shared ownership

ramesheuk

HI everyone,


What is opinion of shared ownership(part buy part rent). Is that good policy?


Thanks in advance.

llh189

You won't find that many people on here very supportive of this scheme, especially in a falling market!

But with most things in life the opinion good or bad needs to be based on your individual circumstances.

A better scheme for you might be my choice homebuy, it might be worth asking your local HA for details of this scheme.

It might be best asking for help if we knew a little more about your circumstances.

lynzpower

Having bought and sold a SO, its totally fine in a rising market, a recipe for disaster in the market we are in now AVOID.

robin_banks

They're overpriced.

If they're a flat they come with a hefty service charge.

Difficult to sell.

You only own 25% for example yet are liable for 100% of repairs.

Not that easy to get a mortgage on.

I know of several HA's that are in financial difficulties as a result of over-stretching themselves.

AVOID

suki1964

We bought a SO when the prices were low and sold just before the crash so for us it worked out pretty well. To buy a SO now? I wouldnt touch it with a barge pole

mewbie_2

ramesheuk wrote: »

What is opinion of shared ownership(part buy part rent). Is that good policy?

Please be aware that in a two toilet SO residency you can only use one for solids until you own more than 65%. It caught my friend out big time when his mum came to stay.

bookduck

"Shared" ownership? You purchase in at an inflated price; pay for all of the decoration, maintenance and up keep out of your own pocket. When you finally sell they get a share of all your work and money you have put in.

a_rather_tall_man

I've looked at the figures in the past when the bubble was in full swing and it looked like bit of con for the buyer at the time, I dismissed the idea of buying SO pretty quickly. The properties were always labelled 'affordable' by the developers and council's but the rent and the mortgage often added up to roughly the same cost as a full mortgage. All the risk was loaded onto the buyer too, if you couldn't make the payments for the rent they would take the lot back but if its SO then imo the risk should be shared.

It was usually the case, in this area anyway, planning permission would be only be granted for a development if a certain percentage of it was SO properties for the council to sell so it appeared just to be a way for the council to get a slice of the action with regard to the boom.

macaque_2

ramesheuk wrote: »

HI everyone,
What is opinion of shared ownership(part buy part rent). Is that good policy?
Thanks in advance.

Builders offer shared ownership when their asking price is more than the market can afford. My advice is to stay well away.

Graham_Devon

Well I'm in Shared Ownership, it was either that or rent for me, and this worked out cheaper. There was no way at all in this area that I could have got a mortgage for a house in 2006. There was an article in the paper not too long back stating people would need an income of at least £60,000 to afford a 2 bed house here.

So it wasn't ideal, but was the only route for me, and so far, it's worked out quite well. There are of course the downsides.

I'm not sure why in a falling market they are so bad. So maybe someone could explain that one, as from my point of view, I'm sitting quite pretty knowing that my rent is going down soon (linked to RPI), my mortgage is paltry, and that I'm only liable for 25% of the total fall of the house. So say it falls £20,000, MY fall is £5000. Because of this, I am able to save a lot more towards the next house....much more than I would with a large mortgage, or even renting a house.

For me at least, buying a second owner one, it's meant low rent, low mortgage, and costs me £150 at least, less per month than renting the equivalent place. I can buy more if I wish, but never will (alienates the next buyer).

There are other upsides, but not major ones.

The downsides are like people have already said, you are liable for 100% of the costs (bar stuff like roof collpasing, as thats under the insurance included with the rent). You can put a new bathroom in, but you will not make any money when you come to sell. You can put a consevatory on, but again, this will not up the price.

The other downsides are simply the fact that you are often lumped in with some, shall we say, dubious characters, and it only takes a couple of families to spoil the whole area. Often you get council homes mixed in. They do not pay towards the ground rent (covering the whole of the area), and, like I say, it only takes one family to ruin it all, and you have to foot the bill.

You are probably going to be surrounded by families, which means lots of kids running around everywhere, and lots of cats....loads of cats!!! Cats everywhere!

The other downside is poor build quality and lack of space. I'm lucky in that in this area we all have our own parking spaces, it's not some big car park, and they all outside our homes. I have seen some with the car park type areas.

Overall though, if you are in my position, and looking for a home, rather than an investment, it's something I wouldn't hesitate reccomending, but I would add in what I have said above to the pitfalls.

The mortgage however, was an absolute pain in the knackers to get, there are clauses, because Halifax (in my case) cannot take the home, as it's not theres, they only have 25% of it.

For me, it worked. It gave me cheap rent, somewhere which I am at least buying some of it and can make some equity in a rising market, and also, in this age, means I am somewhat covered from the falls. It has enabled me to literally save a lot more money and live a bit better because of the lower prices.

So i'd reccomend it if you have no hope of gaining a mortgage, but if your renting at the moment, with the market falling, I'd be inclined to see what happens on the market.

I apologise, that was a bit long!!

llh189

The assumption is that when prices are high SO helps people who wouldn't be able to get on the ladder buy a proportion of a house - this bit being better than nothing

In a falling market house prices are cheaper and therefore you can afford a whole house rather than just a bit of a house and there is more choice.

I would agree about the areas that SO are often in too and about the quality and size of the build.

I once rented a new build apartment, I was the very first tenant, so everything was brand new ( it was a private BTL ).

On the same estate there were 6 SO houses, one weekend they had a open house event. I went along for a bit of a nose and the difference in the quality of the fittings, the finish and room sizes were not comparable to the private residences on the estate, they were completely shoddy in relation to the place I was living - although finished at the same time by the same builder.

On saying this last year I nearly completed on a SO and I am now trying for my choice homebuy - so beggers can't be too choosey.

This forum never says anything good about these types of schemes but at least they do try to help and like you without some help I wouldn't be able to get on the ladder.

Maybe I will regret in but have spent the last 15 years paying other peoples mortgage whilst renting!