Shared Ownership

leahciM

100% sorry if this has been answered in other threads (the MSE forum search tool is not the brightest of sparks, I'm afraid) but I'm a first time buyer looking to buy in London.

Looking at Shared Ownership deals, it looks perfect.

However, I am aware that anything that looks too good to be true usually is and was hoping someone could explain what the cons of it is?

Thanks

Running_Horse

I would only consider shared ownership if I needed a family home in an expensive area and planned to be there forever. No doubt others have more positive things to say.

Annisele

Sometimes shared ownership properties are overvalued, so you end up paying significantly more for the property that you otherwise would.

Sometimes they are difficult to sell: sometimes the housing association (HA) charges high fees when you sell; sometimes the HA says that you can only sell to people in a particular category; and sometimes the HA overvalues the property when you're trying to sell, meaning that nobody wants to buy it and you can't move.

The HA can, within reason, put in whatever restrictions it likes - so it might say that you can't let out the property. So if your circumstances change, and you can't sell the place, letting it isn't an option.

Not all lenders will lend on shared ownership properties. If it becomes more difficult still to obtain mortgages on shared ownership properties, fewer people will be able to buy them - thus restricting your market if you want to sell it on.

The HA might increase your rent and/or service charge, and there wouldn't be a huge amount you could do about it. (There are options there, but they are all hassle).

I know my post is full of 'sometimes' and 'maybes' - but different schemes have different rules, so it's hard to be any more definite.

Linda_Homes

I have been a 50% shared owner for nearly 25 years. All was great to begin with but years down the line i came out of work . I am now in the position where the house needs re wirering the origonal wood frame windows are rotten and i cant afford to have the work done. The HA wont help as maintenence is my responsibility as per my lease.
Think carefully before you go into shared ownership.:cool:

BexInLondon

Pros:
Greater security of tenure than in private lettings (as long as your income doesn't fall)
Some Housing Associations (HAs) have a limit on rent rises so if you combine that with a fixed rate mortgage you have a very fixed budget for 2-5 years.
Some HAs are amenable to reducing the price if your mortgage surveyor downvalues a property - we got ours for an amazing price at the bottom of the trough
Shared Ownership (SO) can be a way of living in a great property for far less than it would cost to rent
Unlike a tenant, you can make cosmetic changes to your property as you see fit, and with most HAs there is no expectation to put things back as they were when you move. So put up shelves, paint, hang pictures and replace the carpets to your heart's content.

Cons:
Some HAs are horrendous at communications and incapable of giving a straight answer - only way to know this is to talk to current tenants/leaseholders (PM me if you want to know about any of the Genesis group)
Some HAs are enormously restrictive about re-sales (read the small print and ask lots and lots of questions)
Although you have more freedom than a tenant (see above), you have less freedom than a full owner, though in the case of a flat this isn't so marked as even with full ownership you'd have others to be accountable to for structural changes etc.
Most SO homes are on mixed-tenure developments, and anti-social behaviour can be a problem, especially in inner-city London.
Some sales-people lie, though this is true of estate agents in general and is not peculiar to SO!

A lot of the antipathy towards Shared Ownership is around the effects on the wider housing market, or around the mechanics of the scheme and the fact that some new-builds are low quality and tiny. With respect to the last points, it's a case of buyer beware. If you do your homework, and don't let the fresh plastering and shiny taps distract you from making a real assessment of the space and facilities, I don't thing these things have to be problems. There are some great properties out there. With respect to the effect on the wider housing market, I'm not sure what to say, or think.

For me the biggest con is that I know that we'll probably have a hard time selling, but we have chosen a place that should suit our needs for the next decade so we'll sacrifice a year of pain down the line for the chance to live very cheaply (£1200 per month for a 3-bed penthouse) in a great flat for the next ten years. We have some awful neighbours and some great neighbours but in the main we love it!