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Shared ownership/equity is a scam.
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# 21
brit1234
Old 16-04-2011, 4:26 PM
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Thumbs down Our shared ownership dream home turned into a disaster

Our shared ownership dream home turned into a disaster

Mira Bar-Hillel, Property Correspondent 8 Aug 2008


Shared ownership 'scam': teacher Andrew Howard

A couple who got on the property ladder through a shared ownership scheme have dismissed the concept as a disaster.

Special needs teacher Andrew Howard, 29, and his partner purchased a 40 per cent share of a new flat in Leytonstone from Newlon Housing Trust less than two years ago.

When he was offered a new job in Norfolk he thought it would be a straightforward process to sell the property and relocate.

But their experience of ownership and trying to sell has left the couple, who have a two-year-old daughter, in despair.

Mr Howard paid £79,000 for his share of the £195,000 two-bedroom flat, which carried a monthly rent and service charge of £347 until it shot up to £433 in April.

The couple's problems began shortly after they moved in. They included:
• Rubbish not collected for five weeks because of poor access to the bin sheds.
• A lift out of service for 11 days.
• A broken front door which had no handle and remained unsecured for nearly two weeks.

Mr Howard said: "We could not do any repairs ourselves because we were mostly tenants. When we complained, Newlon were invariably rude and unhelpful and treated us as though we were the problem."

Things became much worse when they asked about selling their share of the flat, thinking the trust would buy it.

"When we suggested this, Newlon refused point blank, claiming they had no money to do so," said Mr Howard.

He made a formal application to sell in April but discovered that under the terms of the lease he had to give the trust first option and up to eight weeks to resell the property, for which it would claim an agent's fee of 0.75 per cent.

Mr Howard had the flat cleaned and painted ready for viewings but heard nothing from Newlon for two weeks.

The couple were then contacted by valuers, to whom they were asked to pay £300 in addition to paying Newlon's £400 legal costs and for a home information pack.

By early June the trust had still not put the flat on the market and told Mr Howard the eight-week period when it had sole agency rights would only begin when it appeared on a website marketing shared ownership homes. Newlon also said it had a list of interested buyers but these never materialised, claimed Mr Howard. He added: "In July, after many fraught phone conversations, Newlon finally allowed us to use our own estate agents, who at least tried to market the flat properly. "But by then the market had gone flat and the holiday season had started."

The final blow came this week, when Newlon assistant director Sunita Parbhaka told Mr Howard she wanted to contact their mortgage lenders, Nationwide, to "find a way to help you".

According to Mr Howard, she said she wanted to discuss repossession of the flat even though the couple had never been in arrears. Mr Howard said: "I am appalled a charity which is meant to help people like us would want to force us into repossession and extract money from us at every turn."

He now considers shared ownership, the flagship of Labour and Tory affordable housing policies, a "SCAM". He said: "With shared ownership you have 100 per cent liability and zero per cent rights."
A Newlon spokesman said it had tried to help the couple. He added: "We have not failed in our obligations to the owners of the flat, nor have we threatened them with repossession. We sympathise with people finding it hard to sell their homes in the current housing market."

HOW THE HOUSING SCHEME WORKS
• Shared ownership was devised as a way of getting people with relatively limited equity on to the housing ladder.
• The occupant buys a percentage of a property - it must be a minimum of 25 per cent.
• The housing association or trust continues to own the rest of the property and the occupant pays rent to the association.
• The occupant also pays service charges for maintenance.
• The resident is not allowed to carry out maintenance themselves - the housing association is responsible for doing it.

http://www.thisislondon.co.uk/standa...-a-disaster.do
Scams - Shared Equity, Shared Ownership, Newbuy, Firstbuy and Help to Buy.

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# 22
and another thing...
Old 16-04-2011, 4:32 PM
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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.
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# 23
brit1234
Old 16-04-2011, 4:47 PM
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Quote:
Originally Posted by and another thing... View Post
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.

Scams - Shared Equity, Shared Ownership, Newbuy, Firstbuy and Help to Buy.

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# 24
Cubbington
Old 16-04-2011, 4:50 PM
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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.
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# 25
HappyMJ
Old 16-04-2011, 4:56 PM
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Originally Posted by Wickedkitten View Post
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.
Quote:
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.

Last edited by HappyMJ; 16-04-2011 at 5:07 PM.
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# 26
brit1234
Old 16-04-2011, 5:07 PM
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Exclamation Shared ownership under spotlight


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.
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# 27
HappyMJ
Old 16-04-2011, 5:15 PM
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Quote:
Originally Posted by brit1234 View Post
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.
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# 28
Wickedkitten
Old 16-04-2011, 5:23 PM
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Originally Posted by and another thing... View Post
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?
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# 29
and another thing...
Old 16-04-2011, 6:09 PM
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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.
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# 30
Jimmy 31
Old 16-04-2011, 6:36 PM
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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.
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# 31
brit1234
Old 16-04-2011, 6:52 PM
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Originally Posted by and another thing... View Post
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.

Scams - Shared Equity, Shared Ownership, Newbuy, Firstbuy and Help to Buy.

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# 32
Cubbington
Old 16-04-2011, 7:17 PM
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No-one is bragging! At no point has anyone in this thread said shared equity/ownership is all singing all dancing greatness! All that's been said is that it does work for some people but there are other options available.

Maybe if you stopped to read for a minute rather than trample over any comments trying to give opinions you might have seen that.
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# 33
kingstreet
Old 16-04-2011, 7:29 PM
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It may not be advisable.

It may not be sensible.

It may be best avoided.

It may have inherent risks.

It may result in negative equity.

It may artificially prop up the housing market.

It is not fraud. It is not a swindle. It is not a trick. It is not a scam.

I don't particularly like it, but I like ridiculous over-reaction even less and find myself becoming a "supporter," simply to oppose those in opposition.
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# 34
and another thing...
Old 16-04-2011, 7:31 PM
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I'm not bragging I'm only presenting an alternative to the all too often negative viewpoint. SE has it's flaws but can benefit some people. Don't set out to purchase through these schemes, your first option should always be to try to buy without their help.
Negative equity isn't exclusive to SE properties - any property can suffer as a result of a downturn and any homeowner can struggle to remortgage as a result.
Loan rate of interest is RPI plus 1%.I have been paying this fee since the start, there was no interest free period. I plan to put the money I currently spend overpaying my mortgage towards paying the loan should RPI increase drastically. If inflation rates return to the levels of the early 80s I would have to make cut backs elsewhere but wouldn't everybody? I would still be able to afford to pay my mortgage and the loan rate though.

I wouldn't have gotten involved in the scheme in the first place if I wasn't fully aware of its potential pitfalls.
I would hope that people looking into these schemes would make sure they understood the implications fully before going ahead with it. Each scheme is different so I can only refer to my scheme which I feel is one of the better ones. So I would advise people to do their research, look at ALL the schemes available in their area, seek professional advice and don't overstrech their budget-. Some are better than others. They shouldn't all be tarnished with the same brush.
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# 35
leveller2911
Old 16-04-2011, 7:40 PM
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Originally Posted by and another thing... View Post
They shouldn't all be tarnished with the same brush.

I think we could all agree that current house prices are way out of the reach of the vast majority of FTB ers. The real problem still exists and that is HPI and until Government policy stops tinkering with implementing such schemes which are nothing more than a fudge we will not see a solution to the problem...

TBH they should be tarred with the same brush because they are all there with the intent to keep house prices stable, which in itself is the problem
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Last edited by leveller2911; 16-04-2011 at 7:42 PM.
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# 36
brit1234
Old 16-04-2011, 7:43 PM
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Exclamation Couple’s Bellway property dream now a nightmare



Couple’s Bellway property dream now a nightmare


by Claire Miller, South Wales Echo
Mar 24 2011


A COUPLE who appeared in adverts selling the property dream have found themselves in the middle of a housing nightmare.

When Samantha Hyde, 33, and Craig Smith, 34, bought a one-bedroom flat in Cardiff Bay’s Prospect Place in 2004, they were used in advertising features for property developers Bellway, selling its shared equity Open Door Scheme as a perfect opportunity to get on the property ladder.

Now they say they are stuck with a property they cannot afford to sell.

Samantha, who runs her own business, said their problems started when her partner was made redundant in the autumn.

She said: “With the recession I was finding it hard to make ends meet. We were getting into real financial trouble because he wasn’t working.

“We decided let’s sell up, let’s cut our losses, move somewhere else.”

When the couple bought the new-build flat in Kilcredaun House, they paid £109,000 for 75%, with the remaining 25%, at the time £36,000, due when they came to sell.

They accepted an offer of £98,000 but the sale has not been able to go through as both the mortgage company and Bellway are demanding they pay them from the proceeds, which will not cover the £94,000 mortgage and the £17,000 that Bellway want.

Samantha said the couple, who are now living with friends in Somerset, are stuck and facing repossession because the mortgage company expects to be paid off in full first, they do not have the extra money to pay Bellway a lump sum and the company will not accept an offer lower than £17,000.

She said: “We feel very misled and because of them we’re not going to be able to purchase another property"

“If we get repossessed they won’t get any more and it will bring down the price of the other flats because they’ll sell it cheap.”

A spokesman for Bellway said the couple had agreed when they bought the flat that they would pay back the outstanding 25% when they sold.

He said: “We are sympathetic to her, we have tried to suggest other arrangements.

Property values have fallen, we would be taking a smaller amount. We’ve even suggested a lower figure, she won’t even accept that.”
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# 37
HappyMJ
Old 16-04-2011, 7:53 PM
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LOL. So they bought a property valued at £145,000 and have sold it for £98,000 and lost £47,000....

But no they had shared ownership instead of being down £47,000 they have been granted a discount on the final repayment from £36,000 to £17,000 so the losses are reduced to only £12,000 after paying the mortgage and the final repayment...

I'd say shared ownership is a fantastic idea. In this case instead of being bankrupted they could borrow £12,000 unsecured and their credit file will be safe.

And edit to add: they only have £94,000 outstanding on this mortgage. At an interest rate of 4% the mortgage repayment would have only been £315 per month if they declared they were in financial difficulty and renegotiated an interest only reprieve on the mortgage. If they can't afford that with two adults working how can they afford rent elsewhere....Yes, he lost his job so if he claimed benefit the interest would have been paid on the mortgage thereby costing them nothing to stay.

Last edited by HappyMJ; 16-04-2011 at 8:03 PM.
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# 38
Graham_Devon
Old 16-04-2011, 8:19 PM
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PLEASE.

Just one thing. Can all those writing shared ownership off as a scam, learn the difference between shared ownership and shared equity.

Lambasting shared ownership based on shared equity is just sloppy practice. I realise the venom some have against such schemes, and admit there are flaws myself, depending on the scheme, the type of house, etc. However, there are many different schemes, with many different policies and conditions. Shared equity is NOT shared ownership. Neither are they scams. People DO need to know what they are entering into though.
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# 39
kingstreet
Old 16-04-2011, 8:31 PM
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Originally Posted by brit1234 View Post
their problems started when her partner was made redundant in the autumn.

She said: “With the recession I was finding it hard to make ends meet. We were getting into real financial trouble because he wasn’t working.
Another "unforeseen" event which no-one could have taken action to prevent? Anyone buying a property who loses their job could have been the subject of this article.

Unemployment cover?
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# 40
kingstreet
Old 16-04-2011, 8:33 PM
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Originally Posted by Graham_Devon View Post
People DO need to know what they are entering into though.
Isn't that applicable to every financial transaction and to home ownership in general?
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