Shared Ownership

Baby_A

Hi

A friend mentioned a new system brought into place called shared ownership, not really sure what it entails and was hoping that someone knew. Apparently its a way to buy your first house based on what you can afford, you own part of the house and the council or housing association owns the rest. Then when time goes on you can buy rest of the property until you fully own it.

Does anyone know of this and if so the pros and cons?

We currently are privately renting and are not able to get a mortgage because we dont have the money for the deposit. Id like to be able to put the money we are putting on rent on my own house and desperately looking at ways to achieve getting my own home.

Many Thanks in advance for your help

suki1964

Im just selling my share of a shared ownership so I can tell you what I know.

Basically you have to apply to go onto a shared ownership scheme - usually run by HA (although some councils do). They do have criteria you have to meet such as you are already renting from a HA or council, or you are eligiable under the key workers scheme - nurse, police offer etc. You need some savings and a certain income before you are considered - each scheme has differing criteria.

Once you are accepted on a scheme you will be sent out the details of any property you are eligable for in your preferred areas. Then you go view on the day and decide if you want to proceed. If there are a few parties interested in a property then its all down to points as to who get offered the property. One couple who came to view mine had been looking for two years and hadnt been accepted and the people who got it - it was their first attempt.

From then on its just like buying any other property - you need a deposit (around 5% of your share) and you get a mortgage for the rest of your share. Rent is paid on the other share - about a third of the mortgage payment.

To all intent and purpose you own the house. You pay for all the up keep and maintenance as if you owned it all. The "landlords" have no say unless of course you have a leasehold property.

You can then either staircase up and eventually own outright or stay as you are.

When it comes to selling (if you still dont own outright) then the HA finds a buyer. You pay all their costs as well as your own costs. You have to pay for a proper valuation which is often less then an estate agents valuation (5k in my case ) Any equity is shared between you and the HA according to your share value, less any improvements that you have made to the property that have increased the value - you get to keep that.

The other way to get a shared ownership is through a private sale which sometimes pop up with estate agents
HTH

beckstrous

Just to add that the criteria used by different local authorities is not always the same. I have been registered with two - Waverley and Guildford. Waverley allocate according to a points rating but Guildford allocate according to how long you have been on the list. So if three people apply for the same house, the person who's been waiting the longest gets it regardless of individual circumstances. For bigger houses they give priority to families but apart from that it's all down to how long you have been in the queue.

I've just found out from the council that I can add my boyfriend to my application without affecting the amount of time I've been waiting (i.e. without it becoming a new application) so I am rather pleased about this!

Also at Guildford the way you apply for properties is different. They don't send you details - they're all online and you apply via the web. Waverley is different and they invite you to look at particular properties.

Suki, if you see a shared ownership in a private sale, do you have to be registered with the relevant LA?

suki1964

No. Its a private sale as such BUT you do have to satisfy the HA or LA that you can meet the rental charges and any other charges eg someones inprovements.

What worries me about these sales is why are they being sold on the open market? Basically the HA or LA gaurentee you a buyer. The details of my place went out to 85 eligible applicants (over 6 thousand on the wait list) and out of the 20 or so that showed - 10 applied to buy. And believe me my house is nothing special You can only sell on the open market if the HA/LA cant find you a buyer in a certain time frame (6 weeks in my case) which would make me a bit cautious

mummytofour

Some of the facts are slightly differnt from H/A to H/A.
Ours for a start will no longer give us increase in value for improvements, we have lost 10k on that.
You can get 100% morgages, leeds for one do them.

Also if you buy a S/O from a E/A you will still be only allocated the house on the points system, so the more points you have the more chance you have of getting the house.


But as I say it all depends on the H/A they all have their own rules.

Check out https://www.yourhomefinder.co.uk

suki1964

mummytofour wrote:

Some of the facts are slightly differnt from H/A to H/A.
Ours for a start will no longer give us increase in value for improvements, we have lost 10k on that.

Do you mind me asking what happened in your case?

For us the valuation put our improvements as being £25k which we expected but then it turned out that the new buyer had to buy them and they could only add half of the value to the mortgage meaning we had to find a buyer with £12.5k in savings. If there wasnt a buyer with those sort of savings we would have to have dropped our price and lose out. The HA would still wanted their equal share of the equity without improvements

beckstrous

Thanks. Useful info there :-)

mercurystar999

You do not have to by a house that is on the scheme allready. At our housing association we bought a house that was on the open market. We applied to the housing association and they said yes we could go on the scheme, and then it all went from there.

mummytofour

suki1964 wrote:

Do you mind me asking what happened in your case?

For us the valuation put our improvements as being £25k which we expected but then it turned out that the new buyer had to buy them and they could only add half of the value to the mortgage meaning we had to find a buyer with £12.5k in savings. If there wasnt a buyer with those sort of savings we would have to have dropped our price and lose out. The HA would still wanted their equal share of the equity without improvements

The house was valued back in feb o5 and there were two valuations one was without the work we had done and one was with ( 180 without 190 with) ok so we would of got 50% of 180 PLUS the 10 grand. The house went on the market for the 190 and was offerd on, at that time there was NOTHING within 50 miles of here that we could afford as we need at least 4 beds, so we had to take the house off the market. The house was valued on oct 4th 05 at the same value as before, so we put the house on the market at which time we were told that as from end of feb 05 our H/A nolonger give the extra for improvemnts, I was very !!!!!! off, but was told I could appeal... im pg with my 5th babay and dont need the agro of appeal when we will prob loose anyway, I was informed that the H/A is a business and there to make money not give stuff away.

To be honest I will be VERY VERY glad to be out of shared ownership, I had 3 agents value our house... the price was at least 20k more than it has sold for.

:mad: :mad:

suki1964

What B*****d's!!!

Im sorry but I would appeal as that wasnt the deal you signed up for when you entered the contract and I doubt they have a leg to stand on. Its not like they are not making any money is it? In my case they put up 35k nine years ago and its now worth £100K. On top of that they have had no maintenance costs, have had a rent coming in and all legal fees paid for. Plus seeing as I bought on the open market they have actually gained a property.

Like you we have lost out on upto £20k. When I had the EA's in to value in case the HA couldnt find a buyer, they said that if I put it on the market at the price the valuation came in at, they wouldnt even have time to write up the details as I was "giving it away"

Dont get me wrong, I was grateful for the chance of a leg up onto the property ladder but if I knew then what I know now I wouldnt have touched it with a barge pole.

Can you not raise a mortgage for the rest and buy them out? You only need to keep the property for another three months then you can sell to whoever you want

suki1964

mercurystar999 wrote:

You do not have to by a house that is on the scheme allready. At our housing association we bought a house that was on the open market. We applied to the housing association and they said yes we could go on the scheme, and then it all went from there.

Different HA's have different schemes. I also bought on the open market but the HA Im with - Notting Hill - no longer offer the same scheme