Shared Ownership

Sally14 · 29 April 2006 at 3:39PM

Our daughter (mid 20’s) has lived in a number of flat/house shares since leaving Uni. Her current housemate will probably need to move on soon (possible new job in different part of the country) and so our daughter is thinking that maybe she should buy rather than rent. She can’t really afford to buy outright in her chosen location but is wondering whether “shared ownership” is an option. Has anybody got any experience or information on the pros and cons of it?

Jorgan_2 · 29 April 2006 at 4:21PM

Shared ownership can be a good way to get on the ladder. She needs to be careful that the property is priced correctly, as with buying any property do your research. For example, we have a shared ownership scheme in our area, a two bedroom property on the scheme costs £145k of which 50% is availble to purchase, £72.5k. On top of that you have to pay rent on the remaining 50% & an annual maintenaince charge. Bearing in mind that elsewhere in the own a similar two bedroom property costs from £95- £115k, the shared ownership is a nonsense.

Not all shared ownership schemes are like this though. Get here to speak to the local council to see what shared ownership schemes are available via the housing associations in her area and see if she meets their criteria.

TraceyB_2 · 29 April 2006 at 4:40PM

I have worked in Shared Ownership for many years and feel that for those who cannot afford to buy outright, this offers an excellent way of getting on to the property ladder and although there are sometimes management costs and maintenance costs to meet, the total monthly payable is usually cheaper than purchasing outright (where you wouldnt always budget monthly for repairs etc).

The company that I work for are a government funded organisation as a result of which they are monitored on certain areas - one of which are valuations. All properties sold by the company I work for have their sale prices set by a totally independant valuer - the purchaser then obviously has their own valuation carried out by their lenders valuer - assuming they are arranging a mortgage. I would therefore hope that prices are realistic - they are usually brand new properties and therefore a premium is paid for the benefit of having a brand new property.

As suggested by Jorgan you could contact your local council for further advice and also try contacting the Housing Corporation who help fund some of the schemes available.

Also, if by any chance your daughter is a 'keyworker' she may qualify for other schemes available - again your local council or the Housing Corp could assist.

Hope this helps a bit!

Sally14 · 29 April 2006 at 4:50PM

Thank you Jorgan and TraceyB. Some very useful points to ponder.:T

Sally14 · 29 April 2006 at 6:07PM

Following on from this - how does it work if and when you come to sell?

lynzpower · 29 April 2006 at 9:39PM

IM in SO. I was told ( and its in my lease) that I have to advise the Housing association that I want to sell, that the HO will offer the property to people on the waiting list for viewings and potential offers for 10 ( or 12 cant remember right now) if no joy through this route I can either choose to stay with the HO until they sell ( no EA fees) or take it through estate agent to sell as Shared ownership, which will mean fees, but potentially a slightly higher selling price.

Each HO has its own processes though, she would need to check.

Sally14 · 29 April 2006 at 9:46PM

Thanks for that lynzpower:T

SilverScooby · 29 April 2006 at 10:18PM

There are now two places to find out about shared ownership (which the government has now decided to rename "Newbuild Homebuy" for no particular reason...)

The first is the local authority housing department. The second is the HomeBuy Agent for your area - list here

http://www.housingcorp.gov.uk/server/show/conWebDoc.1154

Its worth enquiring about "open market homebuy" too - which roughly speaking is a 25% interest free loan.

Jorgan has a very valid point - it may well be possible to buy outright for a similar outlay to shared ownership.
This happens if what the housing association is selling at the time happens to be part of a development in a higher priced area than the surrounding areas, plus the effect of the newbuild premium.

lynzpower · 29 April 2006 at 11:41PM

Personally speaking, I *bought* my SO in 04 as a solo buyer. Now I have OH, we can get a mortgage for something MUCH cheaper, both in purchase price and on monthly repayments.

I dont think they are value for money AT ALL, and Im also inclined to say that SO is adding to the mental increase of pricing in the housing market. All in retrospect of course, if I knew then what I know now, I woudnt have done it.

Half of the money she will spend every month goes nowhere. I would advocate staying in houseshares if at all possible, saving as hard as she can nad cleverly investing the savings to maximise output, and looking forward to the day when house prices start to fall a bit as they are already doing around here.

OPen market homebuy is a much better bet if she can get that.

nelly_2 · 30 April 2006 at 8:03AM

How are you any better off?

If your renting the other half anyway why not just buy it?

I dont get it? surely you are paying out the same amount per month

lynzpower · 30 April 2006 at 8:21AM

Nelly

The way the sums stack up, I AM PAYING more than a 200k mortgage, despite the fact the mortgage is 75k and the rental side is the rest. If I took out a 100% mortgage on 200k it would be less. However I wouldnt get mortgaged for that as my salary is too low. ( plus was a solo buyer at the time, not now)

Sorry nelly didnt make sense, no one will mortgage me for 200k as my salary is too low, so thatsa why i have to rent the other part.

Cant wait to be shot of this *deal* TBH, its really not for me.

Shared Ownership

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