on board (groan).

In either case, the party that ends up with 100% ownership is free to
sell and keep all the proceeds.

Well, there's the rub. How can one be "free to sell" when it's difficult
to find a buyer?

Seems fair, but, of course, finance & mortgages will complicate things
for houses.

Marine mortgages are not at all uncommon either, by the way.

 

[Alan Frame]

And the Moon is made of Wensleydale cheese.


If party A wants out, they'd want to sell their share, not buy the other.

True, but...

Isn't it more usual to try to find a substitute partner, i.e. to sell
one's share on the open market?

.... then you've got to decide a fair price - the stating partner might
hold out for more that the departing one wants...

Since one of the main reasons for
going for shared ownership in the first place is probably that sole
ownership is too expensive, it seems a bit pointless to expect the
other partner to buy you out, since it's likely he couldn't afford
to.

This does require access to liquid (groan!) captial to work properly.

But yes, first refusal should be offered even if it will probably
not be taken, and perhaps the other co-owner knows someone who would be
interested in coming on board (groan).

...as A sets both the amount they want *and* the price they'll pay, so
it's in their interests to choose a fair amount.

Think of it as a slightly more complicated version of us sharing a pork
pie - "*I'll* cut it in half, *you* choose which piece you want".

Well, there's the rub. How can one be "free to sell" when it's difficult
to find a buyer?

If you offer <50% of what I think it's worth, I'll buy you out - if you
offer >50% of what I think it's worth I'll sell -

If I offer <50% of what I thinks it's worth, I risk you buying me out at
that price - If I offer >50% of what I think it's worth, I'm offering
you the difference between that and what *you* think it's worth IYSWIM.

The party percieved as making the profit then has to find a buyer for
the whole thing.

Marine mortgages are not at all uncommon either, by the way.

Indeed - that's in another chapter of the RYA "Buying a boat" book ;-)

rgds, Alan

 

[Ronald Raygun]

If you offer <50% of what I think it's worth, I'll buy you out - if you
offer >50% of what I think it's worth I'll sell -

If I offer <50% of what I thinks it's worth, I risk you buying me out at
that price - If I offer >50% of what I think it's worth, I'm offering
you the difference between that and what *you* think it's worth IYSWIM.

The party percieved as making the profit then has to find a buyer for
the whole thing.

Not necessarily for the whole thing, perhaps only for the half thing.

Generally only one party wants out, the other does not want to sell
his half and can't afford to buy the other's, so the usual solution is
to find an outside half-buyer, not an outside whole-buyer. Even if a
whole-buyer is then going to be sought, your scheme places both
co-owners in the ridiculous position of having to guess the value
before a buyer is found. Why not just find the buyer first?

This is a major difference between boats and houses. People don't
generally share ownership of a house unless they also share its
occupation. It's not very common for complete strangers to buy a house
together to live in together (even if not as a couple). It's easier to
imagine this happening in the case of a holiday home where the sharing
is done by time rather than space, and this is usually the same basis
on which boats are shared.

Hence when co-owners of a house split up, it generally leads to the
whole house being sold, whereas in the case of boats or holiday homes
it's much more likely that only a fraction of the object is sold, with
one of the original co-owners staying put.