Is it still worthy? (Shared Ownership)

John001_2

I would be taking on the shared ownership on my own, so with single level of income I don’t think I would be able to buy a property in London in next 20 years if ever...

Getting a property way outside the city, where I would have to pay loads of money for train tickets and spend 2-3 hours a day traveling doesn’t appeal to me...

BadgerFace_2

It sounds like your landlord was letting it to you without permission and has been told he must sell it.

One important thing to note in this situation is that it will be the housing association trying to sell the property to you for x% of their valuation. They get a period in which to sell the property, which will be stated in your lease (normally around a month I think). If they are unable to sell it in this time, the landlord can put it to open market. I would wait until this happens, as if you must buy it, you will get a better deal on it.

Could you not just rent a different property on the same estate?

Orpheo

thriftychap wrote: »

ill cut and paste a response i wrote earlier.....

Please don’t be put off key worker/first time buyer schemes by the few narrow minded individuals here, they are very polemic in their arguments.

I am a teacher and was a FTB; i chose to do a scheme with the coop that i am extremely happy with. It means i can afford my own place with plenty left over at the end of the month.

Where these schemes will fail is down to individuals own inclination or lack of to be careful with money and plan for the future. If i was to spend all my disposable income each month on a new car, eating out and clothes etc and then in 25 years or whatever term the loan is on, have to then take out a mortgage to buy the remaining % of my property i would agree the it’s not a good situation to be in. However the scheme has not failed, i would have failed.

If however I decide to use my disposable income to a) make substantial overpayments on my 62K mortgage to reduce the term from 25 years to 7 (this is an aim) or b) save our 1300 pounds each month to eventually buy the remaining 40% in 4/6 years time (c) pay as much of the 40% 2nd charge back as i can in two years then remortgage and rent the flat with a LTV ratio of 70% which will earn us money each month and move to a 3 bed home and start a family with a flat that is paying for itself and making us money.

Any of the above is possible if you are astute, the schemes in question can be either a blessing or a burden, and it depends on what you make of your individual circumstances.

I wish you all the luck with your pursuit of your own home. I am very pleased with the scheme i am on and the service from the coop bank has been and continues to be exceptional.

Oh, just a quick note, i did originally buy the flat on my own. My OH is moving in Feb when she qualifies as a nurse, hence the reason our savings capacity will be 1k - 1.5k per month. I have also received 2 promotions in the last 1.5 years so my earnings have gone up as well. I mention this as I’m sure somebody will pick up on the fact these schemes are meant for people who can’t afford a house on the open market, which now we clearly can but could not 1.5 years ago.

Best of luck.

Please don't be encouraged to buy a half share in a property by somebody who believes that he made a sound financial decision by doing so. This guy is not astute, his post is entirely made up of confirmation bias. Shared ownership schemes are a crutch for the housing market.

thriftychap_2

friends of mine also purchased on a shared ownership scheme, slightly different to mine, i wa able to select a peoperty on the open market and could therfore negotiate like any other.

However, they too managed to negotiate the price of their flat. Originall the housing assocaiation valued it at 165k, during purchase my friends decided they thought this was too much and sur enough when the mortgage valuation was carried out they agreed and the negotiated down to 145k.

Maybe question the value with your mortgage company, sow a seed of doubt and see what happens when they value it.

Addressing the main matter of your post - dont be put off by the lease, all this means it you can be mortgage free but the developer of housing association manages the lease and you pay a ground rent (mine is 150 per year) and a service charge for maintanence. If you owned the lease all you would be better off is the ground rent and if you had no service agreement in place the upkeep of the block/grounds.

It all sounds pretty normal to me. Only question mark is, who are you buying it from? the housing association or an independent owner?

princeofpounds

I think a lot of people are confused by this situation, but that's not surprising as the explanation is vague on what is actually happening.

The two landlords thing is probably the OP getting confused about their potential dual position as a tenant in the property (who has as LL the owner) and the leaseholder (who is both LL to the T and T to the freeholder). Generally when you 'own' a flat you don't own anything except a really long rental agreement, which affords you a bit more flexibility as to how you treat the place, and a lot more security of tenure, but is still some distance from true ownership (if we have such a thing in this country!).

Shared ownership as a concept is not in itself a bad thing, but in practice I have many reservations about is because it is a relatively complicated legal structure which necessarily advantages the original owner over the new part-owner. It tends to achieve the financial effects of part-owning the house, at a cost to the part-owner, whilst allowing little of what we in finance call the convenience yield (i.e. the benefit of feeling like you actually own the home which is one of the main reasons to do it!).

Plus the structure has typically been used to tie in part-owners to high valuations for small flats, and clearly has been used as a prop for the housing market and individual developments. People are basically committed to purchase an asset that they cannot purchase in their current circumstances. The only saving grace when you compare it to overextending yourself via mortgage debt is that at least you can choose when to pay up for an extra share, the liability isn't on you all at once. But that doesn't meant the liability is a good one to have!

Each scheme must be judged on its merits - some are good, some are bad, all are individual, there is no standard form and certainly no duty of care from vendor to buyer. But I have to say that the OP displays sufficient naivety about the situation that for me it is a red flag as to their understanding of what they are entering into.

Where these schemes will fail is down to individuals own inclination or lack of to be careful with money and plan for the future.

John001_2

Sorry about mentioning two landlords, I was on the phone with mine solicitor that's how he explained it to me.

I will be buying the flat from housing association.

However, they too managed to negotiate the price of their flat. Originall the housing assocaiation valued it at 165k, during purchase my friends decided they thought this was too much and sur enough when the mortgage valuation was carried out they agreed and the negotiated down to 145k.

The bank valued the flat exactly the same price as the housing association.

thriftychap_2

You base this overly polemic description of shared ownership on what experience Orpheo? Described as the 'Crutch' of the housing market, maybe it is your own beliefs, shrouded in confirmation bias that are underpinned by a nagging jealousy that such a scheme was not available to you and in order to justify this feeling you spread vicious and unfounded responses.

The facts of THE SCHEME I subsribed to AND my circumstances AND my original posts description of the importance of an individuals ability to plan for the future all mean the scheme has been a success for me, too write all schemes are the, Quote 'Crutch' of the housing market is naive, unintelligent and generalising beyond belief. Each scheme should be judged individually taking into account the applicants current and projected future circumstance.

I agree that some shared ownership schemes are poor, e.g. on some the price of the property is inflated and fixed and you have to pay a rent each month.

My scheme however suits me and my circumstances, and if I am able to be 'astute' , yes i believe i can be........ i would be in a much better posiition with this scheme than without it.

Orpheo

thriftychap wrote: »

You base this overly polemic description of shared ownership on what experience Orpheo? Described as the 'Crutch' of the housing market, maybe it is your own beliefs, shrouded in confirmation bias that are underpinned by a nagging jealousy that such a scheme was not available to you and in order to justify this feeling you spread vicious and unfounded responses.

The facts of THE SCHEME I subsribed to AND my circumstances AND my original posts description of the importance of an individuals ability to plan for the future all mean the scheme has been a success for me, too write all schemes are the, Quote 'Crutch' of the housing market is naive, unintelligent and generalising beyond belief. Each scheme should be judged individually taking into account the applicants current and projected future circumstance.

I agree that some shared ownership schemes are poor, e.g. on some the price of the property is inflated and fixed and you have to pay a rent each month.

My scheme however suits me and my circumstances, and if I am able to be 'astute' , yes i believe i can be........ i would be in a much better posiition with this scheme than without it.

Nice post.

I'm not jealous of you, I pity you in that you are a model of the brainwashed. I too am a teacher; to my fortune and sadly to the misfortune of those that followed, as a young teacher, only in my 2nd year of the job I bought a house in Greater London in 1997 for £50K. I did not get into debt at university, I continued in my job at HSBC underwriting loans to support myself, this was slightly to the detriment of my grades, but it was the "astute" thing to do. Without debt I was able to save for a deposit to buy my house in just 12 months. Following my house purchase HPI skyrocketed and my house value doubled in 4 years. The innocent young couple that bought my house were forced, by HPI, to borrow twice the amount of money that I did. I moved to the East Mids and bought another, bigger house, reducing my mortgage in the process, that too doubled in value in 5 years and the young couple that bought that house were forced by HPI to borrow an awful lot of money in order to do so. Right now I am renting, with enough money in the bank to step back onto the housing pyramid at any time. If I lowered my expectations I could buy a house outright here, but I would have to sacrifice location. I am not jealous of you.

You can see from the above that I have benefitted from the years of HPI, but I by no means put that down to being astute or a financial wizkid; it was luck. I wish that the years of HPI had not happened, they have not truly benefitted anyone. The HPI years have loaded the people of the UK with unimaginable and ever-increasing debt. Had there been no HPI I would remain, as I currently am, able to buy a whole ownership of a house, the only difference is, so would you.

There is nothing vicious in my response, contrary to your spiteful allegation. Shared ownership and shared equity are not there to help you. They are a crutch for the housing market, they were put in place to protect the housing market and protect HPI. People can't afford to buy whole houses anymore so we will sell them half a house instead. If you, in your astute genius, take part in this then you participate in the propping up of the housing market. If you, and others in your position, refuse to take part in this then the removal of your demand would lead house prices to fall to an affordable level. There is no viciousness and vitriol, just concern.

How dare you call me naive and unintelligent. I have considered the merits of these schemes and I have found only one, they prop up the housing market. The problem with projecting one's future circumstances is that one tends to be overconfident; you are betting. All of these schemes are poor, some are downright theft, all of them rely on the assumption that house prices will rise in perpetuity. Some of these schemes share the equity but any negative equity is the responsibility of the mortgagee; have you read your small print? Why would you have a half-share in a house, pay rent on the other half, have none of the freedoms of owning your own home and none of the rights of a tennant? Does the owner of the other half-share pay their share for repairs and maintenance? Can you make any significant changes to the property without their permission? You have payed their build costs and given them a bit of profit now; the rest they hope to collect later, HPI willing.

I'm glad I'm not as astute as you. Not everyone believes, including some of us with financial experience and qualifications, what the "telly" tells us.

'Polemic' is a word often used by those who do not want their own beliefs threatened.

thriftychap_2

How you can be so adamant all these schemes are cons i dont know.........you, I quote call them 'theft'......this truely is unbelievable. You have labelled all those who participate in these schemes as not capable of being astute......wow you like upsetting people!

It appears some of my post has not been digested properly or you find the taste bitter, i wont repeat myself but would like to make one point again - i did not pay an artificially high price for my property, i negotiated as any other buyer would have and therefore are not artificially propping up the housing market, yes it may have remained unsold a little longer.

I am very sorry if you are not of suitable mind to be open to the fact these schemes (the better ones) when entered into well informed can be of great benefit to some people.

I could write a great number of paragraphs justifying my decision and explaining how the schemes can be beneficial but i fear it will most certainly fall on deaf ears.....(or blind eyes)

I have taken great care to ensure in my post to use words such as individuals and circumstances, you however make no such consideration and condemn all the shemes and those participating without exception. This is very narrow minded and i do hope, as a fellow teacher you do not potray such strong and polemic beliefs to your pupils but allow them to make their own minds up, according to their own individual circumstances, experiences and beleifs. For it is these that have led me to judge this scheme as beneficial to ME.

Eric1

Orpheo wrote: »

Shared ownership schemes are a crutch for the housing market.

Yes.
Some previous threads on this forum suggest that some SO schemes may be better than others, sometimes it is a local council who bears more risk than the half-homeowner, probably because the council needs key workers etc, but in the end it is paid by the taxpayer.
They are a crutch.