Shared ownership/equity is a scam.

TOOTHACHE

HappyMJ wrote: »

It's probably not the best idea to ask on this thread titled "shared ownership/equity is a scam" because you will get biased responses.

As long as you are aware that new builds tend not to appreciate faster than older peoperties.

I would also base the calculations on the mortgage interest rate being much higher around 5% base rate plus the premium you are paying. 0.5% base rate will not last forever.

A 25% is quite a good deposit so I'd consider buying if you can.

Finally, when it comes to selling you need to either staircase to 100% before sale or be forced to sell through the council to anyone who is interested in shared ownership or who is willing to staircase it. A restricted market will lower your price.

This isn't always true... we own 50%.
We had to put the 50% on with the H/A for 4weeks.
We had no obligation to accept the price, we had phonecalls from interested parties but we knew we could squeeze a bit more on the open market.
After 4 weeks we could sell our 50% OR the full 100% on the open market at a slightly inflated price. Of course, if the purchaser wants 50% they need to be vetted by the H/A same as they decide whether to let the full 100% go... doesn't necessarily restrict your market.
2 flats here are now owned outright aftergoing on the market and are buy-to-let. Everyone offering S/O seem to have different conditions - selling needs to be looked at when buying!

Catblue

TOOTHACHE wrote: »

2 flats here are now owned outright aftergoing on the market and are buy-to-let.

That's a good point. I do think that in these developments where someone does finally own 100% and then sells on the open market, a lot of these places are eventually bought up by BTL landlords. And sometimes if a seller finds it impossible to sell then they will just rent the property out instead. This has the effect of "downgrading" the development since the (shared) owner/occupier ratio goes down and gradually the number of ordinary private renters and people who need social housing goes up.

The development then becomes less and less attractive for the average buyer as years go by. The average buyer will be put off by:

- The fact that it is shared ownership/equity in the first place
- The relatively high proportion of renters in relation to owner/occupiers in the development (a more transient population, and perhaps landlords unwilling to contribute to communal repairs)
- The presence of social housing in the development (or the potential for some of the properties to become so)
- Difficulties in selling the property on again due to the points listed above

brit1234

Link to a discussion today on MSE where a shared ownership seller is not being allowed to see the valuation data after a survey they paid for.

Seems the housing association is causing them grief.

https://forums.moneysavingexpert.com/discussion/3340460

the_quick

I'm reading this thread and most bad stories are because:

- people got in debt up to their ears
- did not plan ahead
- paid for property to much in comparison to other in same area
- did not research

You always pay premium for new build - like you pay premium for new car. The maintance charge you would pay in blocks of flats anyway - for maintaining corridors, elevators - common areas mainly. And it probably cover the cost of renovation. Friend have to suddenly come with £2k in his 100% owned flat as building needed roofing and they did not have monthly charges in place.
If the price of property will fall, developer will loose money as well. So where is there an interest for them to inflate prices.
An anyway, this is asking price, you can always get valuation by your self and than make an offer what you are willing to pay.

In my opinion this is not a scam, just people did not read all the conditions and when they want out they are caught by them.
The scam is when someone sells you a stone in candy wrapping. I don't think this is a case here.

I've seen this many times, people just don't read or don't understand what they read and accept terms and conditions. It happens with houses, mobile contracts, loans etc. If you don't like T&C express it maybe you would be able to convince them to change those if not go elsewhere.

Those scheme are suppose to help FTB who don't have much deposit. If your private rented property cost you same as you would pay on that scheme, already there is benefit for buyer - you are paying mortgage for something you will own in bigger %. When you pay rent to landlord - only his pockets getting bigger, you gain nothing apart from roof over your head.

And last you hear 1 bad story for 100 or more unheard good stories. People tend not to shout when they are happy, but when something wrong will happen to them. So what we hear is not necessary what happens to majority of people in those schemes.

brit1234

Link to a discussion today on MSE where Housing association unwilling to drop the price despite the valuation saying its overvalued.

https://forums.moneysavingexpert.com/discussion/comment/45108950#Comment_45108950

the_quick

If something is fishy don't go there, try elsewhere. People get in troubles because they are not careful enough

Lgas

Just to add another good experience, I bought a newbuild Bellway home with my OH in March and couldn't be happier, the house is really well finished and spacious (I adore it), we have great neighbours, we are on a private estate, plenty of parking, no service charges, and we pay less per month for this 2 bed house with en-suite than we did to rent a cramped 1 bed flat. We have a mortgage for 50% of the property and intend to buy 100% as and when we can afford to, giving us the freehold. I don't feel that it's overpriced, everyone who visits comments on how lovely the houses are, and we are covered for 2 years for any faults that develop.

The nature of our jobs (we have exactly the same job) means that our wages will increase steadily over the next 3 years, so whilst we can comfortably afford it now, we will be in a good position to own 100% of it in the future, and we have no plans to move for a good while. Where else could we have paid only a £3500 deposit?!

brit1234

Narinder16 wrote: »

Hi everyone I took out a jumpstart mortgage with Bovis Homes 2 years ago which means the house I purchased was £176,995 but I could only get a mortgage for £131,000 so Bovis paid the difference of £40,000 I am currently in a fixed repayment mortgage of 5 years which is due for renewal in 3 years with Halifax. The problem is in 8 years time I have to pay Bovis the amount I borrowed £40,000 I am panicking as to how I can go about doing this, I have spoken to a financial advisor who has asked that I try and save at least £6,000 in the next 3 years and when my mortgage is up for renewal she will try and get me a good deal so that leaves me with £5 years to come up with £34,000, I dont want to lose my house so any suggestions?!

Thanks

http://forums.moneysavingexpert.com/newreply.php?do=newreply&p=45346670

From another troubled MSE poster on shared equity fearing the shared equity time bomb. I believe this panic will increase dynamically as the loan repayments get closer and house prices fall.

Lgas wrote: »

Where else could we have paid only a £3500 deposit?!

Bragging about a low deposit in a falling market is likely to come back and haunt you.

Lgas

brit1234 wrote: »

Bragging about a low deposit in a falling market is likely to come back and haunt you.

Excuse me, "bragging"? I was simply sharing my positive experience of buying a shared equity property. My boyfriend and I could not have bought a home outright with that kind of deposit, it's a fact. As we have 25 years to buy the other 50% of our house, and therefore own the freehold, I am confident that we will not be haunted by this decision.

brit1234

Lgas wrote: »

Excuse me, "bragging"? I was simply sharing my positive experience of buying a shared equity property. My boyfriend and I could not have bought a home outright with that kind of deposit, it's a fact. As we have 25 years to buy the other 50% of our house, and therefore own the freehold, I am confident that we will not be haunted by this decision.

Exactly, its pulling people into the market who weren't in a position to buy and then getting them a property which is priced over the odds.

With such a small deposit, over priced property and falling prices you face negative equity. It may not effect you today but perhaps when you remortgage. Also there are very few lenders who recognise Shared Ownership, surely that says something.