SHAREDOWNERSHIP is FANTASTIC!

Jeffrey_Shaw

mr_fishbulb wrote: »

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.

But that's equally true of any newbuild, you know!

mr_fishbulb

Jeffrey_Shaw wrote: »

But that's equally true of any newbuild, you know!

Yup. No argument there.

herpderpingstein

Has anyone had experience with the London scheme First Steps? I've been looking at a few properties but some seem to only be available to people currently living in that borough, even though its literally 2min from where I currently rent, seems ridiculous!

mr_fishbulb

herpderpingstein wrote: »

Has anyone had experience with the London scheme First Steps?

Is it called that because that is the only part of the property you actually own?

Arthritic_Toe

wymondham wrote: »

... Do keep in mind though that each person that signs up to purchase a house using a scheme is directly responsible for keeping house prices artificially high...... ;-(

This is true unfortunately. Any scheme that enables first-time buyers to afford more for a property results in higher prices. Without these schemes, prices would naturally fall to an affordable level.

St00zer

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.

This was a hypothetical example I used to illustrate a point. But your are mistaken to think anyone with £75k can necessarily afford the flat/house they want on the open market. What if the person is only earning £25k and trying to buy a £300k house?

Do you think the banks will lend £225k to this individual? I think not. As they typicall lend 3-4 times earnings.

This individual will never get financing to buy a £300k flat/house so the only route they can do so is SO.

St00zer

- 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

No, not the same as buying outright as if the bank does not lend then they can't get the mortgage to buy a similar property.

You say durr to "The buyer has the ability and can afford the payments of the mortgage and the rent", if it was really that obvious you would'nt have individuals who are struggling to keep up with payments. So many horror stories on these boards. I would'nt go for SO if I was only comfortably meeting payments as a £100 hike or so in Service charge/Rent has made it unaffordable for quite a few.

So you would probably want a decent buffer to weather the storm and have the ability to cut out unecessary expenditure. This scheme is not for those who are just about meeting payments, that is very risky and they risk losing their home.

How many FTBers stay in the same place for 5-10 years?

Well I think it does'nt make sense to buy a 1 bed or a studio apartment. As it is expensive to buy and sell property, so it makes more sense to keep saving and buy a 3 bed house or a 2 bed flat to allow one to live in the place for a good 5-10 years.

Yeah, that's probably why you can only afford shared ownership on it in the first place

Possibly, but it is better then nothing. You have the opportunity to get on the ladder. It beats paying someone elses mortgage anyday of the week.

St00zer

This is true unfortunately. Any scheme that enables first-time buyers to afford more for a property results in higher prices. Without these schemes, prices would naturally fall to an affordable level.

Disagree. What proportion of the population own their property privately or do buy to let compared to SO ? As SO has only been open to the main market for the last few years I suspect a small proportion. Do you honestly think a small proportion of the market is holding up the rest of the housing market?

What is preventing House prices from deflating is cheap finance. Raise Interest rates and House prices would drop, but the UK would also probably go bust. So the authorities simply won't let it happen. And I don't think we will get any meaningful rate rises for a few years, great time to take advantage of trackers IMO.

SO was'nt open to the wide market back in 1995 or 2000 or even 2005. So what caused House prices to rise so relelntlessly?

Relaxed mortgage standards, BTL and Foreign Investors. The last two factors are still very much alive today and add in cheap finance.

SO is a good way to hedge your bets against House prices, if prices rise you benefit on your share and if prices drop when interest rates go up you can buy out the balance of the share you don't own.

With individuals refusing to buy as house prices are "expensive" it will just support the Housing markets on any meaningful drop as they would buy so therefore I doubt prices will drop to the magnitude some on these boards hope for. Just look how quickly prices in London bounced back from their drop and now back to their 2007 peak.

saayinla

Considering what you have to say in support of shared ownership, are you well versed in shared equity scheme as well, because to me, it looks more appealing than SO or am I missing something?

St00zer

Saayinla

Shared Ownership & Shared Equity schemes are not for everyone. I would'nt suggest that anyone regardless of their circumstances should get involved in these schemes. If your bad with credit, if your bad with managing your finances or have really bad debts or can't cope with a 10/20/30% increase in your costs whether that be your mortgage, Rent or Service charge then I would stay well clear.
Basically one should have a rainy day fund and should carry out what if x happens, how will I cope etc ? Can I cope?

I think these schemes can work well with those that have a good track record of managing their finances & those that can cope with unexpected costs. Unfortunately it comes across as the way these schemes are marketed is you only need 5% deposit to get on the ladder and so on and so forth which can mean the people who should'nt get involved do and later regret it and feel trapped.

It is worth doing a stress test of potential worst case scenario's to asses how one would cope in different scenario's then it won't be such a shock if such scenario plays out. And you will be better preprared.

Without the Shared Equity scheme launching and being in the market for a while it is difficult to give a valid opinion.

However based on the following :

Shared Equity

Shared Equity in the UK is undergoing a mini revival. It is the basis for the Government's new FirstBuy scheme announced in March 2011 and starting in September 2011. New home builders will be offering the scheme so you can approach them (through the likes of https://www.SmartNewHomes.com) and your local HomeBuy agent. You will only need 5% deposit, but beware that if the property goes down in value by 5% it will be YOUR deposit that is eroded. This scheme is only applicable to new homes - lovely but rather more expensive than 'second hand' ones. You will put down 5% deposit, take out a shared equity mortgage for 75 or 80% and then the remainder will be finded by a shared equity loan of up to 20%. The shared equity loan is repayable on the sale of the property along with 20% of any increase in value of the property. No interest is charged on the shared equity loan for the first 5 years, and a low interest rate is charged thereafter (it starts at 1.75% for the 6th year then 1% over the rate of inflation after that).

The downsides are that this scheme is only available on certain new-build properties - those the housebuilders need to shift and that if your property goes down in value, you will still need to repay the equity loan.

A similar scheme to firstbuy shared equity one is shared appreciation which operates on a similar basis but as it is offered by a private lender. The limitations on property do not apply ie you don't have to buy a particular new-build property and you don't have to be screened by your local HomeBuy agent.

See our navigation bars on the left to read about other options such as shared ownership or joint ownership otherwise......

Request Mortgage Advice If you have gathered a deposit and want to buy your first home. Our mortgage advisors have details of all the best current first time buyer deals including mortgages for Firstbuy shared equity schemes. and the shared appreciation option.

Shared Equity in a nutshell:

• You own the property and there are no rental payments
• Usually offered by your local housing association under FirstBuy (household income must be under £60,000pa) or through a house-builder ( these schemes can vary)
• You must be a first time buyer, key worker, housing association or council tenant or be in housing need
• The Housing Association will provide you with a top up low or no cost 'equity loan' providing the lion's share of the deposit, usually up to 20% of the purchase price and the remainder is financed by your deposit and mortgage
• You are normally entitled to repay all or some of the equity loan at and point bu you would need to check the terms of your particular scheme
• Currently you will need at least a 5% deposit
• When you sell the property you will need to replay the equity loan remaining and a proportion of the equity growth that reflects rhe proportion of the equity loan remaining
• Restricted to new build properties which are lovely but command a premium

With shared equity, the first time buyer does not own the property in conjunction with any other party (unlike shared ownership) but takes out more than one loan for the property. A mortgage and an ‘equity loan'. You are the only person on the deeds. There is no co-owner. However, when the property is sold, the ‘first time buyer' has to repay the loans AND a proportion of any increase in equity of the property to the party making the ‘equity loan'.


http://www.firstrungnow.com/shared-equity/

First of all I would'nt buy a property based on a preferred scheme. I would consider all options and I would purchase a property based on it's location, space, convenience factor, affordability etc etc

Once I am happy with these factors I would then consider my options, whether I need to buy privately or do I need to go through one of these schemes.

I also would'nt want to buy a property a developer is struggling to shift, it is a bit like taking on the developers headache on your own shoulders because at somepoint in the future when you come to sell you too could have problems shifting the property.

I would also look to put more then 5% deposit, I don't think it is worth buying a property with just a 5% deposit, it is quite easy to wipe out 5% of a property value, less likely to wipe out 20/25/30%.

I think it is a very good sign if a development is sold out within weeks of coming to the market, it just demonstrates how strong the demand is.

Please note all these posts are my views only - Please conduct your own research. I am just sharing my thoughts.