Tag: fees

Overview

I have extensively written on the topic of shared ownership. In this section, I provide you with some techniques to help you find your ideal shared ownership property and some advice to help you along the way. While, I cannot guarantee you that you will find the perfect shared ownership property. The below will, hopefully help you with your journey.

Visit MoSCOW

MoSCOW is Business Analyst tool for prioritising.

M – Must Have

S – Should Have

C – Could Have

O – Ought to Have

W – Would like to have or some will call it wish to have.

This tool is quite useful before viewing homes to determine priorities for features before you begin looking. It helps save time by helping you to idenfity properties that you are most interested in viewing versus wasting time being a ‘lookie loo.’ A ‘lookie loo’ someone who really does not have an interest in purchasing the property but is just looking. Likewise, it forces you to think about the purchase, what is important to you, what you need, and what is more of a luxury for you.

Basically, prioritisation is from the top to bottom with ‘Must Have,’ being the features you must have to consider the property and these would be your most important features. Whereby, if the property did not have most of them, the property would be one you would not pruchase. ‘Ought to Have,’ would be your next most important features that the property needs for you to consider but if a few were not included, it would not be a deal breaker for you. ‘Should’ and ‘Could’ have are features that are not as important but at least some should be included. Whereas, ‘Would like to have’ being more of features being on your wish list. How many you assign to each category, the criteria for each, and how you assign is your choice.

Expand your search

If you are looking towards shared ownership then you need to have a bigger search area. This is because shared ownership properties are in demand due to their limited numbers, and shared ownership operates on a first come first served basis. From my experience, if you are looking in a limited area because of nearby family or schools, for example, it is likely your search will be quite long. To get around the barrier of limited search area, is to expand your search to include nearby areas.

Expand you searching tools

Some people will advise you to use the Shared Ownership website. This is a great starting point but I would strongly recommend expanding your searching tools. One good tool is On the Market. This site allows you to search your area for shared ownership and to search on a variety of criteria. Another option is entering your search criteria into a search engine. The downside, to using a search engine you may return outdated results.

Keep up to date with new housing developments in your area

Share ownership properties are included with affordable housing requirements, social housing, for planned developments. This means a small number of homes will be allocated shared ownership, I believe the figure is around 10% for social housing. However it is worth noting social housing includes housing for councils and housing associations to rent. In order to be one of the first to apply, you will need to contact the developer to find out the housing association that is managing shared ownership. Once you find out, then you will need to contact them and to keep in contact to get your application in as one of the first. A good way to identify potential shared ownership properties is to follow housing developers on Facebook, for example Taylor Wimpey, Keepmoat, and Barrat Homes. Along with following housing associations in your area.

Look at your finances

Affordability and Credit Checks

The last thing you want to happen once you have found your dream home, is to find out you do not pass the affordability checks or you have an adverse credit history. The realiality shared ownership is not cheap. You will have to pay rent, service charge, a percentage of the building insurance, in many cases a mortgage, and repairs on the property. Furthermore, you will have to go through an affordability check to ensure you can afford the property. Plus, you will need to get a mortgage. Since shared ownership means you will not own the property outright, it means the number of mortgages available are limited and it can mean you will need to put up a larger deposit than if you bought the property.

Cost of Moving

The other side of getting your finances into shape is ensuring you have enough money. Moving is not cheap. You will face changes in your expenses, such as utility bills, council tax, and you may face re-connection fees for services like broadband. Also, you will face having to go through your possessions to see what you will need and what you can throw away. This can mean, the need to replace high value items like television and furniture. Along with hiring a skip to throw away items you no longer need. Next, you need to consider the legal expenses. In the UK, outside of London, a good ‘ball park’ starting figure is £2,000. £2,000 is your legal fees and this does not include your first month’s rent, mortgage + any additional days being charged because you are moving during the month. You will need to factor in at least an additional £4,000 – £7,500 if your property does not come with flooring (carpet and tiling). Finally, you need to account for the cost of your mortgage plus any fees being charged by your mortgage and mortgage broker.

Advice: Maximising your chances

Don’t get attached

The above sections gives you techniques on how to find your perfect shared ownership but it does not tell you how to endure the rejection that comes with shared ownership. To begin with, it is important to see your search as a journey that has an undefined destination. Yes, you may have an idea of the type of property you want, its location, and what it should contain, but it is important not to get attached. When viewing properties, it is easy to get attached to a property and begin to get tunnel vision that leads to an obsession of needing that specific property. Best advice, don’t get attached. Shared Ownership, can be very competitive and brutal. Instead, it is best to search every day and regularly view properties. If you find one you like then start the process to compete for it but continue your search. Because of the competitive nature of shared ownership and because shared ownership is done on a fist come basis, it is easy to give up. Perserveriance, is needed to be able to continue your search.

Be flexible and adaptable

While searching for your perfect shared ownership property, it is important to review what is working and what is not working. This is a journey and to find your perfect shared ownership property you will need to be flexible and open to updating your approach. The more you get ‘locked in’ to a location, type of property, or specific features, for example, the harder it will be to find your ideal property. To be clear, I am not saying you will not find it but it will, most likely, take longer with a lot of rejection. So, the more you can be flexible and adapt to what is available in your market the more likely you are able to succeed.

Final Thoughts

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Introduction

It is an exciting time; you are now one major step closer to your dream home. After experiencing elation, reality sets in, leading to feelings of panic and anxiety. What do you do?

After completing all of your initial checksand paying your reservation fee, the real work happens.

Finally, Part 1 discussed how to find your property through paying the reservation fee. This section will discuss a generic process that involves instructing your solicitor and ensuring its completion. It is not legal advice, and it should not substitute for it. Furthermore, it is worth noting that each purchase journey is unique and may not necessarily follow this exact path. On this journey, your solicitor will advise you on what is required.

Timeframes

For those who are buying a new build, it can take you 2 months or more before you move into your new home. It can take nearly a year to move into an off-plan home, and it can take another 3–6 months to move into a resale home. Why does the process take so long? This section will delve into the subsequent steps and provide guidance on how to prepare effectively.

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Words of Warning

Once you reach this stage, you need to be aware of two major issues that have the potential to derail your aspirations. First, until contracts are exchanged, either party can withdraw without penalty. This could imply that you have forfeited all your payments, yet you remain free to purchase the property. Secondly, and perhaps most importantly, you should have an agreement in principle (‘AIP’) for your mortgage offer. An AIP notifies the seller of your mortgage approval. Most importantly, you reduce the risk of your seller leaving due to delays.

This prompts a frequently asked important question. Your reservation agreement will include terms such as contract exchange within 28 days or property removal from the market for 28 days. I can’t speak for all shared ownership sellers, but in my experience, delays often lead to seller withdrawal. Generally, if the process advances and the seller receives regular updates, there shouldn’t be any problems.

Upon signing your reservation agreement, make sure you are prepared to proceed by supplying the necessary information and ensuring your availability. Any delays can dearly cost you.

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Finding a conveyancing solicitor

Individuals typically seek out a local solicitor or opt for the solicitor that the housing association recommends. In reality, you can easily complete the conveyancing process online, eliminating the need to visit the office. Therefore, restricting yourself to a local solicitor significantly reduces your options.

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Initial fee and checks

You will be required to pay an initial set-up fee once you find your solicitor. Typically, this will cost between £250 and £500. Once you have paid the fee, you will need to conduct additional checks. These checks are designed to verify the origin of the funds, and the duration of this process may vary depending on the source of the funds.

Your solicitor will identify the sellers’ representatives while conducting the checks, and you will receive the contract pack and contract report about 1-2 weeks after instructing your solicitor.

Solicitor fees will vary based on several factors, such as location, type of property, if a mortgage is involved, value of the property, requirements of the mortgage company, and other factors. A very general estimate is between £1,500 and £2,000. This does not include your deposit, and it does not include the cost of the survey.

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Searches

Generally, searches uncover information about different facets of your property and its surroundings. The cost of each search varies depending on its specific nature, typically falling between £30 and £100. From a purchasing perspective, searches can be either mandatory or optional.

Mandatory searches are those that your mortgage company, insurance coverage, or the law requires. Your solicitor can advise if any searches are mandatory. If you are a cash buyer, you can often choose to forego searches or request additional ones to gain a deeper understanding of your property. Therefore, you can request optional searches to enhance your understanding of your purchases, even though they are not mandatory.

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Title Searches

At some point, your solicitor will run a title search. This will confirm who owns the property and if there are any covenants, rights of access, or attachments to the title. Covenants are restrictions or actions you need to take. An example of a covenant could be fencing no higher than six (6) feet or refraining from hanging laundry outside. Consider utilities and rails as the best examples of right of access. It means someone has the right to access your land and provide an essential service. Examples can include running a gas line below ground on your property, rail tracks crossing a segment of your land, or electrical lines crossing above. Finally, attachments refer to debts that the landowner must settle at the time of purchase. Typically, this will include a mortgage or any unpaid debt that has resulted in a CCJ.

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Property Surveys

In addition to identifying repairs, a property survey may also consider the property’s value and/or the cost of the repairs. The RICS website provides a very informative guide about the types of surveys available.

As for the question, is a survey mandatory or optional? The answer depends on the type of property (new build or resale) and if you have a mortgage. Many mortgage companies will mandate the completion of a survey. The cost will differ depending on the property’s location, size, type, and type of survey. A very rough estimate is somewhere between £400 and £1,200.

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Opportunity to ask questions

Throughout the process, you will have the opportunity to ask questions of your solicitor, who will, when appropriate, also ask questions of the other side on your behalf. You should never contact the other side’s solicitor without first getting permission from your solicitor. Ask your solicitor any questions you have, and if you’re still not satisfied, consider following their complaint process.

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Exchanging contracts and completion dates

Once you’ve finished your searches, surveys, and checks and received answers to your questions, it’s time to exchange contracts. Your solicitor will provide guidance on the necessary procedures for that day, the timing and method of transferring funds, and, if you are renting, the appropriate notice period to give your current landlord.

Once you exchange contracts, you become legally responsible for the property, and on completion, you will need to pay all remaining balances.

How long can you have between exchange and completion dates? If feasible, it is possible to conduct both the exchange and the completion on the same day. This usually happens when there is an onwards chain or you want to immediately move into the property. If you require additional time to secure time off work, hire a mover, and/or start packing, it’s advisable to arrange the exchange and completion dates separately. Please note that certain housing associations may have stipulated in your reservation agreement that completion must take place within a certain number of days after contract exchange.

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Giving notice to your landlord

Once you pay your reservation fee, there is a natural inclination to give notice to your landlord. The best person who can advise you when to give notice is your solicitor. Generally speaking, you should give notice only after you have completed the sale. There are a few reasons for this. The reasons include, but are not limited to, the fact that completion is not instantaneous and can take months or over a year if the property is off-plan, deals fall through, and sales are dependent on a chain. This will mean for a period of time you will be paying rent for two places, but should the agreement fall through, waiting will prevent you from becoming homeless. Upon completion, you will receive the keys to your house.

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Council Tax

Once you have agreed your completion date, you will need to notify your council of your change of address and, if you are moving councils, to let your new council know when you have moved in. If you are facing a change in councils and/or tax bands, then this link will show you how much your council tax will be and how to contact the council about your change.

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What could cause the deal to ‘fall through’?

What factors could lead to the collapse of the deal? There are several reasons why a deal could fall through, including issues with the title, an unsatisfactory survey, financing issues (e.g., unable to secure a mortgage, changes in circumstances that cause the mortgage company to withdraw their offer, the mortgage being insufficient), either party deciding to withdraw from the purchase before contracts are exchanged, and other factors.

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