shared ownership

avit

Hi guys, looking for some advice on the above.

Like a lot people today we are struggling to get on to the property ladder and have a chance on the above scheme (new build home buy part buy part rent)
with a housing association. The property in question is a 3 bed end terrace with garage at 166,000 and we could purchase 40% at 66,400. I would be putting 36k down and getting a mortgage for 30k to get to the 66k. the rent for the 60% is 249 per month. I wanted to know what people think of these schemes and wheather there were any hidden pit falls that I have missed with regards how the rent is calculated (whats stopping them from doubling it for instance) selling on in the future. If house prices were to drop i could purchase more shares at a lower value or it could go the other way.
What if I was never to purchase more shares and got to the end of my mortgage term and just had rent to pay? Would this be a waste ? should I buy more shares now and stretch my self further or wait and see what happens. Thanks paul

A_Fool_&_His_Borrowed_Mon

Shared Ownership is a Nonsense-Type Exotic Mortgage invented by the Money lenders to keep the potty Property market Gravy Train going.

When the music stops, who's left with the cold Turkey???:huh:

lynzpower

Actually, this looks like a rather good deal to me -as you have such a large deposit. So well done.

I have a SO property myself, and I believe they CAN offer great VFM, especially if you are in the position you are with a large deposit.

Instantly your mortgage will be low.

Is this from a housing association?
the rental proportion of the rent will be set by your lease and the lease will say how the rent can be increased. my lease says it will rise with inflation on the 1st october every year. in october just gone- IIRC, my rent increased by about 6.20 a month. Not a big deal. This is guided by the housing corporation, indeed all HA SO leases have to be approved by them ( they are a standard lease I believe, most are fairly similar and bought from the Housing corporation in the first place)

Where abouts in the country are you?

Anya

We are currently in the middle of selling our shared ownership house after being on the scheme for 7 years. For us it was the only way to get a nice little house in a decent area to bring up our children.
The scheme has mainly been positive for us. The rent was fairly low and rose about £35 per year, and it enabled us to build up equity. Bad points are that rent money is lost money (although ours did include buildings insurance) and that when you come to sell you have to pay to get a valuation and are not allowed to sell the house for any more than it is valued at. Any value that is added due to work you have carried out is added onto your share when you come to sell.
As first time buyers on a low income - I was grateful for the "leg up" it gave us. Because of the demand the house sold in 3 days and the Housing Association have always been very helpful.

For us it has been very positive, but weigh up the pros and cons and work out whether it will be beneficial to you and your situation. Hope it works out well for you.

lynzpower

the other thing you CAN do is once you have paid off the mortgage you are taking you CAN choose not to buy extra shares and sit renting at 250 a month. Which for a 3 bed house anywhere in the UK isnt to be sniffed at.

This is particularly useful if you are planning to start a family or want to work part time for a year or so or what have you.

lynzpower

The scheme has mainly been positive for us. The rent was fairly low and rose about £35 per year, and it enabled us to build up equity. Bad points are that rent money is lost money (although ours did include buildings insurance) and that when you come to sell you have to pay to get a valuation and are not allowed to sell the house for any more than it is valued at.

this is what I was told then when I came to sell up I called the housing association and they said no just sell it on the open market so I am

avit

thanks for the reply's its in the south west and it is with a housing association, the house is really nice and there is no way i could afford it on the open market.

Anya

lynzpower wrote:

this is what I was told then when I came to sell up I called the housing association and they said no just sell it on the open market so I am

We sold on the open market as a shared ownership. The house was valued at £131,000 with our share (50%) being £66,500 (due to improvements we had made). We were not allowed to sell our share for any more than that. I'm not complaining though as we had an offer at the asking price made 4 days after we out the house on the market, before the lady had even viewed the house.

Did they mean sell it as 100% on the open market then so that there was no restriction?

lynzpower

no they meant sell my share on the open market as 40%. I did so by getting3 valuations, and as they were so high, reduced the average ( not very MSE )

I wasvery busy with viewers too

lynzpower

avit wrote:

thanks for the reply's its in the south west and it is with a housing association, the house is really nice and there is no way i could afford it on the open market.

Look, I think you can use this to your advantage by having such a handsome deposit.

You could of course get a greater mortgage now, BUT what you could also do is save as much as possible so you can put down a second "deposit" later thus not incurring interest on it, and earning it while you save.

My understanding is that shares are valued by the housing association.

It would be for others to say whether its best to get extra shares asap or not. Im not sure as the rent looks cheaper than interest on a mortgage would be. And at least while you are paying rent thats almost a charity payment as it goes back into development ( mine includes buildings insuracnes, cleaner, water rates as a service charge but you wont have that as its a house i imagine )

avit

I was thinking of saving up and trying to purchase more shares later, you have to buy a min 10% each time and the house is valued by a frics surveyor believe. The rent side is cheap as it is subsidised.