Shared Equity Property Dangers :(

brit1234

Shared Equity Property Dangers

Shared Ownership has widely been seen as a bad deal by the British public. Now the Law Society is saying they are dangerous. The builders are just using them to inflate property prices and at the same time it exposes vulnerable first time buyers. :exclamati

BBC video below.

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

What are you thoughts:question:

Cat695

if people actually did the maths when they look at these they would realise they are a con

a very expensive way to get on the property ladder in the long run

moanymoany

Locally we have an enormous new developement that isn't selling. They are advertising to buy 75% and pay for the other 25% in whatever years.

An absolute con. The places are worth the 75% and I bet it is easy to 'persuade' people without their fingers on the pulse that it is worth while!

wymondham

Cat695 wrote: »

if people actually did the maths when they look at these they would realise they are a con

This is the problem ... people DON'T do the maths, and they become blind to the small print, and usually taken in hook-line-and-sinker by the developers sales techniques..

ultra10

One thing i hate in Advertising of any sort..& particularly thoes outside new blocks of flats, are all the Pictures of couples etc with big grins Hugging each other.. :mad: ..& yeah, shared ownership is SXXXE !!! dont be conned !!

ad44downey

ultra10 wrote: »

Pictures of couples etc with big grins Hugging each other.. :mad: ..& yeah, shared ownership is SXXXE !!! d!!

They ain't got big grins on their faces any longer. Probably on the phone to the Samaritans.

brit1234

Where i work you also have the danger of a criminal family moving in next door to you. It has happened to a number of the shared ownership places I know. So not only do you have to put up with the smaller size, mortgage, rent, £100-200 monthly service, differculty selling but you could have undesireables move next door at any time by the council.

Rabiddog_2

Ah yes, the Evil council in connivance with the evil council tenants :rolleyes:

lostinrates

wymondham wrote: »

This is the problem ... people DON'T do the maths, and they become blind to the small print, and usually taken in hook-line-and-sinker by the developers sales techniques..

I think the problem i that people CAN'T do the maths, not just that they don't. Even some of the mortgage sales people we have spoken too have struggled with fairly basic maths, and trut me, my maths is very basic so if i see they are going wrong they are really going wrong.

lynzpower

There is quite a big difference in the 2 schemes, and its unclear what we are talking about here.

1) shared ownership. I have bought and sold a SO flat, and they are very very different beasts indeed to:

2) shared equity with builders. 75% plus the rest in 10 years time.

In my experince the difference is this.

in SO one buys what share they can/ want to. In my case I "bought" 40% and rented the other 60% from a housing association. Strict and clear process, the 60% share the housing association owned is rented. In my case the mortgage was 390 and the rent was 360. So the rent on the non owned part was much lower than the mortgage, even though it was a higher share (and I was on a 4.69 mortgage)

There is NO PRESSURE at all to buy the rest if you dont want, and no "debt" stacking up in the back ground unlike the shared equity deals.

My shared ownership flat was valued at 199k 2 bed gf with garden) , others on the open market in thesame development upper 2 beds no garden with a poxy juliette balcony were on for 249. therefore my SO flat was "below market rate" as many of them were then.

for good moneysavers, these can be turned to ones advantage. I could had I been in a different circumstance, gone fully MFW and overpaid my mortgage like mad, owned the the 40% stake outright then continued to rent at the effectively peppercorn level of rent only. Should moneysavers wish to they can bank all the overpayment money into investment vehicles and pay off lump sums of ownership whenever they wished to "staircase". mY scheme was the min one could buy extra shares was 5%. Without paying interest to the bank, its my view that its much easier to buy a SO property outright with some clever jigeery pokery, and paying no interest to the bank makes it significantly quicker. I would not rule out buying a shared ownership property again in the future, and managing the payments in this way.

On the converse these shared equity deals from barrats and the like are totally opposite. One must be mortgageable for the 75% in the first place ( unlike SO where one can have a much lower income) and the other 25% is on a loan from the builder. this is secured lending from the word go. f you dont have the cash in 10 years time, you will pay interest ( whatever that is , info seems very sketchy) I totally agree that this approach definatley keeps prices high and contines to ramp and overvalue . From what I have seen I cannot see any finiancial benefit to the punter, and I cannot see a way out of this mortgage witohut paying double the interest to 2 seperate parties.

dopester