part buy part rent

shree_2

Has anyone any thoughts and ideas on part buy part rent scheme from housing associations. Are they good in the long run? You dont need a large deposit to start with but what are the pitfalls?

brit1234

Main four pitfalls:

1. Properties are extremely overvalued compaired to normal properties.
2. High likelyhood that social housing will share the block with high turn over which increases the risk of criminals living next door which can effect quality of life.
3. Rent, service charge, mortgage costs and car parking hardly make it affordable housing.
4. Extremely differcult to sell with all extra restrictions, limited lenders and smaller pool of buyers.

I'm a key worker and the stories my friends have said with their experiences has put me off, also what I have witnessed at work isn't good. It really is a property trap as we have these falling normall properties.

adg1

You buy X percent of the property and you rent the rest.

So. You pay for a mortgage, you pay the rent. BUT you also pay all the service charges for the property, pay for all repairs if things go wrong as it is considered yours, not only 75% yours.

The original value is artificially high and you will get your mortgage based on that. New builds have suffered the largest and fastedt drop in prices during the crash hence your mortgage could, very quickly, end up in negative equity.

Also, I believe that if you do sell, the constructor gets paid off first and you get the keep the rest of the sale proceeds. So if you buy at £100k, with 75% mortgage and 25% rent, pay off so you have a 30% share in the property in equity, only 25% of that is your equity when you sell.

What happens if you come to remortgage in 3 years and the valuer from the mortgage company values the property far lower than you have been paying towards? It'll be tough to get a mortgage again at a favourable rate.

shree_2

thanks for the advice, but if you don't have a large deposit, then it is better than renting maybe? I'm still looking into it. Thanks.

brit1234

shree wrote: »

thanks for the advice, but if you don't have a large deposit, then it is better than renting maybe? I'm still looking into it. Thanks.

No because you will have differculty selling, plus the longer your save a deposit the more prices come down lowering the deposit you need.