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Shared equity does not lead to full ownership
geoffky
Posts: 6,835 Forumite
http://www.insidehousing.co.uk/story.aspx?storycode=6501770
Shared ownership is failing to act as a stepping stone to full home ownership, leaving many people in worse positions than if they lived in other types of housing, researchers have found.
A Joseph Rowntree Foundation investigation shows that only a very small proportion of residents are actually able to move into full
ownership.
While some shared owners are able to move on due to improvements in their finances, many are unable to afford the greater cost of a full ownership mortgage, the study found.
Shared owners’ typical starting investment has declined from 50 per cent to 40 per cent, with 25 per cent shares now more common.
And evidence suggests that just 3 to 5 per cent of shared owners are able to move on to another property.
Shared ownership is failing to act as a stepping stone to full home ownership, leaving many people in worse positions than if they lived in other types of housing, researchers have found.
A Joseph Rowntree Foundation investigation shows that only a very small proportion of residents are actually able to move into full
ownership.
While some shared owners are able to move on due to improvements in their finances, many are unable to afford the greater cost of a full ownership mortgage, the study found.
Shared owners’ typical starting investment has declined from 50 per cent to 40 per cent, with 25 per cent shares now more common.
And evidence suggests that just 3 to 5 per cent of shared owners are able to move on to another property.
It is nice to see the value of your house going up'' Why ?
Unless you are planning to sell up and not live anywhere, I can;t see the advantage.
If you are planning to upsize the new house will cost more.
If you are planning to downsize your new house will cost more than it should
If you are trying to buy your first house its almost impossible.
Unless you are planning to sell up and not live anywhere, I can;t see the advantage.
If you are planning to upsize the new house will cost more.
If you are planning to downsize your new house will cost more than it should
If you are trying to buy your first house its almost impossible.
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Comments
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Are shared equity and ownership are the same thing?
SO has always been a ripoff, designed to keep the ridiculous prices and housing bubble going that bit longer.
People buying 25% of a flat "valued" at 200k or whatever is just silly. You'd think/hope people would have more sense!0 -
This has come as no surprise, thanks for putting the figures on what has been widely known.
FTR I get this publication at work and I never bother reading it."An arrogant and self-righteous Guardian reading tvv@t".
!!!!!! is all that about?0 -
The scheme has been known by many of my fellow key workers to be a scam to keep house prices high.
If you look at many new developements of flats you will find most are aimed at buy to let investors using gift deposits. Then the rest have to be allocated as affordable housing by law. These are mostly shared ownership to get round the high price issue.
Where I work you can get £400,000 1 bed keyworker flats, however all most people can just about afford 25%. So you have to have a £100,000 mortgage and pay rent on the other £300,000. Then you have a monthly service charge of just under £200. The government must be having a laugh if they call this affordable housing.
Then you have the other problem. When you stretch yourself to the limit to buy you have to consider having housing association tennants in your block. This has led to problems with my friends who have found they have criminal families next door and have to hide their job due to fear of attacks or vandalism. This may be just a London thing but it is an unstated risk of such properties. I know many people who fear where they live in these blocks where i work and regret the scheme completly.
The complaints from one of my friends is herrorine addicts injecting in the stairwells. From other members of the public gangs dominating another block. Another is constant vandalism of his moped. Or the colleague who has been threatened by neigbours.
There is one block open since christmas that is well known for violent domestics, serious assaults and full of repeat robbery offenders and yet i could just about afford one of the £300,000 shared ownership 1 beds near a prominant motor way. Another further out is literay built under a motorway flyover.
People almost can't sell houses at the moment and have no chance of selling one of these. i think the government have realised this and have now started promoting shared equity properties instead (the next scam).:exclamatiScams - Shared Equity, Shared Ownership, Newbuy, Firstbuy and Help to Buy.
Save our Savers
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But if you think about it, it's obvious really. Sorry - no insult intended but I'll explain.
You buy 50% of a property - that's it. You own 50% of it (its value). Let's say it's a 3 bed semi. All you've got is 50% of a 3 bed semi.
You keep the property for 10 years and the value quadruples. Great!
But if you sell and want to buy another three bed semi, guess what? Your 50% share of your original 3 bed semi is only going to get you a 50% share in another comparable 3 bed semi in the same area. Ignore the fact, for now, that many shared ownership properties are valued below full owner/occupied properties (as many SO properties are labelled as "SO" or worse "Social Housing"!!!)
The only way your 50% share of a 3 bed semi is going to get you full ownership of any property is if you downsize/downgrade to a lesser property - either a smaller property in the same area or a similar property in a less desirable property.
All of us are in the same boat, really - but if you start off with a plan to buy outright, then eventually you'll get there. If you start off with a plan to buy 50% then .... you'll get there ... but you won't get any further.Warning ..... I'm a peri-menopausal axe-wielding maniac
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I understand all these points, but at the end of the day people need houses and if the only way to buy something remotely nice is to get shared ownership then that is what we have to do?
I despise the very principle of only owning 50% but i need a house for my gf and baby, with my mortgage offer of 74k i can either buy an old house in a poor area, or go for shared ownership and own 50% of a nice house in nice area?
While I appreachiate we are in the middle of a crash/recession the only thing i can hope is for serious negative equity allowing me to purchase the 2nd half of the house....0 -
I understand all these points, but at the end of the day people need houses and if the only way to buy something remotely nice is to get shared ownership then that is what we have to do?
I despise the very principle of only owning 50% but i need a house for my gf and baby, with my mortgage offer of 74k i can either buy an old house in a poor area, or go for shared ownership and own 50% of a nice house in nice area?
While I appreachiate we are in the middle of a crash/recession the only thing i can hope is for serious negative equity allowing me to purchase the 2nd half of the house....
I'm sorry, but you're missing the point. If the property has negative equity, then you own half the debt!!!!
If you only set out to buy 50% then that's all you'll ever have.
Your choice is 100% of a less desirable property or 50% of a property you cannot afford to buy.
A crash - or a boom - affects you in exactly the same way as it affects all others.Warning ..... I'm a peri-menopausal axe-wielding maniac0 -
Debt_Free_Chick wrote: »You buy 50% of a property - that's it. You own 50% of it (its value). Let's say it's a 3 bed semi. All you've got is 50% of a 3 bed semi.
You keep the property for 10 years and the value quadruples. Great!
Not Really. Say you bought 50% of a £100k flat and it quadruples to £400K, you have £150k equity £50k mortgage and now owe rent on £200k. Now if you bought a £75k flat outright and that quadruples your have £225k equity and a £75k mortgage.
Now that simply means that if you bought a cheaper normal property you would be far better off. Not only is it going to be easier to move up the ladder because of extra equity you don't have to put up with the shared ownership restrictive selling conditions.
At present you can buy a normal property cheaper. SO properties have their own valuations which restrict the price and at the moment they aren't comming down in line with other properties. This makes it near impossible to sell in downturns like this.
Shared Ownership is just a very poor choice.:exclamatiScams - Shared Equity, Shared Ownership, Newbuy, Firstbuy and Help to Buy.
Save our Savers
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The more I hear about these schemes (all of them - shared whatever...) the more it's becoming clear ... if you can't afford to buy a property at the normal market price, then you can't afford a property. Normal market price should return soon....!
If you do buy with any scheme with 'shared' in the name then be prepared to discover the pitfalls in the future, as someone else shares the good times as well as the bad!0 -
Not Really. Say you bought 50% of a £100k flat and it quadruples to £400K, you have £150k equity £50k mortgage and now owe rent on £200k. Now if you bought a £75k flat outright and that quadruples your have £225k equity and a £75k mortgage.
Now that simply means that if you bought a cheaper normal property you would be far better off.
And that is what I'm saying ... but clearly, not being clear
In your example - at outset - you either buy a share of a £100k flat or all of a £75k flat
If they're in the same area, then the £100k is likely to be a two bed flat and the £75k flat is studio Warning ..... I'm a peri-menopausal axe-wielding maniac0 -
You work for the old bill, brit?[FONT=Arial, Helvetica, sans-serif]Rise like Lions after slumber
In unvanquishable number -
Shake your chains to earth like dew
Which in sleep had fallen on you -
Ye are many - they are few.[/FONT]0
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