Q Two years ago, my daughter and her partner bought a 40% share in a shared-ownership housing association flat in Hackney, east London. Her company is relocating so they are having to sell their share. Buying this way was their only option in London to get on the property ladder as is the case with many young people.
My question relates to the marketing costs the housing association is allowed to charge for their services when the share is sold. Of course it is reasonable that the seller should pick up the bill for the housing association’s legal fees as the sellers started the selling process. But surely the housing association should not be allowed to charge their percentage marketing fee on the full value of the flat rather than on the sellers’ share? In my daughter’s case the flat is valued at £590,000 meaning that her 40% share is worth £280,000. But the housing association says that if it finds a new buyer it will charge a marketing fee of 1.25% of the full valuation of £590,000, which would mean a fee of £7,375 which seems like daylight robbery to me. If it was charged on the value of my daughter’s share the marketing fee would be only £3,500. PC
A I’m afraid that housing associations are allowed to charge their percentage marketing fee on the full value of a property and many do. Others share your view and base the charge on the value of the seller’s share. Which way the fee is calculated should be outlined in the lease agreement. However, the lease agreement doesn’t make any difference to the fact that with all associations, there’s VAT at 20% to pay on top of the marketing fee as well as on all the other costs a seller has to pay including the valuation fee, cost of getting an energy performance certificate and all legal fees.
The marketing fee is the equivalent of the fee that an estate agent charges to sell a property but is typically cheaper than what an agent would charge. As most housing association shared-ownership lease agreements have a clause which says that the housing association has the right to market the property for eight weeks – sometimes 12 – the fee charged is for the cost of photographs, floor plans and advertising the property to prospective buyers. The good news is that if a housing association fails to find a buyer in the specified amount of time, the fee is generally not charged.
