Shared Ownership

Craig_Grant

Hello

Some advice please.

Shared ownership - what are the cons?....and the pros?

My sister is looking to get on the proprty market and feels this is the only way her and her partner can do it.

I want to be able to help her make an informed decision so please help.

Thanks

Craig

Cannon_Fodder

http://forums.moneysavingexpert.com/search.html

peachespeaches

We are buying our huge new build 4 bed house through shared ownership with a housing association. Its a good scheme, some are good some arent. Basically its the only way we can afford a house large enough for all our kids. There are houses we can afford but they are way too small.

The cons may be that the houses are expensive. Depends on the area and the scheme of course. Mortgages can be a bit tricker to get but not impossible. Get a lender who knows all about shared ownership though and avoid the Co-op like the plague. They really messed us around. Our lender is the Mansfield BS and they have been fab. Another minor point is that the housing can be part of a social housing scheme. Ours is on the edge of a council estate, but its a nice estate and mostly owner occupied anyway. There are plenty of other owner occupied properties around here but very few of the size we need.

[Deleted User]

We had a shared ownership house and to be honest, it was the only way for us to afford a house but I'm not sure I'd do it again.

Shared ownership houses can be built on land no one else wants (so the land is cheap). Ours was on the edge of a very bad high rise estate.., with the only exit on a road that went thru the estate so u'd get accosted as u went out with yobbos trying to charge u 'rent'. U didn't go out at night on your own.., and I felt like I was in prison. We were so in love with the house and the idea of home ownership we didn't even look with open eyes at where it was. Other shared ownership options at the time were in places it would have been difficult to get to work because of a lack of public transport routes.

On top of this, as I said, it IS the only way to buy if on a low income, but its not a cheap way to buy. U will often find the rent and service charge u pay on the part of the house u don't own is more expensive than a mortgage would be if u had been able to buy 100% of the house.

Plus we found that altho it was a new build house, our house had been the last to be built and it had been done as a rush job.., the plastering was done quite badly (altho u can find things like this in any house). When they came round to snag a year later I had three pages of things that needed re-doing!

If I did something like that again, I'd be a bit more careful about where it was and ask why it was being built there. Sometimes there can be a reason why shared ownership properties have been built in an area and decide if its something u can live with.

jane-twin-mum

i did this and it was a very positive experience for me. The Housing Assco were incredible thorough in making sure I could afford the payments of all my bills..even checked how much petrol and car insurance costs were and included them in my budget plan. If only mortgage lenders were this precise still.

I had no service charges and the house was in a lovely place. Got me back on the property ladder after divorce and relocation to a more expensive area.

Main thing is use the same criteria you would buying the 'normal' way, use a Housing association if possible and check out their track record.

I even managed to make money when I finally sold the house and had no problems at all..Oh and check if you can buy incremental bigger shares in you property when you have more money. That way the rent decreases and you can eventually own it out right should you wish to do so at a later date.

Jane

BexInLondon

Positive experience here. Our total outgoings on rent (75%), service charge (includes 2 lifts!) and mortgage (25%) are still around 40% less than it would cost us to rent an equivalent place around here. As others have said above, there are potential pitfalls, but many of these apply to full ownership too!

I would say you need to go into ti with your eyes open, and ask questions such as:
1) What's the deal when you come to sell it? Are you allowed to do it on the open market?
2) Are there any limits to rent rises?
3) What will happen if the mortgage valuation comes out lower than the price they're marketing it at?
4) What's the deal with buying more? Are you allowed to buy the whole thing? Do you have to buy in particular sized chunks?

As with any moving house decision, you need to be satisfied with the area, so wander round it at a few times of day and night to get a feel. These days a lot of SO developments are mixed right in with private housing and/or other social housing, so they can really vary. Check the quality of the fixtures and fittings - these are sometimes a bit lower quality in shared ownership, but a few SO developments were actually built for private sale then sold to Housing Assocations during the credit crunch so have superior fixtures and fittings.

You'll get very mixed views on here. Personally, it's worked out well for us, and for our many friends who are raising their families in shared ownership homes. For some on here, there have been horror stories of being stuck, unable to sell for years, though some of this can happen in privately owned places too!

Finally, when costing remember that mortgage interest rates can (and have to at some point) rise, and that as a shared owner you don't have all the repairing rights of a normal tenant, so you'll need to make sure you're covered for emergencies such as boiler breakdown. However on the plus side you don't have to ask someone's permission every time you paint a wall or put up a shelf, and as long as you keep up payments you can't be evicted on a whim, so it is more secure.

bodgerx

Our experience of shared ownership wasn't particularly positive.

Basically, we bought a 50% share of a house priced at £145K. Mortgage was about £500/month, rent and other charges about £200. A little cheaper than a mortgage for the full amount, but not substantially. We had to take a valuer's estimate for it when we sold it, and couldn't take anymore, so we took about £7K less than houses were selling for in the street at the time when we sold.

If you want to buy a bigger share it gets re-assessed at the time you buy the share, so this means the housing-association cashes in on you as prices rise.

Also, a lot of shared ownership houses get allocated alongside housing association tenants. I'm sure many of these tenants are great people, but we got stuck on a street with some real nightmare people.

Your experience may vary...

I would say the better schemes are Homebuy and the discounted open-market sale houses.