SHAREDOWNERSHIP is FANTASTIC!

saayinla

Hi All, was initially looking at the Shared Ownership Scheme but all the sob stories looks scary plus I dont think I have enough to put up for the Deposit being a first time buyer but I am recently looking at the Share Equity Option as it looks more promising and just about 5% deposit is required.
Ideally, I ll be looking for 3 bedroom and can afford reasonably about £1k for (mortgage+rent+service charge, provided rent is also involved.)

Is there anything I should be looking out for?

St00zer

urban_chaos wrote: »

The reason that I originally posted on this board was because of the issues I was having with the Shared Ownership Scheme I bought into.

I tried to link in my original post but I'm a new user so I am not allowed to.

Basically my service charge is going up by £100 per month and I owe them £400 for the "underestimated" service charge since I've been living there (October 2010).

I had a good deposit
I have a permanent full-time job with the NHS and was able to afford the service charge, rent, mortgage, council tax etc
I was prepared to live in it for the long haul
The property is in central London with a high demand for housing

The amount of stress that I've been under these past weeks is unreal. My dealings with the Housing Association have been pretty awful, they've been mostly unhelpful and unsympathetic

I feel quite bitter about it as I was a first time buyer and put all my savings into this scheme as I needed somewhere to live. I also had a financial interview with the HA before they approved the purchase and now it looks as if I'm going to lose everything

So, no I wouldn't recommend buying into a Shared Ownership scheme to anyone

Urban

Which part of London do you live in and which Housing Association have you had problems with ?

Have you spoken to the HA about your situation and what have they come back with ?

Muhasib

saayinla wrote: »

Hi All, was initially looking at the Shared Ownership Scheme but all the sob stories looks scary plus I dont think I have enough to put up for the Deposit being a first time buyer but I am recently looking at the Share Equity Option as it looks more promising and just about 5% deposit is required.
Ideally, I ll be looking for 3 bedroom and can afford reasonably about £1k for (mortgage+rent+service charge, provided rent is also involved.)

Is there anything I should be looking out for?

Without knowing your family situation be aware that requiring 3 bedrooms will likely require proof of your current family size to a Housing Association. They could also ask to see 12 months of your main bank account statements to check your eligibility both ways - ie that you can afford the repayments and that you don't earn so much that you exceed the income level they set. Be prepared for uncooperative staff from Housing Associations, surprisingly they employ quite a few people who don't actually like speaking to their residents/customers!

Running_Horse

St00zer wrote: »

There is nothing stopping you from buying outright. But let's look at the numbers....

Say your buying a £300k house on shared ownership.

Say you wish to buy a 50% share = £150K

Then assume you put down 50% of your share price = £75k and take out a £75k mortgage @ 3% Interest.

An you pay rent of od 1% of the % of the property that you don't own so £150k * 1% = £1500 / 12 = £125/month

A repayment mortgage over 25 years @ 3% for £75k = Payment of £355.66/month which is the same as paying of £168.16 principal and £187.5 in interest.

Instead of thinking of the rent you pay to the HA on the % you don't own think of it as cheap finance + service charge at £150.

In effect you are paying £125 + £187.5 + £150 = £462.5 in Interest a month. Add on the pricipal you pay of on your mortgage of £168.16 then you get a total monthly payment of : £630.66

Using the same example to buy a £300k house with a £75k deposit @ 3% repayment mortgage, your monthly payments are £1,066.98 which is broken down into £504.48 principal and £562.5 in interest.

Which do you prefer share ownership monthly payments of £630.66 + plenty of disposable income to save or Invest to buy out the other portion of your property or paying £1,066.98 per month and having less disposable income and paying more interest?

I prefer the shared ownership route as once I have paid of the mortgage of £75k in effect I have a permanentm morgage of about 1% of my property.

Where do you get 1% mortgages?

Not only that once I have paid of the mortgage I can use the excess income to buy High Yield 6-7% dividend paying shares, over several years the dividends will cover the rent.

And several years more I would have enough capital to buy out my HA.

Simples.

It seems where shared ownership has gone wrong for individuals are those who buy with low deposits and have financial problems in managing their debts. I think if people pay decent deposits and have steady jobs then this scheme can actually work out very well.

I also think there will be ALOT more takeup of Sharedownership schemes from FTB and this is going to be a more common route to homeownership for FTB, but I do think as time passes the rent portions will become less generous and less subsidised. But those that get in early and have contractual agreements in place it will be difficult for these to be altered at a later date.

Shrugs shoulders. Whatever makes you happy.

I prefer owning all of my house; a real asset to pass to my child.

Each to their own.

Wickedkitten

St00zer wrote: »

There is nothing stopping you from buying outright. But let's look at the numbers....

Say your buying a £300k house on shared ownership.

Say you wish to buy a 50% share = £150K

Then assume you put down 50% of your share price = £75k and take out a £75k mortgage @ 3% Interest.

Shared ownership is meant to be for helping people get on the first rung who can't afford to buy a house outright, not to enable people who have 75k in savings who can manage to buy one the traditional way.

skater_kat

my HA let me have a 2 bed flat when i am single.

Matt1977

I think Shared Ownership would be much better if:
a) it was reasonably priced in the first place and
b) The bought shares are owned outright. The owner will end up shelling out left right and centre for rent, charges and some repairs too.

Just my 2ps worth.

Mrs_Arcanum

Shared Ownership also works better when properties sold on the open market can be bought this way. Market rate is paid and not inflated.

mr_fishbulb

St00zer wrote: »

I have been doing some research on Shared ownership & I think it is a great scheme for first time buyers looking to buy a house/flat providing....

- A decent deposit is put down on the share the buyer buys
So, same as buying a place outright.
- The buyer has the ability and can afford the payments of the mortgage and the rent
Well durrrrrrr!
- The buyer is prepared to live in the property for atleast 5 and possibly 10 years or longer & is not looking to sell out soon after buying
How many FTBers stay in the same place for 5-10 years?
-The property can accomodate future changes in personal circumstances e.g. larger family size
If you are saying 5-10 years then there is a chance you'll have a couple of kids by then. Better get a place with plenty of spare room.
-The property is in a very good location with high demand for property
Yeah, that's probably why you can only afford shared ownership on it in the first place

Personally I don't think SO is a scam, I just don't think people understand what they're getting into from the offset. Plus I don't really see the point.

Got a friend who is thinking of buying a 20% share of a 2 bed apartment. 20% of 2 bedrooms! Plus he needs someone to move into the other room so he can afford the mortgage + rent.

Crazy times my friends. Crazy times.

mr_fishbulb

Mrs_Arcanum wrote: »

Shared Ownership also works better when properties sold on the open market can be bought this way. Market rate is paid and not inflated.

Doesn't work out so well for the people who were first in line to buy them off the developers, and are then looking to sell them on the open market.