Shared ownership/equity is a scam.

richardw

Idiophreak wrote: »

...restricted choice of lenders - there are only a handful that will have anything to do with shared equity or shared ownership and it's this that reduces choice more than anything....

If it is such a bad risk wouldn't there be no lenders whatsoever that have anything to do with it?

Idiophreak

richardw wrote: »

If it is such a bad risk wouldn't there be no lenders whatsoever that have anything to do with it?

Who said anything about it being a bad risk?

From a bank's point of view it's great business. They get a great whack of deposit from the developer/government/whatever and so they get a good LTV - and they get to charge more because there's less competition...I don't really understand why more of them don't get in on the deal.

richardw

Thank you for the clarification.

brit1234

There have been lots of other horror stories on mainly shared ownership (none on shared equity surprisingly) over the last month. Sorry didn't have time to add them here, will in future.

I still stand by that they are for the developers benefit and not buyers, by passing all the risk onto them and getting them to overpay.:mad:

richardw

There are some of the UK's biggest housing associations involved with SO, are they partners in the scam or are some better than others?

workingnomad

You need your head tested to get involved in these schemes. They only exist so the Govt can keep prices high.

Idiophreak

workingnomad wrote: »

You need your head tested to get involved in these schemes. They only exist so the Govt can keep prices high.

Lol, you're a funny one.

You have to have your head tested to make sweeping generalisations about stuff like that.

Some of these schemes are to be avoided, some are relatively on the level.

Since taking out shared equity 3 years ago I've cleared a few k of the balance on my mortgage (and, of course, a bunch of interest), my home's increased by value around 10% (believe it or not) and I've been £300 richer each month than I would have been renting. (about to be a bit more as my 3 year fix ends). If I wanted to move now I could probably put together a 10% deposit, which just wouldn't have been the case if I'd "just saved" as everyone on here advocates.

Plenty of people take a 0% loan from their parents for their deposit - and don't run out and overspend on a property...I don't know why everyone thinks people's brains turn to mush as soon as they're borrowing from a developer.

poppy10_2

Some more media coverage of this scam:

Ministers break first-time buyer promises as buyers are trapped in shared-ownership schemes

Tens of thousands of families seduced by Government-backed property schemes are trapped in homes they have outgrown, but can’t sell nor afford to buy outright.


A Money Mail investigation has revealed how first-time buyers who signed up for shared ownership deals have never been able to fulfil the dream they feel they were sold.

Those who signed up to these deals were told that once they got a pay rise, or repaid some of their mortgage, they could buy an increasingly bigger share of the property until they owned it all. But our findings suggest the vast majority of people in such schemes never buy all their home — or even increase their stake.

SecondLegDownIsTheBigOne

It is telling that those who have been taken in by these "schemes" are quick to line up to defend them in this thread, that is until it is they who find themselves in the schtuck - and most of you will.

Selling these "dreams" on the promise that your income will surely go up, you will suddenly come into £50K or that you'll be able to save up £xxK at the same time as paying mortgage and rent and then you'll be able to buy the rest is at best incompetent and at worst criminal. That the govt is pushing these is a disgrace. Will this turn out to be the next mis-selling scam? If so, guess who will be paying up?

Idiophreak

SecondLegDownIsTheBigOne wrote: »

It is telling that those who have been taken in by these "schemes" are quick to line up to defend them in this thread, that is until it is they who find themselves in the schtuck - and most of you will.

Selling these "dreams" on the promise that your income will surely go up, you will suddenly come into £50K or that you'll be able to save up £xxK at the same time as paying mortgage and rent and then you'll be able to buy the rest is at best incompetent and at worst criminal. That the govt is pushing these is a disgrace. Will this turn out to be the next mis-selling scam? If so, guess who will be paying up?

You're doing that thing, again, when you lump all of these schemes together.

1) Some young people are willing to back themselves that their wage will increase. Many are on a pay scale or simply in an industry where experience pays. We were confident our wages would increase and three years in we're earning a combined £25k more than we were when we bought.

2) Shared equity does not require you to pay rent. Simple maths suggests that if you pay less in mortgage than you would in rent, it will be easier to save. Even with shared ownership, there's no reason people shouldn't be able to save. The advice on these boards is always to rent until you've saved a deposit - but if you're able to save when renting, why wouldn't you be able to when buying shared ownership?

Obviously you're not a fan of these schemes, but I really feel you're missing the actual issues with the things:
1) the difficulty in selling or remortgaging s/o properties
2) the typically high prices charged for properties on the scheme
3) optimistic affordability criteria when applying for the scheme

Some people are daft and pay over the odds to get onto a scheme when they've little chance of increasing their earnings or ever affording to save a deposit. The "scam" in these schemes is simply that they let people be this daft.

The people referred to in poppy10's link, simply say "great, we'll commit 10 years to saving a deposit" and then after a couple of years they get bored and decide to push out a couple of sprogs and then start moaning that they're "trapped" in a small house. Well that's hardly shocking - most people *can't afford* to buy a big house whenever they feel like it - which is why these schemes exist in the first place. I'm sure there are plenty of people that own small homes feeling "trapped" because they can't afford a bigger one. There are plenty of people who bought high and are now struggling with negative equity. I'm not too sure what any of this has to do with s/e or s/o...