Shared Ownership - can someone explain?

fabulous_girl

Hiya,

I've just been on rightmove looking at the cheapest houses in my local area (interested in getting on the ladder). Just found a 3 bed, sparkly looking house for £16,250, and it says " Offered on a 25% shared ownership basis, with rent in year 1 of £3 per week". What does this mean? I'm a bit confused. You pay £16k for your 1/4 share of the house and then live there for an additional £3 a week? This is what I'm assuming, but doesn't this lead to complications later on when you come to sell/move on? Can you then buy the other 75%, how yould you even go about this?

Sorry if its a silly question, but this house buying lark is a confusing business!

ad9898_3

Simple answer is NO, don't do it, they are legal scams to keep the price high, yet affordable initially. Best advice ?, keep saving, prices will be falling for at least another year.

Wickedkitten

fabulous_girl wrote: »

Hiya,

I've just been on rightmove looking at the cheapest houses in my local area (interested in getting on the ladder). Just found a 3 bed, sparkly looking house for £16,250, and it says " Offered on a 25% shared ownership basis, with rent in year 1 of £3 per week". What does this mean? I'm a bit confused. You pay £16k for your 1/4 share of the house and then live there for an additional £3 a week? This is what I'm assuming, but doesn't this lead to complications later on when you come to sell/move on? Can you then buy the other 75%, how yould you even go about this?

Sorry if its a silly question, but this house buying lark is a confusing business!

You get a mortgage for 25% of the price and then in the first year it would be £156 on the rented portion. You would need to be careful though because if the property actually is worth £65k, in the second year it would be based on the remaining 75% share of £48750 so even if the RPI is still the same next year and they charge RPI + 1%, that's your rent gone from £156 a year to £487.

you would have to staircase up to buy the rest which would normally require you to get a full building survey done and incur legal costs every time you want a buy a chunk.

You would probably also need to pay for 100% of any work that needed done on the house as well.

Greenwellies_2

I purchased my home on the open market, and approached a HA for their 'assistance'.

Mine was 55k and I purchased 50%
my mortgage was about 300 per month, and the rent was nearer 400 (although it started off at something like 200 and increased every year)

I was responsible for everything, burst pipes, broken boiler, removing the dumped car off the drive....... The house needed a lot of work.


I realised I'd never be able to afford to purchase the remaining 50% as house prices were constantly on the up. Each time I thought of it and approached the HA, I was told that they wanted £X to consider it, and then it would be 50% of the current market value. (Despite the work that I'd done to the property).

I did buy the remaining 50%, but I do remain bitter about the experience.
The lack of support, the rent hikes, and the fact that I vastly improved the home, yet only saw 1/2 of the 'improvement value'. On the other hand, I don't think I would have ever got on the property ladder, well, maybe if I'd gone to a mortgage broker...

Good luck

GW

ruggedtoast

Steer well clear of SO unless you really have no other way of getting somewhere suitable to live.

It was engineered by Nu-Lab some years ago to keep pumping up house prices by exposing poorer people to debt they couldnt have obtained even in the most reckless Northern Rock 120% mortgage days. And combining it with tax payer cash that mostly went straight into the pockets of housebuilders.

You get all the disadvantages of owning combined with most of the disadvantages of renting. As Brown cuts public spending to fund his bail outs you can only expect rents to keep going up, and dont default on your rent or you lose everything.

chickmug

ruggedtoast wrote: »

Steer well clear of SO unless you really have no other way of getting somewhere suitable to live.

It is a great shame as I remember the days when these schemes were an excellent way for people to get on the housing ladder. Perhaps this type of day will come again when the figures make more sense than they do now

poppysarah

cheaper house prices would do the trick with much less messing about though.

And if the government want to interfere in the housing market then let them build cheap nice rental proeprties.

fabulous_girl

Thanks for your replies, I will stick with renting for now!