shared ownership

suki1964

I think a lot of people dont realise that a lot of councils and housing associations offered DIYSO - do it yourself shared ownership, where you bought any house for sale on the open market in the areas they covered. Obviously you had to be accepted on the scheme and they told you how much you could afford to go up to. So no,not all shared ownerships were overpriced or mixed with social housing.

This is how we bought on shared ownership

Or house would have cost us 68K in 1996 which with hindsight we could have stretched ourselves and taken the 100% mortgage on that amount, but interest rates were still up and down and we were just coming out of the previous recession. So we went DIYSO and bought a 50% share.

We totally gutted the house,replastering walls and ceilings, putting in all new skirtings etc, added an extension and landscaped the garden and added off street parking

When we came to sell in 2006 we could got 210 - 220k on the open market if we could have waited for the right buyer. However the rules say you have to pay for a valuation based on what other houses comparable to yours have sold for and thats what the HA allow you to sell for. In our case he valued the house at 190k.

The were not allowed to take any profit from the works that we had done which was valued at 25K. This meant that the HA took back 50% of 165k.

For us we came away with a healthy profit and we cant grumble. At the time it was a bit gutting not to have any control on who we sold to (they find the buyer) or any leeway on sale price (esp as prices were flying upwards when we sold) but then that was just greed. When you think that the day we put the offer in on the property we had less then a grand to our name we came out very happy.

Not all SO is overpriced. You need to see what schemes are availible in your area and see if there is any that work better for your needs then others.But with interest rates so low, prices still falling and more and more people losing their jobs I would really say save another year and get that deposit and buy outright.

dopester

It is a scheme for people without brains in their heads.

lynzpower

dopester wrote: »

It is a scheme for people without brains in their heads.

No, it isnt

Fat_Fairy

dopester wrote: »

It is a scheme for people without brains in their heads.

That's very rude and very wrong! :mad:

We bought a 25% share of a housing association house, it cost us £33,000 last summer.
My husband was forced to retire at 54 due to ill health which will continue to worsen until he ends up wheelchair bound. We also have an Autistic son so I am now a stay at home carer for the both of them.
We used equity from our previous house which we sold because my husband could no longer use the stairs - but as house prices had risen so steeply and we no longer had a salary coming in, we couldn't afford what we needed - a modern bungalow close to town.

So we bought this 25% share and have the option to keep buying further shares til we own outright (i doubt we'll be able to do this though). The rent is £168 per month, including insurance. This means we have a lovely new house with wheelchair access in a quiet area just out of town for a very affordable rent, plus a little nestegg to leave our son. We also have the option to exchange with other shared equity owners should we ever want to relocate, or to sell on to someone waiting for this kind of property, or sell on the open market.

If we did ever sell then any improvements we made would benefit both us and the housing association, or benefit our son who will inherit the share when we die. Ok, the market value may have dropped slightly since we bought (not much up here in the Scottish isles though) but this doesn't bother us as we are here for the long haul.

lynzpower

The other great thing is that once you have paid off your share, you are in absolutely no pressure to buy any more shares, so you can pay off the smallamount then have a peppercorn rent for the rest of your life there. OR you can save the difference and buy lump sums in the property without having to take out mortgage insterest or even go anywhere near mortgages and thier arrangement fees etc.

IT IS possible to be very clever with these and I wouldnt rule one out agian, HOWEVER< the vast majiority I see when on rightmove are SO overpriced its totally ridiculous in this climate. ( London)

macaque_2

suki1964 wrote: »

I think a lot of people dont realise that a lot of councils and housing associations offered DIYSO - do it yourself shared ownership, where you bought any house for sale on the open market in the areas they covered. Obviously you had to be accepted on the scheme and they told you how much you could afford to go up to. So no,not all shared ownerships were overpriced or mixed with social housing.

This is how we bought on shared ownership

Or house would have cost us 68K in 1996 which with hindsight we could have stretched ourselves and taken the 100% mortgage on that amount, but interest rates were still up and down and we were just coming out of the previous recession. So we went DIYSO and bought a 50% share.

We totally gutted the house,replastering walls and ceilings, putting in all new skirtings etc, added an extension and landscaped the garden and added off street parking

When we came to sell in 2006 we could got 210 - 220k on the open market if we could have waited for the right buyer. However the rules say you have to pay for a valuation based on what other houses comparable to yours have sold for and thats what the HA allow you to sell for. In our case he valued the house at 190k.

The were not allowed to take any profit from the works that we had done which was valued at 25K. This meant that the HA took back 50% of 165k.

For us we came away with a healthy profit and we cant grumble. At the time it was a bit gutting not to have any control on who we sold to (they find the buyer) or any leeway on sale price (esp as prices were flying upwards when we sold) but then that was just greed. When you think that the day we put the offer in on the property we had less then a grand to our name we came out very happy.

Not all SO is overpriced. You need to see what schemes are availible in your area and see if there is any that work better for your needs then others.But with interest rates so low, prices still falling and more and more people losing their jobs I would really say save another year and get that deposit and buy outright.

Say you bought at £68k and sold for £220k. You then had to pay the HA 50% of £190k less £25k.
Gross profit = 220 - (68 + 25) = 127
Money repaid to HA = (190 - 25)/2 = £82.5k
Mortgage interest (assume 6%) = 0.06 X (68/2) X 10 = £20.4k

Net profit = 127 - (82.5 + 20.4) = £24.1k

By my reckoning you managed to make £24k out of property during the biggest boom since Caligular came to collect sea shells on English beaches. How could anyone do that badly?

P.S. I have let you off maintenance and conveyancing costs.

llh189

Dopester - your comment is both rude and unhelpful!

I am sure that should you wish to add anything constructive to this debate we would all very much like to hear what you have to say!

llh189

Macaque - the people who did it badly were the people who couldn't afford to get on the the ladder and made nothing from the last boom.

So given that Suki1964 probably wouldn't have made any money had it not been for their SO place the scheme obviously worked for them.

I have been paying other people's mortgages in the form of BTL for 15 and I am sick of it, being single now and worried about where I might live when I retire in 30 years is enough for me to take a gamble on one of these schemes.

macaque_2

llh189 wrote: »

Macaque - the people who did it badly were the people who couldn't afford to get on the the ladder and made nothing from the last boom.

So given that Suki1964 probably wouldn't have made any money had it not been for their SO place the scheme obviously worked for them.

I have been paying other people's mortgages in the form of BTL for 15 and I am sick of it, being single now and worried about where I might live when I retire in 30 years is enough for me to take a gamble on one of these schemes.

Au contraire, the people who did badly are the ones who got onto 'the ladder' and are now neck deep in negative equity.

suki1964

macaque wrote: »

Say you bought at £68k and sold for £220k. You then had to pay the HA 50% of £190k less £25k.
Gross profit = 220 - (68 + 25) = 127
Money repaid to HA = (190 - 25)/2 = £82.5k
Mortgage interest (assume 6%) = 0.06 X (68/2) X 10 = £20.4k

Net profit = 127 - (82.5 + 20.4) = £24.1k

By my reckoning you managed to make £24k out of property during the biggest boom since Caligular came to collect sea shells on English beaches. How could anyone do that badly?

Way 1 looked at it, my 1000 pound investment left me with enough money that I now have a five bedroom,3 bathrooms, three reception detached house with a double garage and 1/4 acre with a 25k mortgage. Not bad seeing my last house was a two up two down terrrace on a council estate

What I dont think you realise that working as clerical support for the health service, wages were and still are notoriously bad. When we took our mortgage my take home was less then 600 a month, when I left the Health Service in 2000 they were still less the a grand a month. Even getting a mortgage back then was nigh on impossible as self certificated mortgages were unheard of and as partner had no books it had to be based on my income only With CSA payments for two children on the old system plus a self employed partner whos wages were never gaurenteed we done well.


Not everyone is greedy. Some of us by a house as a home, not an investment We only bought because the HA who I had a flat with would only give us one bedroom which made having the step kids stay a nightmare