Shared ownership premium

tek-monkey

robin_banks wrote: »

I'd really avoid any shred ownership/ equity scheme.

I hear this constantly, but I still don't get it. When buying a share is less than your rent costs, how is it worse than renting til you have a deposit? If both cost the same, in 5 years you'd still have the same lump sum saved plus some equity (hopefully!). Wouldn't that put you in a better position?

robin_banks

tek-monkey wrote: »

I hear this constantly, but I still don't get it. When buying a share is less than your rent costs, how is it worse than renting til you have a deposit? If both cost the same, in 5 years you'd still have the same lump sum saved plus some equity (hopefully!). Wouldn't that put you in a better position?

Not neccessarily, if you have equity as a result of shared ownership you only have gained equity on your share. How do you ever build up the equity to own outright?.

Only 3% of shared ownership buyers have ever stairgated i.e. bought additional shares.

tek-monkey

But equity on your share is better than no equity at all, which you'd have with renting? Sell the place in 5 years, use your equity to add to the deposit you've saved and buy a 100% place - same as you'd have done if renting but any equity you've gained adds to the deposit. How does anyone ever build up the deposit to own outright? By saving. Your ability to save will not be affected by the fact you're in a SE property, unless you get major repair bills.

robin_banks

tek-monkey wrote: »

But equity on your share is better than no equity at all, which you'd have with renting? Sell the place in 5 years, use your equity to add to the deposit you've saved and buy a 100% place - same as you'd have done if renting but any equity you've gained adds to the deposit. How does anyone ever build up the deposit to own outright? By saving. Your ability to save will not be affected by the fact you're in a SE property, unless you get major repair bills.

But it simply doesa not happen that way.

You own 50% of property worth 180k , 5 years later it's worth 190k. You've made 5k, but to buy a similar place outright would cost 10k more.
You're still 5k short.Selling the place will cost you 3k-ish.

The HA have a big say as to who they choose to offer the property to dealying things further.

tek-monkey

But that 5k is still 5k more than you'd have if you'd just been renting, so you are in a better position if we assume mortgage=rent? If you have a deposit already I agree SE is a no-go, but if you need that few years to save one then it seems to make sense to me?