Shared ownership/equity is a scam.

Ulfar

Idiophreak wrote: »

But the fact that not everyone is "financially literate" doesn't automatically make it a scam.

You're right, if you're stupid enough to see the word "loan" and read it, instead, as "gift" then the whole thing's probably going to strike you as a scam...but if you're not that stupid, it's just an irritating way of listing the things.

Advertising it at the wrong price is in my opinion a scam.

Its like computers that used to be advertised excluding VAT, legislation was passed to make this illegal.

As for Rightmove, I find when I search even if I exclude shared ownership some still get through the filter. The properties should be listed at the correct figure.

Idiophreak

Ulfar wrote: »

Advertising it at the wrong price is in my opinion a scam.

Its like computers that used to be advertised excluding VAT, legislation was passed to make this illegal.

Not quite the same thing. With the computer thing, the amount you actually paid was different to the advertised price, so it was misleading.

With SE/SO, the amount you pay *is* the advertised price...you just need to understand what you're buying for that money....you're not buying the whole house, you're buying a proportion. It would only be a scam if you *had* to buy the additional 20%, too - which you don't.

brit1234

The scam with shared ownership/equity is the way they are marketed falsely as affordable housing. When in reality they are more expensive than comparable properties and give the buyer less share for more cost.

None of these affordable homes are really that affordable, its just more borrowing under shifty means.

sinbad182

Hi Brit

How come you only post in these threads nowadays?

How come you dont update your signature periodically anymore?

How's the first time buyer strike going?

Idiophreak

brit1234 wrote: »

The scam with shared ownership/equity is the way they are marketed falsely as affordable housing. When in reality they are more expensive than comparable properties and give the buyer less share for more cost.

None of these affordable homes are really that affordable, its just more borrowing under shifty means.

There's a difference between affordability and "expensive" - and there's a difference between headline costs and overall costs.

I save £420/month through SE vs renting the same property. Over 10 years, that's a saving of £50,400...Sounds more "affordable" to me.

That said, I've not come across much stuff that spins these schemes as helping "affordability" as such. They just help people (who can afford it) to buy. Help to buy - does what it says on the tin. They're just plugging the gap left by the withdrawal of 100% mortgages.

Ulfar

Idiophreak wrote: »

Not quite the same thing. With the computer thing, the amount you actually paid was different to the advertised price, so it was misleading.

With SE/SO, the amount you pay *is* the advertised price...you just need to understand what you're buying for that money....you're not buying the whole house, you're buying a proportion. It would only be a scam if you *had* to buy the additional 20%, too - which you don't.

The amount may be what you are paying with shared ownership but it isn't with shared equity. With shared equity the actual price should be displayed, without the shared equity being taken off. You have to pay that equity loan back at some point.

This is where it gets really murky as there are different schemes, some expect the loan to be paid back in 5 to 10 years, some at sale and some on a stair casing basis. In all cases interest becomes payable at some point and while the interest may start at a low amount it rises linked to inflation year on year.

How many people on shared ownership managed to stair case their ownership by 20 to 30% in 5 or 10 years, not many I would bet.

In fact in these cases a shared equity loan is actually worse than a standard mortgage as you are paying the loan back over a much shorter period.

In fact I think all properties shared ownership and shared equity should be advertised at their full price then less financially literate people would be able to make a direct comparison with private sales, in a lot of cases this would be a real eye opener.

Idiophreak

Ulfar wrote: »

The amount may be what you are paying with shared ownership but it isn't with shared equity. With shared equity the actual price should be displayed, without the shared equity being taken off. You have to pay that equity loan back at some point.

No, you don't. You could just move. Like I said, if you *had* to buy it, you'd be right...but you can quite legitimately use SE as an investment without ever intending to repay the loan - indeed, I've no intention at present to repay ours, I'll just use our savings as deposit on the next place.

Like I said, I don't agree with them being included in that way on RightMove etc just because I've selected to view "houses", not "bits of houses", but they always list the full value along with the loan value, anyway - so it's not difficult for people to see what they're being charged relative to other properties.

Ulfar wrote: »

In fact in these cases a shared equity loan is actually worse than a standard mortgage as you are paying the loan back over a much shorter period.

"Worse" is very subjective, though....If you can't afford the repayments, you're right, it probably is "worse". If, on the other hand, you can easily afford the repayments, it's much "better" taking the loan than having the money on the mortgage, as it's essentially interest free (for a period of time, anyway). Of course this, again, is somewhat different if you intend to repay the loan - as the loan will rise or fall with your house price. So it may be better, it could be worse....

Ulfar

Idiophreak wrote: »

"Worse" is very subjective, though....If you can't afford the repayments, you're right, it probably is "worse". If, on the other hand, you can easily afford the repayments, it's much "better" taking the loan than having the money on the mortgage, as it's essentially interest free (for a period of time, anyway). Of course this, again, is somewhat different if you intend to repay the loan - as the loan will rise or fall with your house price. So it may be better, it could be worse....

By definition the schemes are for those who cannot afford a conventional mortgage. So yes in my opinion that makes the schemes worse as it is targeting people who will struggle.

Look at the problems there are with people with IO mortgages.

leveller2911

Ulfar wrote: »

How many people on shared ownership managed to stair case their ownership by
20 to 30% in 5 or 10 years, not many I would bet.

The percentage of people with Shared Ownership who have managed to staircase to 100% in the last 10 years is less than 5%

I don't see this increasing at all. The main usses seem to be affordability and associated costs of staircasing such as valuation fees,and mortgage fees.

Its a little long winded but def worth a read.

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

Idiophreak

Ulfar wrote: »

By definition the schemes are for those who cannot afford a conventional mortgage.

Err, no, not really. As I said earlier, it's just a way to replace the 100% mortgage, so the schemes are mainly aimed at people who don't have a "conventional" deposit.

I know five people on SE, including myself - all of them can *easily* afford the mortgage and save for the loan at the same time.