Shared ownership

sallysqueak

Can someone please tell me how the schemes work whereby you buy part of the house and rent the other? i have to say i dont get it, how can someone who can only afford council rent suddenly afford rent plus mortgage payments? Am i missing something?

ben37564

The council rent is significantly less than what you would pay a mortgage company.

Imagine a property valued at £200,000 and lets say the council is offering a 50% shared ownership. Your mortgage would need to be £100,000 so lets say a monthly mortgage repayment of roughly £540 (interest only @ 6.5%). Your council may charge rent of perhaps £125pm. Therefore the net cost to you is £665pm.

Now if you'd have borrowed the entire £200,000 on a mortgage, your monthly repayments would be £1,080 therefore costing you an additional £445pm.

Obviously these are very rough figures but you get the idea. The shared ownership scheme reduces your monthly outlay and also gives you to opportunity to buy the remainder when you can afford it.

Austin_Allegro

To my mind these schemes are just a way of artificially keeping prices high and I would avoid them like the plague.

You're also trapped in the agreement. if your rent goes up, you can't just up and leave like you could in rented accommodation.

The only way to leave would be to sell your 'share' of the flat, which is likely to difficult in a falling market, as most FTBs would avoid these places in favour of full ownership.

gabyjane

We have SO and think it's great! if you want more info let me know..x

brit1234

gabyjane wrote: »

We have SO and think it's great! if you want more info let me know..x

Can you tell us what is so great about these schemes because I believe as a ftb you should steer well clear of the shared ownership trap.

I have friends with these and they can't sell, the extra conditions make it harder to sell than a conventional property.

They are also far more expensive with the rent, mortgage and huge service charges for what is really a poor quality newbuild shoe box.

As the other poster said they were just designed to keep house prices high. It is a failed experiment and you are better off buying a repossessed older property at auction, you will get far more for you money. You also have the danger of social tenants moving into the flats as they can't sell them all. All my friends with these sort of problems have had problems with this including increased crime.

Wickedkitten

ben37564 wrote: »

The council rent is significantly less than what you would pay a mortgage company.

Imagine a property valued at £200,000 and lets say the council is offering a 50% shared ownership. Your mortgage would need to be £100,000 so lets say a monthly mortgage repayment of roughly £540 (interest only @ 6.5%). Your council may charge rent of perhaps £125pm. Therefore the net cost to you is £665pm.

Now if you'd have borrowed the entire £200,000 on a mortgage, your monthly repayments would be £1,080 therefore costing you an additional £445pm.

Obviously these are very rough figures but you get the idea. The shared ownership scheme reduces your monthly outlay and also gives you to opportunity to buy the remainder when you can afford it.

Add in life assurance, buildings insurance if its a house and service charges if its a flat - both of which you wouldn't have to worry about if you were renting, and then regular property maintenance costs and renting from the council is a hell of a lot cheaper.

geoffky

http://www.insidehousing.co.uk/story.aspx?storycode=6501770

gabyjane

well brit1234 firstly ours was so much chepaer than any auction 'risk' house and outbuy property and still would be..with our rent, mortgage etc it is chepaer than renting where we live too by a long shot. I'm not sure where the social tenants bit comes in as we had to have a pretty decentincmoe to get ours so i would imagine ppl claiming housing benefit wouldn't have a hope..not the ones we have anyway..they all sold before they were even built. We know most of the neighbours and they are all nice, some dh's friends and they all work etc and have no intention to move so we have a nice little area where we are at the mo.

Wickedkitten our life insurance isn't that much really, our buildings insurance is covered in our rent, our contents is what we had when we rented, and we dont have to pay a service charge so no more really than renting for us and a bigger nicer house.

There are identical properties like ours round the corner on the same development and the whole lot sold, one went up for sale and at the peak didn't sell so they have rented it out for £750 per month, got someone in staright away..ours is £450 so i know which ide rather choose! Plus ours is bigger spec which is odd but i'm not moaning!

To us as iv'e said many a time is a house..a home not a money making scheme so as long as we live here we will love it then when we decide to move we will deal with what happens then as no one can tell what will happen in the future so pointless worrying!

gabyjane

Plus!! this talk of council propertys is irrelevant as of course yes a council rented house would be cheaper than a mortgage BUT if you were in a council house then you wouldn't be eligable for a SO property so it doesn't matter..not where we are anyway.

Wickedkitten

How big is the share of your house that you own and what percentage do they use for calculating your rent per annum if you don't mind me asking. Your mortgage portion is only about £70 less per month than the entire mortgage on our 3 bed semi.

shellnapier

gabyjane wrote: »

Plus!! this talk of council propertys is irrelevant as of course yes a council rented house would be cheaper than a mortgage BUT if you were in a council house then you wouldn't be eligable for a SO property so it doesn't matter..not where we are anyway.

thats not true!!!!!
were looking into SO with teh council in low cost houseing.. we currently pay £250 a month rentin council house, and mortage qoute fo r65% £380 repayment..