Shared ownership/equity is a scam.

chequer71

Idiophreak wrote: »

In terms of your situation, I'm concerned that you appear willing to pay, essentially, 40k above normal asking price to do FirstBuy / new build...which is, plainly, nuts - and why this thread exists, basically.

Personally, I'd not have a problem paying 10k more for a new build...afterall, most people think nothing of buying a second hand home then immediately spending 10k on a new kitchen/bathroom and redecorating...so there's definitely stuff worth paying a premium for, but as soon as you move in, you effectively lose this money. Again, losing 10k is one thing...losing 40k is something quite different!

First off, thank you for such a fantastically in-depth response.

The lodger idea is one to have a think about; we'll definitely map-out a bit of a long-term, month-by-month financial plan; and the issues with the warranties is something to factor in. (I rented a relatively new build a couple of years back and the basic lack of quality in some of the finish - floors, sinks, bathroom units, doors etc. was very frustrating).

I don't think I explained myself the best on some of the pricing though - sorry about that! When I say that £140k buys a "bog-standard" 2-bed, it's not just the decor and appliances that are the differentials, they also tend to have funny lay-outs (being semi-conceived conversions rather than purpose-built), poor room sizes as a result, and are located in slightly less desirable parts of town for the transport hubs, shopping, and cafes/bars.

We'd also prefer a place that we have to do-up a bit rather than paying the slight premium for someone else's idea of a "luxurious finish". And there definitely are other new developments a stone's throw away for £220k with the only difference seemingly being some fancy brand decor, two-hundred power points, and a couple of gimmicky "features". I definitely think there's a significant premium on those.

Mid-term we'd be looking at staircasing on a SO. Short-term we'd be looking to take the one-bed option with a view to saving a bigger deposit in 2-3 years for a 2-bed. What we're currently worried about with the idea of continuing to rent and save for another 2-3 years to hit a 80-75% LTV is that:

1) London prices went up something like 7% last year. 3 more years of that and we'd be struggling in this area.

2) We're planning to start a family sooner rather than later and I'm guessing that isn't going to help an "out-right" mortgage application?

3) The going rate for our current kind of rental property is £900 a month. The sums on a new build look more like £700 a month. And we're buoyed by this talk of historically low fixed-rate mortgages right now.

leveller2911

chequer71 wrote: »

Mid-term we'd be looking at staircasing on a SO. Short-term we'd be looking to take the one-bed option with a view to saving a bigger deposit in 2-3 years for a 2-bed. What we're currently worried about with the idea of continuing to rent and save for another 2-3 years to hit a 80-75% LTV is that:




The link below may be of interest to you.It gives a balanced view of Shared ownership.The point that sticks out to me is the fact that in the last 10 yrs those who have staircased to 100% has been less than 5% which rings alarm bells to me.

Good luck.........

http://www.cchpr.landecon.cam.ac.uk/Downloads/Shared%20ownership%20second%20hand%20market%20-%20proofed%20final%20for%20publication.pdf

brit1234

Idiophreak wrote: »

Having linked to it, you've offered no comment, or advice to the OP for that matter - and highlighted only the bits that suit your agenda...

At this stage, your contributions to this thread are, bluntly, trolling. You really need to start adding some kind of value to the thread, or *just give it up*.

Why Trolling?

This thread is shared equity/ownership is a scam. I just add examples of posters here which back up the arguments we have had for 25 pages before.

Examples from real life people help prove the argument and hopefully educate people looking at these options. Remember people buying into scheme get a one sided account from the selling firm. It seems to me you don't want people to be made aware?

Idiophreak

brit1234 wrote: »

Why Trolling?

This thread is shared equity/ownership is a scam. I just add examples of posters here which back up the arguments we have had for 25 pages before.

Examples from real life people help prove the argument and hopefully educate people looking at these options. Remember people buying into scheme get a one sided account from the selling firm. It seems to me you don't want people to be made aware?

What are you making them aware of, though?

You're linking to random threads that have little to do with SE/SO and if they do, not expanding on why it merits discussion on this thread. Filling a thread up with random junk that even you have no opinion on is trolling, pure and simple. Next time you do it, I'll be hitting the spam button and I'd advise anyone that actually wants to learn anything from this thread or have sensible discussion to do the same.

You have to make it clear what parts of "the argument" this example is supporting. For instance, that last thread you posted to...What exactly about that was a scam?

I assume, with your bitter and twisted view on things, that you weren't going for the pro-SE stance...which, really, is a shame - as the post in question was quite a good endorsement of the scheme....A couple of people who got to live in their own home for 10 years, pay less than the equivalent rent and have a great chance to save for a deposit on a house...at the end of the ten year period they even have a couple of k in equity. The fact that they failed to save any kind of deposit in the 8/10 years really isn't the fault of shared equity. So what did you see in that thread that was so damning?

kingstreet

chequer71 wrote: »

b) Take up something like a FirstBuy, new build, SO 2-bed at 25 or 50%

You need to re-read the material you have studied on the schemes.

Homebuy - shared ownership

You purchase an agreed share of the property on a leasehold basis, paying rent and service charges on the portion you do not own.

Firstbuy - shared equity

You purchase 100% of the property, using a mortgage, deposit and second charge loan which is interest-free for five years. After that, interest changes each year based on inflation. The second charge is repaid as a percentage of the eventual selling price of the property on sale, or remortgage.

A house is normally freehold, flats leasehold.

mopsymuffin

I have been following this post for a few weeks now, it has taken quite a while to read all 25 pages & I know it originally started I think a couple of years ago!
Reason for my interest is I am looking to buy into a shared ownership scheme. It is a bit different to normal shared ownership as there is NO rent to pay on the % I don't buy.
The scheme is (from the local borough council) you buy an agreed percentage, pay ground rent & service charges, which I appreciate are not cheap, but that is it apart from normal bills etc.
It is not shared equity.
I must admit I am confused by all the above posts, I read some of them & think that I am doing the right thing & then with further reading I get more worried & feel I should pull out whilst I still have a chance! I do understand from reading all these posts that new builds for 1st time buyers do seem to be overpriced but I am looking to buy approx 25% & I have looked at other apartments in the block that are selling at full price (not SO) & they are selling at 4x what I am paying so I don't seem to be paying more for the SO. The apartment is in London so maybe they hold their prices better??
I do need to mention that if I don't use the benefit of this scheme then at the moment I would never be able to afford a similar flat. It is only 1 bed but flats in London now just seem to be totally out of reach for a young single 1st time buyer!
I would appreciate advice from anyone who still reads this thread who really understands SO but without the rent.

kingstreet

Some shared ownership schemes, run as you mention by local authorities, charge no rent on the unowned portion. Not much more to say than that.

Idiophreak

kingstreet wrote: »

Some shared ownership schemes, run as you mention by local authorities, charge no rent on the unowned portion. Not much more to say than that.

Interesting....Never come across this before - sounds like a worryingly good deal to me? You get to pay 1/4 of the mortgage payment, no rent and have pretty limited vulnerability to rate rises. There has to be a catch?

starsky27

I purchased my property on a Homebuy equity loan scheme 10 years ago.
We only pay back the percentage that the equity represented when we sell.
We never pay any interest on the equity loan. We had the option of staircasing which we never got around to doing ( we wish we had now we are selling)
The issue it seems to me is when it's used to buy a new build at an inflated price. This is also a issue with new build properties when you go through the standard buying route . Our property was a flat in London but not new build.
Our scheme was good for us in regards to it enabled us to afford a mortgage on a bigger property as we wanted to start a family.
I'm not sure if this type of scheme exists today though .

brit1234

When I first started working in London as a key worker 10 years ago you could get a property for a maximum £160k in 2003. You would pay about £120k and the scheme would pay £40k, with the only money owed was the quarter you borrowed and the % that had risen when you came to sell. The thing was London property prices rose so fast that very shortly you could not get a property for £160k. This was the time when mortgage brokers were encouraging people in the area to lie about their salary with self certs/liar loans.

Shared ownership replaced the above scheme and later in 2008 shared equity. All schemes designed to borrow more and more which just helped house prices continue to rise above the heads of normal buyers.