Shared ownership/equity is a scam.

Idiophreak

starsky27 wrote: »

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 .

It is, but it's much more severe when shared equity is involved. Normally, the builder sticks their...erm..."optimistic" prices on their houses, then buyers come along and knock 10-15% off them and they wind up just a bit more than buying second hand. With shared equity, the builders try and "force" people to pay full asking price for the property rather than negotiate on price, for the "privilege" of using the scheme....and that's how people end up paying massively over the odds. But, as has been said many times before on this thread, that's not really an issue these days...because the builder can be as "optimistic" as they want about the price...but, at the end of the day, if the lender downvalues, they don't get buyers anyway.

kingstreet

Idiophreak wrote: »

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?

TBH I haven't seen one professionally for about fifteen years, but there was nothing more onerous than the usual lease terms.

Idiophreak

brit1234 wrote: »

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.

Fairly sure, if you were to look at it rationally, shared equity and shared ownership's contribution to house price rises is really negligible...Stack it up against the liar loans you mention above, BTL, 100%+ mortgages and second homes...and you realise it's a tiny factor and, really, is just a mechanism to allow some FTBs to hold on to the coat tails of house prices, as they're spurred on by all the other factors.

Out of interest, by the way, where do you draw the line at what pushes prices up?

Really, any kind of mortgage encourages people who don't have the money to buy homes, which forces prices up...So you'll be buying outright, right? And once you've bought a place, you won't add any value to it, or hope to make any profit, right...because that would just make your house "unaffordable" for other FTBs, right?

Idiophreak

kingstreet wrote: »

TBH I haven't seen one professionally for about fifteen years, but there was nothing more onerous than the usual lease terms.

So it literally was just a way of paying less than 1/4 of usual rent...? What's in that for the council?

kingstreet

It was genuine social housing back then. A real step between wholly renting from the council and wholly buying privately. They used money from the Housing Corporation, so it may not have been funded by the Council itself.

It was around the same time as DISO (Do It Yourself Shared Ownership) and Tenants' Incentive Scheme, where the former allowed you to find a property yourself and buy it using shared ownership; while the latter provided a deposit for a tenant giving up a social housing property, to enable them to buy in the same Local Authority area.

Andyuk101

My experience of shared ownership

Salary £58k (£70k ish with bonus)

Purchased 40% of a shared ownership property worth £249k in Sept 2012

Mortgage for the 40% share is with Halifax at 4.49% for 2 years, put down 20% (of the 40%) as a deposit

I pay £79 in service charges (down from £84 in the first year) and this includes a hefty contribution to a sinking fund

On the share i dont own i pay £314 per month in rent, having a mortgage for this amount would cost me around £500 per month

I have a stunning 2 bed apartment with a huge private terrace and access to a large communal terrace shared with 6 other owner-occupiers and an allocated parking space in a secure underground car park

It a 10 min walk away from a major train station and in 2-3 years a tube line will be extended to a smaller station closer to my property

Similar size and profile properties without the terrace and communal space are on the market for around £240 - £260k and turn fairly quickly at these prices

The flat would rent out for around £1250 - £1350 a month

At the minute i overpay my mortgage by the difference between what my rent costs me (£314) and what a mortgage would cost me (£500ish) and used the money i saved from not needing to pay such a large deposit to pay off some debts

When my fixed rate is up ill staircase to 100% and take complete ownership

There are a lot of negatives around shared ownership and for a scheme designed to help people with low earnings its not always ideal but i would disagree its a scam

So long as you are aware of the pitfalls, have a clear plan to staircase to 100% you are taking no more of a risk than you would with a normal property and with a little bit of creativity you can actually pay less than you would for a fully mortgaged property

lindsaygalaxy

We are looking at shared ownership, mainly because of my very poor credit history (nearly 5 years ago now) and the mortgage needing to be in my partners name only. I have looked into it ever since I went BR nealry 5 years ago. In this area I would only buy a house as the 2 bed flats seem to have trouble reselling. 3 bedroom houses however very rarely come up - 3 in the loast 5 years. We would also probably not be looking to staircase unless we could afford to do it to 100% as properties seem to struggle to resell after 60%.

AliceBanned

Andyuk101 wrote: »

My experience of shared ownership

Salary £58k (£70k ish with bonus)

Purchased 40% of a shared ownership property worth £249k in Sept 2012

Mortgage for the 40% share is with Halifax at 4.49% for 2 years, put down 20% (of the 40%) as a deposit

I pay £79 in service charges (down from £84 in the first year) and this includes a hefty contribution to a sinking fund

On the share i dont own i pay £314 per month in rent, having a mortgage for this amount would cost me around £500 per month

I have a stunning 2 bed apartment with a huge private terrace and access to a large communal terrace shared with 6 other owner-occupiers and an allocated parking space in a secure underground car park

It a 10 min walk away from a major train station and in 2-3 years a tube line will be extended to a smaller station closer to my property

Similar size and profile properties without the terrace and communal space are on the market for around £240 - £260k and turn fairly quickly at these prices

The flat would rent out for around £1250 - £1350 a month

At the minute i overpay my mortgage by the difference between what my rent costs me (£314) and what a mortgage would cost me (£500ish) and used the money i saved from not needing to pay such a large deposit to pay off some debts

When my fixed rate is up ill staircase to 100% and take complete ownership

There are a lot of negatives around shared ownership and for a scheme designed to help people with low earnings its not always ideal but i would disagree its a scam

So long as you are aware of the pitfalls, have a clear plan to staircase to 100% you are taking no more of a risk than you would with a normal property and with a little bit of creativity you can actually pay less than you would for a fully mortgaged property

Why do you recommend staircasing to 100%? Just curious as I am looking into a shared ownership scheme. The one I'm interested in only allows staircasing up to 90%. The full value of the flat is £155k, in Hertfordshire in a great location, good for commuters. Like some other people on this thread, I keep changing my mind because of the pros and cons of SO. Thanks.

Idiophreak

AliceBanned wrote: »

Why do you recommend staircasing to 100%? Just curious as I am looking into a shared ownership scheme. The one I'm interested in only allows staircasing up to 90%. The full value of the flat is £155k, in Hertfordshire in a great location, good for commuters. Like some other people on this thread, I keep changing my mind because of the pros and cons of SO. Thanks.

Really? I've not come across a scheme that prevents you from staircasing to 100% before and, in a word, EEW!

The big problem with that is that you can only ever sell it as a shared ownership property...which greatly reduces the number of buyers available to you and, most likely, the price you'll get for selling. It also means you'll never be free of this extra "partner" in your property, no matter how long you stay there. I'm no expert in these things, but that sounds like a fairly ugly condition to me...

fionajbanana

If I rented a property of a similar size, it would cost me almost double to what I am paying each month with mortgage, rent and service charge.

With my bills of energy, water, phone etc, it costs roughly the same as I pay in mortgage, rent and sc.