Shared Ownership advise please?

2muchdebt

I bought 50% SO in 1995: and the remaining 50% in 2000 when I got collared for stamp duty (should have paid it in 1995 though I didn't understand finances then). It worked for me in helping me get on the ladder and as prices have risen since I bought I still have a reasonable chunk of equity. I dont think at the initial time (1995) I would have got a full mortgage on paper, so this suited me.
HA have been mostly a nightmare and I don't think they earn their money - I dont get any say in the repair companies they use (there are schemes to nominate people but you need a certain % of tenants/leaseholders to nominate or agree with you) and so far most of the repairs have been overpriced and shoddy quality.
Whilst I don't pay rent now I do pay service charges and the HA appear to arbitrarily increase or decrease them at will, depending on how incompetent they have been with spending/budgeting but I have found The Leasehold Advisory Service very useful in telling my where I stand legally...
Although I don't know them all, the neightbours I do know are very nice and when things go wrong we do all get together against the HA!!
I wouldn't go for SO again now, but mainly because of poor experience with HA and I'm not so confident in the house market at present.

MigsyBigsy

Hello All,

reading all these post has left me still rather confused on whether or not to go for the SA. However, my economic situation is thus:

Currently earning around £18,000 pa and will have steady increases. I have about £10,000 saved and could ask for another £5,000.

Would you think that I would be able to have a foot in the SO ladder?

thanks

Helga14

Okay so if you earn £18k. Probably you will be able to get a 3-4 times multiply of your salary which is from £54k-£72k in mortgage. I would also add £10k as a deposit. Then use the additional £5k for the costs and to set up. I would advise paying all stamp duty up front if you think you are likely to keep staircasing and eventually own 100% of the property. You will need to pay legal fees, mortage fees, valuations.. it all adds up. Then when you move in you'll need to buy white goods, furnitures etc. I seemed to be constantly pouring out more and more money.

Is your job safe and secure. Make sure you sit down and work out exactly how much it will all cost you. Work out how an interest rate increase will effect you. They will go up again at some point.

Read your lease agreement carefully. They all vary. Some properties you can never own 100%. Mine I couldn't have bare wooden floorboards, I could not let it, I couldn't have an animal without permission. Make sure you understand what you are getting into. Personally i wanted to own as much as can so i pay as little rent as possible but the bit i own as mortage is more expensive than rent.

I'm not sure if for the intial buyer SO is the right thing as if between you you earn £50k and property they want is less than £200k I wouldn't bother with SO. Also something for you GF to think about is if you have a bad credit rating and you then have a financial product together your credit rating will be linked.

SO can be good if you have to do it but if i could have brought without it I would much rather do that. Then again I would much rather buy a house rather than a flat because of the general problems that can come of being a leaseholder rather than a freeholder but it was a way on to the ladder and when i can afford a house (which in london it may never happen) I will buy one.

RoxieW

MigsyBigsy wrote: »

Hello All,

reading all these post has left me still rather confused on whether or not to go for the SA. However, my economic situation is thus:

Currently earning around £18,000 pa and will have steady increases. I have about £10,000 saved and could ask for another £5,000.

Would you think that I would be able to have a foot in the SO ladder?

thanks

Depends on what price property you are looking at. You basically need to show that you can afford the mort plus rent on 50% (or whatever) but not 100% of a comparable property. Therefore at income multiples of 3x I'd say if you were looking at SO properties around the 100 - 125K mark I think you'd be eligible.

Jvic28

Just a note: Look around at different shared ownership schemes. With mine I don't have to pay any rent on the share the HA own.

techspec

I had a shared ownership house and it was fine.

But not all banks will give mortgages on the scheme, and you don't really feel like its your home, as you have to ask for permission for a lot of things. I was usually REFUSED permission.

That said, i got a new build i could not afford without the scheme, and had no problem selling it. If you qualify for housing benefit at any pioint, they usually pay the rent for the part you don't own. But i have heard that some councils can be awkward on this, so check what the current situation is. I would gladly by another WHEN THE HOUSING MARKET HITS THE BOTTOM, but i don't qualify for any of the local schemes anymore.

Don't forget that if the prices do start to rise, the percent you do not own goes up, and you may never be able to afford to buy the full house. Of course, if the other half falls, then you may get it cheaper, if the scheme goes on the valuation at the time of purchasing another percentage of the home.

MigsyBigsy

Jvic28 wrote: »

Just a note: Look around at different shared ownership schemes. With mine I don't have to pay any rent on the share the HA own.

Which HA are you with?

brit1234

devon_guy wrote: »

1. You share the blocks with housing association tenants some of which will be criminals and cause anti social behaviour. Nothing like stereotyping is there? I have worked in housing and can say the types you are talking about make up a very tiny proportion of overall tenants. The majority are hard working law abiding citizens.
2. Prices are extremely overvalued and build quality is poor. Where is your proof for this? My S/O property is independently valued and matched the mortgages valuation. On what basis are S/O properties poorer built than someone buying a house outright?
3. Service charges are inflated and rents rise above CPI inflation Service charges will be set by the management company not the HA
4. It is far harder to sell, you have to jump through hoops for ages before you can market with a normal estate agents. It is well known most people will stay well clear of shared ownership so your pool of people to sell to is smaller. You don't have to "jump through hoops" as you put it. There will be a condition that the HA has to have the first attempt at selling, anything from 4-8 weeks, after that you are free to sell wherever you like.
5. House prices are falling fast, get a normal flat at auction for 50% off instead. House prices are falling yes, but isn't that the same for everyone??

No stero typing at all. I know all the blocks in my borough and have delt with the problems. I can say each block has a criminal element especially the recently built ones. You may not be as aware due to job type, it may be different where you live also compared to my innercity area of London.

Then as a keyworker I have friends who live off borough and it is a recurring theme in their locations. One hates it so bad he is now living 80 miles outside London. People have come up to me and said it was the biggest mistake of their lives.

As for the independent evaluation, how does that hold up when prices are falling so fast.

It was simply a scam to keep prices high which has back fired.

DaisyClaire

brit1234 wrote: »

Stay away from shared ownership they are a nightmare and con:

1. You share the blocks with housing association tenants some of which will be criminals and cause anti social behaviour.

They will be criminals? For sure?

Jvic28

MigsyBigsy wrote: »

Which HA are you with?

CCHA in Cardiff. Fair play, they're very good to me. I'm behind on my service charge payments due to relationship issues over a year ago and they haven't pressured me at all for the repayments. They've allowed me to pay what I can afford with no quibble.