Shared Ownerhip-it’s a mind field please HELP!!

jrenee

Hi my husband and I are considering shared ownership. We had been renting for a year and half but were fed up with spending a fortune on rent and not getting anything in return. We are considering shared ownership as a way of getting on the property ladder, as we have minimal savings. Renting has made it impossible to save for a deposit and we dont have the option of bank of mum and dad to help us out. My husband is a teacher, as a key worker we do have options available to us.



My concern is the housing associations make it sound like shared ownership is the solution to all your housing issues, but obviously don’t highlight any of the negatives!


It would be great to hear your about your experiences of shared ownership.

• Have you increased the share you own and how straight forward was the process?

• How affordable do you find the monthly repayments?

• I’ve noticed that a number of housing associations say you require min of £4,000 is this accurate and what are the hidden costs involved in purchasing a shared ownership property?

• How straight forward is selling you shared ownership property?

Sorry for asking so many question- just want to get a true picture of the scheme before we commit to anything.


Hope you can help thanks in advance.


Janine

hazyjo

Tonnes of posts about it on here...

Here's a very recent one:

CLICKY

All search results for Shared Ownership CLICKY

Jx

poppysarah

So you're hgappy to rent half (your % may vary) and pay full repairs?

BitterAndTwisted

Actually, you aren't paying rent and getting "nothing in return". You are getting a roof over your heads with none of the responsibility for repairs and maintenance.

There is not "property ladder". At the moment, with property-prices either stagnant or falling, it's big, ugly snake.

With a shared-ownership or shared-equity property the rent on the proportion you do not own will increase over time by a percentage you cannot know or have any control over. And a mortgage-lending rate which will also inevitably increase. Plus, you will have 100% responsibility for repairs and maintenance.

Shared-equity/shared-ownership properties can be very, very difficult to re-sell and numerous threads on this forum are a testament to that fact if you do some research on here.

My advice would be to not touch s-o/s-e with a barge-pole.

Is a "mind field" related in any way to a "mine-field"?

G_M

Shared Ownerhip-it’s a mind field please HELP!!

Is that as in "I don't mind getting ripped off" or as in "I'm getting a headache"?

LandyAndy

BitterAndTwisted wrote: »

Is a "mind field" related in any way to a "mine-field"?

I think both of those are related to a 'minefield'.:)

Mandog

Janine, you're doing the right thing asking questions and you should read all the really negative posts on here as some of the concerns are valid. However, some people pile in to heap scorn on these schemes who don't actually understand the detail.

BitterAndTwisted wrote: »

With a shared-ownership or shared-equity property the rent on the proportion you do not own will increase over time by a percentage you cannot know or have any control over.

Not quite true, BitterAndTwisted. Rises in housing association shared ownership rents are linked to inflation. Janine's current rent probably isn't! I've had my S/O place for 10+ years, the rent was discounted to begin with and is now a bargain, as private rents around me (central London) have soared well above inflation.

That the rent element of S/O is discounted seems to be overlooked by many critics.

AliceBanned

I've been to see a few shared ownership properties and cannot bring myself to be convinced by it. I do have subsidised rent at the moment so my situation is a bit different to yours, but I also struggle to save for a deposit. However I still feel that shared ownership could leave you losing out - I think there are fees to pay to the housing assoc/joint owner when you sell. Also if you buy further shares this is based on current market value at the time of buying, so you may still find you are priced out of the rest of the property, if it rose in value too much for you to be able to afford more shares, especially if your mortgage interest increased. The main issue I had with buying any of the ones I viewed, (one or two of which I was tempted by as they were stunning) was that the asking price is often non-negotiable, allowing the developer to cream off more profit, often £20-40k more for a one or two bed flat, (new build or nearly new) than similar properties in the area. If you bought in these circumstances you would never get this back and you would not be able to sell it on, as non shared ownership ones in the same area would reflect true market value so buyers would snap those up instead.

Also the "second hand" shared ownership one bed and two bed flats I viewed, on the outskirts of London or in Beds or Herts mainly, were in plentiful supply and to be honest did nothing for me - if none of them were enticing me then I figured that they were not worth buying as I would struggle to sell. some of the owners who showed me around seemed a bit desperate, and I could see why because as a potential buyer I couldn't even find one close to as lovely as the flat i'm renting, they all seemed poor value for money so i couldn't imagine what it was like for the poor owners trying to shift them. I have heard that unless you stay in shared ownership for a long time, maybe ten years or more, you lose out due to fees when you sell and I have known some people go into negative equity so ending up with less than if they had been renting. I do understand what you are saying about paying rent but in a more stagnant market you are gaining nothing anyway, and you are possibly at risk of losing more than you would pay in rent.

I have been trying to weigh up the pros and cons for myself. I would say that if you found what seemed to be your perfect home in a great location that you really want, then it may be worth it, especially if the asking price is reasonable (more likely on older properties).

Oh one more thing - some housing assocs have low service charges - some are more co-operative type and do not ever sell you the 100% as they want to keep back 15% perhaps if they are some kind of charitable organisation. I did come across one of these and they were not forthcoming about the 100% shares not being available so do check if you do go ahead. It would be harder to sell on if this were the case. Also some charge extortionate service charges, and some do not give you the service charge in writing - one housing assoc told me it was "about £60 per month" and could not give me details in writing before I decided whether to go ahead!!

scheming_gypsy

I'll give you a brief breakdown of mine...

3 bedroomed mid mews / terraced on a new estate, there's about 10 identical houses in two blocks on the street and mines one of 4. The street is right at the back of estate and the only entrance is half a mile away - so away from the main road... ie nice and quiet.
The house was advertised at £128,000 on a 60/40, unfortunately I just accepted the price but my next door neighbour who's also S/O with the same housing association, had it valued and knocked hers down to £120,000. Zoopla have the sale value of £69,800 which was builder to HA but the rest of the street are around the £120,000 to £130,000 so the price I paid wasn't over the odds as people like to make out. Yes I paid more than I could have done but that was simply my own fault for not bartering the price down.

I had to pay a £250 admin fee to reserve the house, I think this came off the overall cost of the house though.

I got a standard mortgage on normal rates from the Halifax. No inflated S/O mortgage.

I pay for any repairs as it's my house. I don't expect the housing association to pay for repairs just because I rent 40% of it. I don't expect them to clean it or decorate it either.
They don't live here, they don't tell me what I can and can't do and I don't have to answer to them. I just have to pay them my rent.

As I have a house I pay no service charge

I only have to pay contents insurance as the HA have a group policy for building insurance which is covered by my rent. So any money I save there I can put into a repair pot.

If i want to buy more shares then I can do at the going rate. Currently according to Zoopla the average house price on my street is down to £123,000, so if I wanted to buy the other 40% it's cost me £49,200 instead of £51,200 at the original purchase price of £128,000.... So if the house price drops I can buy for less, although that also works in reverse.
The price drop is mainly down to a cement factory behind the car park (yes we have a residents car park included) which is a bit ugly.. When they move the houses will be easier to sell and the prices will creep back up.

If I decide to sell then it's a bit of hassle as I need to try to sell as a 60% share but if i can't sell it after *** (whatever their rules are, length of time or amount of viewers etc) then it can go on open sale to whoever. Out of that the sale price is split 60/40 which is fair enough.

My rent for this terrible scheme? well it started off at £50 a month and goes up a small percentage a year; it's currently at around £57.50 a month which still includes building insurance.


Now obviously, that's just my experience and others will have bad experiences or pay higher rent. Although most people who slag the scheme off are people who don't live in a shared ownership house.

So basically... don't believe all the bad press people on here give, just because the scheme isn't for everybody. Look into what's being offered and compare it to your other options.

FireWyrm

Finally! Thanks Scheming gypsy...someone who knows what they are talking about...I'm looking at you Brit.

This is the type of house I grew up in, bought 70% of and sold again as a 100% house. I lived in it from childhood and inherited the 30 share from my parents. THIS is the point....it was MY house, yes I paid rent on the outstanding shares, but I owned it which meant no chance of a S21 and I could decorate it any way I pleased. My home, my choices, no chance of a greedy LL or thieving LA deciding my future, no 'admin' charges to renew after 6 months and I too had a perfectly normal mortgage on our shares. I have no idea what this hype about 'special' mortgages is all about because we had one from the high street lenders and I was never advised any differently.

OP, you are renting all ready, why is it so difficult to change to SO and still pay rent, but actually have true security of tenure? Yes, selling a SO as a partial is difficult, but seriously, are you actually buying a house as an investment cash machine, or are you looking for a place to live out your life? There's always the opportunity to urchase the last remaining shares in the future if you work hard and save....in the meantime, just live in it.

brit1234

FireWyrm wrote: »

Finally! Thanks Scheming gypsy...someone who knows what they are talking about...I'm looking at you Brit.

Not really, far from it.

It is a scam scheme designed to get people to overpay in so many ways with a maze of tight conditions.

Anyone doing this scheme do your research first to the bad points which there are many.

Personally I would avoid at all costs. House prices are falling, going to continue to fall. Save a bigger deposit in the meantime and rent, it isn't dead money.