Buying shared ownership property.

farhanshaikh

My wife and I are thinking about buying a house on the part buy and part rent scheme being offered by a number of housing associations in London.

I have done some research and found a lot of advantages about entering such an agreement. However I now want to know any DISADVANTAGES of shared ownership.

Is there anyone out there already on a similar scheme? How easy is it to re-sell if your circumstance changes?

Anyone who could provide some advice would be most welcome.

Thanks.

Tassotti

Okay, never gone down this route, but to me the advantages are .................................................................................................................................................. okay cannot think of one.

Disadvantages..you pay mortgage, you pay rent...when you sell the council take half your profits.

I'll give you a part share in my Ferrarri (you make payments every month, you cannoty drive it, and I will charge you for the privilage)

rchddap1

There are advantages. For a start....without my shared ownership property I wouldn't have over £15k in equity. Instead I'd have been throwing cash at my landlady.

Disadvantages....well, you still don't 100% own the property and there are various restrictions on what you can do with the house. Whilst you own a portion you are 100% responsible for the maintenance should anything happen. There are also a few additional costs if you decide to sell up down the line.

But the reverse of that is....when you do sell up usually the housing association gets over 1 month to try to find someone suitable. Meaning hopefully no estate agent fees. And the price of the house is fixed at what it is valued at. For example, if your share is valued at £60k....then any potential buyers must pay £60k. They can't make an offer.

We're in shared ownership at the moment and a lady next door sold up a year or so ago. Only took her a few months to get everything sorted and she was off. The Housing Association do have additional admin charges (of course), but as I said before on the reverse side they do market the property initially.

Tinkerbell_14_2

farhanshaikh wrote:

My wife and I are thinking about buying a house on the part buy and part rent scheme being offered by a number of housing associations in London.

I have done some research and found a lot of advantages about entering such an agreement. However I now want to know any DISADVANTAGES of shared ownership.

Is there anyone out there already on a similar scheme? How easy is it to re-sell if your circumstance changes?

Anyone who could provide some advice would be most welcome.

Thanks.

hi ya,
i have a part buy part rent house wiv sovreign housing n am really pleased wiv it. if u wish 2 sell (in my case) the housing assosation has 1st choice 2 buy it back cos they have a lot of people on there books who r on the waiting list but if they have no suitable applicants then u r allowed 2 sell it on the open market n in our town the estate agents have no probs selling them cos the house prices r so high! hope this helps ALLI x

Tinkerbell_14_2

Tassotti wrote:

Disadvantages..you pay mortgage, you pay rent...when you sell the council take half your profits.

the council dont take half ur profits cos its all done through the housing association n any profit that u do make when u own the property u keep!!!
i have a friend who is my solicitor n she has confirmed this :j but i have no intention of selling up as im really happy here!!

ALLI

lynzpower

I agree with Rchhap here

Im in SO at the mo, and yes,there are disadvantages.

However, I wasnt the sharpest when I took it on as a single person, I have an IO mortgage and pay rent adn it takes me right to the top of my affordability. IN saying that if I wasnt paying my debt off Id be comfortable. if you can afford repayments ( or that saving in an ISa business that goes with IO). then I cant see what there is to worry about.

I was a single person, but now IM part of a couple, and we will be sellingt to rent, with a view to buying later once our plans become more stable. My OH has a dog that we cant have here, so thats really the main motivator for us. Also a property on the open market will be cheaper for us, but then we only NEED a one bed flat really. All depedns on your own circs as to whether it would be a good move. If you are committed to buying and there isnt a way of buying another way, then its definaltey worth considering.

there are things you cant do, but thats the individual lease not SO as a rule, eg with my HA you cant sublet, although with some you can, in mine you cant have pets, in some you can and so on.

I have a fantastic flat, in a good area, new build, no work for me to do really, and the HA dont interfere with me at all. However, Tasotti is right, you have to do all the maintanence etc on it, when they still own a percentage, thats a disadvantage for a start. Also now IM part of a couple I can now look towards a range of other mortgage products that wil suit us better, and save us money, as the rental proprtion can go directly to repayments, not to the HA IYSWIM

Another downer is that even if its in a stamp duty exempt area, and you have a mortgage under the threshold you still have to pay SD cos of the rental proportion. Certainly was the case in 2004 when I bought, probably still is.

Im selling up soon ( looking into it at the mo) and yes, you save EA fees by them doing the marketing for you. WIth mine if they dont find a buyer in 12 weeks, you can move it to EA to market. You are also dependnt on tiher valuation to a certain degree, altohugh whne you move to an EA its what the EAs valuation is that will carry IYSWIM

Dont hesitate to PM me if you want more. off out now for bit but will be back in an hour or so

Tassotti

Tinkerbell_14 wrote:

Tassotti wrote:

Disadvantages..you pay mortgage, you pay rent...when you sell the council take half your profits.

the council dont take half ur profits cos its all done through the housing association n any profit that u do make when u own the property u keep!!!
i have a friend who is my solicitor n she has confirmed this :j but i have no intention of selling up as im really happy here!!

ALLI

Sorry, may be thick or to many champagne charlies tonight, but What on earth are you talking about??!!?!??

The council own half, if you sell,they take half the profit, all the time paYING THEM 'RENT'.

Errrrrrrr?

Tinkerbell_14_2

Tassotti wrote:

Tinkerbell_14 wrote:

The council own half, if you sell,they take half the profit, all the time paYING THEM 'RENT'.

ok i get ur point bout them having some of ur profit cos ur paying rent but my point was that any profit made from purchase price 2 the selling price is mine 2 keep... so i think we were at crossed purposes there! but also wanted 2 say that wivout the HA myself n my kids would have been homeless (but thats another story!!)

ALLI

suki1964

Read the small print and get a solicitor to explain it all in english before you sign the dotted line.

There are lots of disadvantages of buying a SO. The obvious one being you pay rent and mortgage and are only a lease holder meaning the HA is still your landlord so permission for anything needs to be sought. You are however liable for all maintenence and insurance. Each year the rent is allowed to be increased by 5% which means it soon overtakes your mortgage payments. However buying in London then your unowned share is rising high and becomes unafordable so you may never own outright esp if you are a public sector worker with just 2-3% wage increases

Come to sell - HA has first chance of finding a buyer - at a price - 1% of share being sold +vat+legal costs. They fix the price to sell at although you pay for the valuation.Ours was valued 20K lower then houses of the same standard on the same estate were fetching. Improvements to the property you are entiled to keep so effectively you have to sell them to your buyer and the buyer cant mortage more then 50% of their value. In our case our improvements were valued at 25k so our buyer had to find 12.5k cash to pay for them - not every buyer can afford this and this is where you can be knocked down.

Yes you do make some profit but not enough to take the next step upwards. Our HA done very well out of us walking away with 78k profit without lifiting a finger and unless the new "owners" buy outright they will be making another healthy profit the day they sell.

I would seriously think about saving more and buying outright esp if you are public sector workers where you know wages are not going to dramactically increase

Jorgan_2

Just make sure it is the best deal for you. Many shared ownerships in new developments can be very expensive. We have a scheme in our area where people can buy a 50:50 share in a new two bedroom property for about £72,500 + rent, 100% ownership £145,000. A two bedroom property can be bought in the same area, for £90-120,000, so its worth checking all your options.

Arch-Angel

There's a property that I was interested in - was 75% shared ownership with the builder holding the remaining 25%. However, noticed on the "description sheet" that if we sold and the value had increased then the 25% would also increase. Not unreasonable - however, if the house value decreased, their 25% would not decrease in value! Worst case scenario - I could end up in negative equity and the builder's share would still be worth £35K!!! :eek:

Suffice to say, I'm not interested in it any more!!!

As an aside I've recently discovered that I qualify for key worker schemes when getting a mortgage. My understanding is that I have a 95% mortgage with part of the mortgage (say 75%) being an actual mortgage which I pay on etc. The rest is held in a ultra-low interest loan (with the same mortgage company) - I only pay this part when I sell or I can "buy" this part out. I can buy what I want (AFAIK) with no restrictions. Is this a good deal? It almost sounds too good to be true...so some advice from the clever mortgage brokers would be highly appreciated!