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

HARSA

My story (pretty similar to scheming_gypsy) has been a positive one.
I bought my three bedroom end terrace new built (Bovis Home) back in March 2003 from the housing association – a 50/50 share for £65k. Mortgaged with Halifax for 97% of my share – my rent was £170 (now at £180) and mortgage repayment was £427 (now £327).
I appreciate that new built tend to be overvalued but the ones exactly like mine and opposite were sold directly by Bovis at the same price.
For the last couple of years I have overpaid my mortgaged massively and by Sept next year I will be mortgage free – well on my 50% share.
I decided a while back not to staircase but regard the average £175 rent I would have paid until Sept 2012 (just under £20K) as the interest I would have paid back to the bank on the other 50% owned by the HA. Hope this means sense – happy to explain how I worked it out.
Anyway the house next to mine sold recently for £80K making my then neighbour a £25K profit. Mine should be a little bit more as it is an end terrace with two private parking driveways. The house was sold directly by the HA to someone on their waiting list. My neighbour had to pay £130 valuation fee to an independent surveyor chosen by the HA. The £80K is what it would have cost my neighbour if he wanted to staircase to own the whole lot.
The reason why I decided not to staircase is because I don’t think my house is worth £160K as my bank valuation is only £143k and is on Zoopla for £152K. So why pay an extra £80K to the HA when I know that their 50% share is not worth that much. Nevertheless I think someone will pay just over £80K for mine when I come to sell. The reason being that the house will be more affordable to someone just as it was for me back in 2003.
I have to say that I have not had a single problem with the HA. I live in a very nice and safe area and the HA looks after our development well. I carried out all internal repairs and improvement at my own cost. I don’t get any visits from them although they do write letting me know what dates they are in the area and if I wanted to basically invite them in. I never take any notice of their letters. Every year without fail I receive approximately £120 back due to service charges surplus. Also the building insurance is covered by the HA and there are no extra hidden cost or surprises during the 8+ years I have lived here. I also know that other than valuation fee you are asked to pay should you wish to sell or staircase there are couple of very admin small charges during the process
I will continue living here for two more years after I pay off my half in Sept next year. I plan to raise at least £75K through company share saving schemes and personal savings. This with the equity on my house should be able to get me a bigger property with a reasonable mortgage repayment.
My advice is to go for a share ownership scheme only if you cannot afford a full mortgage and your existing rental is so much that it will take you a very long time to save enough deposit to get on the property ladder. The fact is that you will likely have to pay a little more than the going rate for your share of the property. Take for example whilst I know that that the HA share of my property is overvalued I know someone will pay exactly that for my share.
For this reason your priority should be to over pay your 50% mortgage as much as you can. When you have enough equity and or savings rather than buy the other half at a premium buy another property outright. Also try and not stay in a share ownership too long. I believe 10 years is long enough unless you really like the house and area and can see yourself living there forever. In such case consider the house as your home rather than a cash cow and buy the other half at a premium thus making it your palace.
Ignore what anyone says on this forum about how bad these schemes are and make up your own mind. Check that scheme is as good as mine has been and that there are no nasty surprises.
Good luck

zzzLazyDaisy

My cousin's story has also been a positive one.

Newly separated with two young children she had no chance of buying. She rented for 18 months and was very happy but then the LL gave two months notice as she wanted to come and live in the house herself. My cousin found herself sleeping on a friends sofa with her kids, as she just could not find anywhere else at a price she could afford, even with HB (she lives in one of the most expensive areas in the country, but her job, the kid's schools and her whole support network was there).

She is a teacher so was lucky enough to get a keyworker house. She owns 50% and has an interest only mortgage, so in effect she is still 'renting'. But the difference is that the overall cost is significantly less than renting on the open market, and the LL can't just tip up and tell her to go.

So it has worked for her.

heathcote123

I bought on a 50/50 scheme 4.5 years ago. 80's 2 bed terrace in a good area. It's worked out really well. The rent reduction for this scheme is ludicrous, am paying about 120 a month on the 50%, which would be about 350-400 at market rates. Think its gone up from about 110 when it started.

There are some crappy schemes out there, particularly some new built flats with big service charges etc, but there are also some real gems.

Nearly done the mortgage now as am earning a lot more now than I was then, dont know if I'll ever buy the other half as the rental discount is huge.

Never hear a peep from the HA other than rent statements every now and again.

Look into it and do the maths. It's certainly worked out well for me.

Oh yes, and back then there were people just like britt saying it would be a disaster and house prices would fall lots..... some things never change...

heathcote123

brit1234 wrote: »

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.

.

Actually it's a redistribution of wealth scheme designed by politicians who wanted to buy votes.

HARSA

The rent you pay under share ownership is less than the going rate and is definitely less than the interest you would have paid the bank for other 50% share.

People like Brit seem to ignore the fact that you pay a lot of interest for the 1st 8 years of the start of a mortgage.

So if you look at SO as a short term option and overpay as much as you can. The extra money you can use to overpay can be the difference between what you would have paid for a full mortgage and the mortgage+ rent. Or the rent you would have paid a private LL & your mortgage & rent. Hope that makes sense.

The main issue that Brit & Co have is that SO tend to be new builts which we all know are overpriced. Unlike developers such as Bovis with more financial muscles than HA you can get them to reduce their asking price.

Now Brit & Co also forget to realise that it is not only new builts where buyers pay over the odds. A buyer can also pay over the odd on an older property.

In the case of the OP neighbour she managed to get the HA to drop their asking price by 8K ... so you see it's not all that bad.

Like I said before my SO has been great for me. I live in a really cool part of the country with a very good catchment area for my kids. Not only at secondary school level but also primary as well.

The bigger properties here cost over £300k and in 3 years I will be able to get my family to live in one with hopefully just over £100K mortgage. And that is all thanks to a SO scheme.

The scheme will not only give me a little profit on my share but also an opportunity to live in a village where only the well-offs can afford to live.

Had it not been a SO I would probably be raising my very young family is the ghettos of Birmingham - no disrespect intended.

SO helps families with lesser incomes to live in the same area as the better offs and enjoy the same facilities (nicer parks, richer councils facilities and better schools).

AliceBanned

Helpful for me also to hear of the positives. I wasn't trying to negate S/O completely, I just saw a few places that were expensive and did not seem to offer good value for money, some with very high service charges. After reading some positives I might now consider it as an option, especially seems good if a house rather than flat. My only other option is to continue to rent housing assoc flat but it does not give me choice in terms of area I live in so I'm spending a lot on travel. Seems S/O can be a good option as long as it is checked out thoroughly and a good scheme. I did find one flat that was beautiful, such a lovely design and layout, looked like a double fronted house, something I never dreamed i could live in. However I turned it down even though I was given first refusal, although the area wasn't ideal (further to commute) and it seemed overpriced compared to similar sized older properties in the area. I still think of it though but just didn't have the courage to take the risk. It's a big step being a first time buyer especially on your own so I decided to stay secure and try and sort my finances and keep looking.

Air-Wolf_2

Depending on the area of the country you are buying SO can be a great way to get on the property ladder. Some things to point out:-

• Mortgage availability - the FSA regards Shared Ownership as high risk and therefore lenders are restricted to the number of SO mortgages they can hold on their loan book
• The Home Buy Agent for your area has access to a list of lenders who will provide mortgages for Shared Ownership - some key workers, e.g. Teachers can get specific access to mortgages at preferential rates
• The rent you pay on the unsold equity should normally be no more than 2.75% of the unsold equity e.g. the 100% value of the property is £160,000, you by half for £80,000, of which 2.75% is £2,200 divided over 12 months is £183.33, rent increases will be RPI plus x%, details may be found in the HCA model shared ownership lease. Lots of information on leases etc here
• Properties in rural areas can be more difficult to get mortgages for because of the legal agreement known as a Section 106 which restricts those able to purchase and stair casing (buying more shares) is capped at 80% but even with those some lenders will lend on them.
• Finally it is really important that if you do buy you use a Solicitor who know the shared ownership product - one that doesn't could mess you and the Housing Association about, once again your home buy agent will have a panel of approved Solicitors as well as Financial Advisors.

SecondLegDownIsTheBigOne

BitterAndTwisted wrote: »

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

Metaphors are a mind field and a minefield for the OP. Hyphens can be a minefield too.

brit1234

For anyone considering shared ownership check out the collection of real shared ownership mse stories from owners on this thread below. It will give a more balanced idea.

https://forums.moneysavingexpert.com/discussion/3177256

HARSA

Brit
This is one of your quotes from the link you posted......
Gullible and desperate first time buyers are being deceived into these schemes. Shared ownership buyers are being milked with rents, mortgages and high service charges with little home rights and difficulty selling.

Can I ask if you hold the view that I am/was guillible & desperate after reading my post above?

With everything in life there are pros and cons. Have you had any direct experience of a share ownership scheme? Also what is your expertise on the area?

I totally agree with you that new built properties especially flats or in a bad area can be a bad thing for 1st time buyers. Whereby there they can find themselve stuck in negative equity or their properties value is less that what they paid them for from the HA/

This can also happen and is happening to people who bought older properties that they own outright - well owned by the banK (who you pay massive amount of interest payments to).

I think a good advice is for anyone looking at this scheme to spend a lot of time weighing the pro & cons based on their individual suituations. Words that you (Brit) use are wrong. It is not a SCAM and the scheme has worked for me.