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Shared ownership/equity is a scam.

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Comments

  • Indeed as this article shows many schemes have failed those who fell for them. Those schemes tend to be where you are restricted to buying a new/purpose built property. You really do need to do a lot of research beforehand. To those considering shared equity see if there are any schemes in your area where you can purchase a share of a property not specifcally built for FTBs or key workers, an older/period property. This way you will have far fewer headaches.
  • brit1234
    brit1234 Posts: 5,385 Forumite
    Indeed as this article shows many schemes have failed those who fell for them. Those schemes tend to be where you are restricted to buying a new/purpose built property. You really do need to do a lot of research beforehand. To those considering shared equity see if there are any schemes in your area where you can purchase a share of a property not specifcally built for FTBs or key workers, an older/period property. This way you will have far fewer headaches.

    So would you like to tell me how you are going to pay back the equity loan in 5-10 years? What happens if you are in negative equity when this comes around?

    You have a Shared Equity Time Bomb round your neck.

    images?q=tbn:ANd9GcS-gBYQYwQSvgVQO9rI9zrmy0pBrPbeoQGhMjf2mczsZrl5OMTd:eek:
    :exclamatiScams - Shared Equity, Shared Ownership, Newbuy, Firstbuy and Help to Buy.

    Save our Savers
  • Cubbington
    Cubbington Posts: 38 Forumite
    Guess they didn't bother reading the t&c's properly as I'm sure these details would have been listed. If they weren't in the t&c's then they could've taken them to court.
  • HappyMJ
    HappyMJ Posts: 21,115
    Combo Breaker First Post
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    edited 16 April 2011 at 4:07PM
    If the scheme didn't exist, they would have to lower the price to a level that people could afford or they wouldn't be able to sell them.



    They would be able to claim Housing Benefit on a rented flat anyway and if someone had 16k, they wouldn't need Housing Benefit surely.
    Which in London would keep you renting forever...If someone earnt £20,000 they could quite easily borrow £60,000 with their let's say £16,000 savings that they've spent years scrimping and saving. They could buy into a property worth up to £200,000. That's enough to get a flat in London. As it is where do people on low incomes live in London. Private rentals paid for by housing benefit or local housing authority properties. When a tenant saves some money to buy a house and try to get off benefits and onto the housing ladder they are penalized by the total withdrawal of all benefits once they reach £16,000 in savings then having to pay full rent. So they just spend it to keep under the limit.
    A couple who got on the property ladder through a shared ownership scheme have dismissed the concept as a disaster.

    The issues the family in the article above would have been the same if they had owned 100% of the flat or were just renting the whole flat. The general thing that I get from the article is they were unhappy with the management company doing nothing and that they were unable to sell but if they read the agreement they could have staircased to 100% then sold. This can be done on the day of sale so no actual money is required.

    To pay only a £433 a month on effectively £116,000 of property is only about 4.5% per year and it's inclusive of repairs and maintenance to the structure so to me it seems quite cheap.
    :footie:
    :p Regular savers earn 6% interest (HSBC, First Direct, M&S) :p Loans cost 2.9% per year (Nationwide) = FREE money. :p
  • brit1234
    brit1234 Posts: 5,385 Forumite
    images?q=tbn:ANd9GcRiCyqwnCDv217oKc9_fgAMrDj0JVwWaTBCiLxuYpbTDY2u59AqQQ
    Shared ownership under spotlight

    The Law Society says schemes offered by housebuilders to help first-time buyers could leave them unable to trade up when they come to sell. Shared equity deals are on the increase as developers try to shift thousands of homes in the property market slump.

    Report Video link: http://news.bbc.co.uk/1/hi/business/7613781.stm

    Sarah Pennells reports.
    :exclamatiScams - Shared Equity, Shared Ownership, Newbuy, Firstbuy and Help to Buy.

    Save our Savers
  • HappyMJ
    HappyMJ Posts: 21,115
    Combo Breaker First Post
    Forumite
    brit1234 wrote: »
    The Law Society says schemes offered by housebuilders to help first-time buyers could leave them unable to trade up when they come to sell. Shared equity deals are on the increase as developers try to shift thousands of homes in the property market slump.

    Report Video link: http://news.bbc.co.uk/1/hi/business/7613781.stm

    Sarah Pennells reports.
    That was a report from 2008 and those schemes still exist today. If someone did buy then at full price in 2008 without the builder contributing a 25% interest free loan they would still find them themselves unable to trade up as they would be in negative equity.
    :footie:
    :p Regular savers earn 6% interest (HSBC, First Direct, M&S) :p Loans cost 2.9% per year (Nationwide) = FREE money. :p
  • Wickedkitten
    Wickedkitten Posts: 1,868
    First Anniversary Combo Breaker
    Forumite
    Where I live (South West london) it has worked out cheaper to buy a share of equity in a two bed flat than to rent a decent one bed.

    Will it still be cheaper than renting when the base rate goes up?
    It's not easy having a good time. Even smiling makes my face ache.
  • brit1234 - The loan needs to be repaid after 25 years or when I sell. I don't intend to stay here for that long! I have a four years left of a five year fixed rate mortgage which will hopefully see me through. I also overpay on my mortgage each month but if I am in negative equity when I come to sell then I will be in the same position as everyone else owning 100% of their property when they, too, come to sell. I don't plan on remaining in this area after I sell as it is now and still will be far too expensive and I also plan to move further out of London anyway. Where I intend to move to I could now buy a property on my own, without the help of a shared equity scheme, but beacuse of work commitments at the moment I must live where I am.
    Everyone has their own individual circumstances and in my case I believe SE works well for me at this moment in time and that it is the best way to pay for a roof over my head whilst working in London. It is not a permament solution and if I wasn't single but had a family it would not be something I would consider.
  • Jimmy_31
    Jimmy_31 Posts: 2,170 Forumite
    Do some people actually think the government want to help FTBs with this new scheme that they have cooked up ?

    If the government really did want to help a FTB put a roof over their head then they could quite easily release a piece of land in many areas big enough to build a large housing estate on and give (or sell at a fair price) each FTB a plot on that land to build their own homes, each ftb could then get their own construction firm to build them a house or do it themselves like a self build project. No major house building companys would be involved and the FTBs could quite easily end up with a decent 3 bed home for quite a bit under 100k.

    The government couldnt care less about FTBs, and this is plainly obvious by FORCING them to buy a home from a major house building company if they want to be involved in the scheme.
  • brit1234
    brit1234 Posts: 5,385 Forumite
    brit1234 - The loan needs to be repaid after 25 years or when I sell. I don't intend to stay here for that long! I have a four years left of a five year fixed rate mortgage which will hopefully see me through.

    But your loan is interest free usually for 5 years after you purchase. So what is the interest rate on this loan after the 5 year period? Is the interest rate fixed or is it linked to BOE rates?

    Now if you don't manage to sell within the 5 year peiod can you afford the mortgage and the loan repayments? What happens if you can't re-mortgage due to negative equity when the fixed rate ends.

    These are the questions people considering this scheme need to know before you brag about how good it is.

    images?q=tbn:ANd9GcRW9oB9RmdAGVzzZ1PdMA_5VcdO11z-qlK_rCWeZGJsdSG0eMjBJA
    :exclamatiScams - Shared Equity, Shared Ownership, Newbuy, Firstbuy and Help to Buy.

    Save our Savers
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