Shared ownership...

All_Good_Things..

Think we all know just what a bad scheme this was and still is, it combines the worst aspects of buying & renting all in one go.

Not sure if it's the fault of the financially gullible and inept or the greedy in power that still feel that these kind of 'props' are s good thing.

Quote from This Is Money site.


Tens of thousands of families seduced by Government-backed property schemes are trapped in homes they have outgrown, but can’t sell nor afford to buy outright.


A Money Mail investigation has revealed how first-time buyers who signed up for shared ownership deals have never been able to fulfil the dream they feel they were sold.


Shared ownership is one of many State-backed schemes — advocated by numerous housing ministers — promising to help people buy a home in areas with high house prices. Critics argue these programmes’ real goal is to kick-start the house-building market.


With shared-ownership schemes, buyers take out a mortgage for a percentage of the home — this can be as little as 10 per cent. A separate company, usually a housing association, takes ownership of the remaining stake. The buyer then pays rent on this share.


Those who signed up to these deals were told that once they got a pay rise, or repaid some of their mortgage, they could buy an increasingly bigger share of the property until they owned it all. But our findings suggest the vast majority of people in such schemes never buy all their home — or even increase their stake.




Stuck in shared-ownership that's hard to sell
Buyers have been hit by the triple whammy of high mortgage costs, rising rents on the property stake they don’t own and service charges for maintaining the property, which can cost up to £150 a month.

This can prevent them saving enough for a deposit for a larger share of the home or from affording higher mortgage payments.


Many now have families but cannot move to larger homes. In areas where house prices have risen, the cost of other properties is now out of reach. Where prices have fallen, it can make it very tough to sell the property.


Matt Griffith, of campaign group Priced Out, says: ‘Many who bought into these schemes are stuck. Shared-ownership homes are often small flats, and we are seeing people who have growing families but little chance to escape.’


The latest home-ownership programme, NewBuy, was launched just last week. With this scheme, you can buy a new-build worth up to £500,000 with just a 5 per cent deposit because the mortgage is guaranteed by the Government. But the last figures, from 2009, showed three-quarters of shared-ownership buyers never purchase their property outright. There are no official Government figures on how many increase their equity stake.


Many firms taking part are reluctant to reveal exact figures of the number of shared-ownership homes sold. Of those that do, figures reveal that most people never buy all of their home — and only tiny numbers increase their stakes from, say, 25 per cent to 50 per cent.


Places For People, which sells and rents homes nationwide, including through shared-ownership schemes, says over the past decade just 90 of its customers have upped their stake, with 1,500 buying homes outright.


A spokesman for the Homes And Communities Agency, which funds these schemes, says these issues are due to wider ‘‘economic forces’.

Mrs_Arcanum

However it is a great option for single people who will never have families. Also cheaper than residential care which would be many of our Shared Owners alternative.

Graham_Devon

Another article which puts shared equity and shared ownership under the same roof.

They are not the same things. BOTH have their pitfalls, and like any scheme, it's not aimed to help the person using it, it's aimed to help the people involved in it.

It's of no surprise that people don't buy more of their shared ownership homes any longer. The schemes have progressivley got worse. You used to be able to buy any home on the market....the home you wanted....therefore more people used to "staircase" and buy more of the property until they owned it all. That was when shared ownership WAS helpful.

It's no longer helpful to buyers though, it's helpful to governments, home builders, and more recently, banks, who now don't even have to take any risk at all.

Instead of finding and buying a house on the open market, to reduce costs and increase profit for builders, governments and banks, the houses have progressively got worse and worse. Smaller and smaller. Moving from semi detached buildings, to terraces, and now to whole blocks that look from the outside to be office buildings. The more "homes" they can get on the plot, the better.

Labour then paved the way to solve their own housing problems by using these homes for people needing housing with no means of paying for it. So owners having spent out suddenly find they are overrun with people who often don't care for the homes they are living in or the communal areas.

Shared onwership itself was a decent enough scheme if you couldn't afford to do anything else. It's lost it's way though, and a new scheme seems to appear every 6 months now as previous ones simply fail. Theres nothing in it for the buyers anymore. Nothing at all. It's about banks, builders and governments able to tick their own target boxes.

Theres still some bargain second ownership houses to be had though. The best thing is, with these homes, you are on the older, less restrictive schemes. Schemes which were created when saving the banks and the housing market wasn't the most important consideration. These schmes can be a pretty good deal in some cases.

MrRee_2

They are great for those fed up paying 100% rent each month .... and - very importantly - they give these buyers a place to call their own.

This is such a great feelgood factor which can have no equal.

IveSeenTheLight

Graham_Devon wrote: »

Another article which puts shared equity and shared ownership under the same roof.

It's good to get a personal experience perspective.

What is the difference between shared equity and shared ownership?

JohnHunter

Shared ownership has added to property defying gravity until now, one of the reasons why the big falls still havent come yet.

But as people want out they will realise they have to drop the price a long way to find a mug who wants to buy their share.

Graham_Devon

IveSeenTheLight wrote: »

It's good to get a personal experience perspective.

What is the difference between shared equity and shared ownership?

Shared Ownership - Basically you buy a share and pay rent (including service charge) on the rest. You can normally buy more shares later, but don't have to.

You can take any HPI on your share, and you only pay for losses on your share.

Shared Equity - You buy a percentage of the house, usually 75% upwards, and take a loan for the rest. The loan is usually interest free for approx 5 years, and after that you pay interest on that loan.

Dependant on the scheme, there may or may not be rent (as I said, so many different schemes have come and gone over the past 4 years).

However, the big danger, again dependant on scheme, is that you are often paying higher interest on that loan than you would elsewhere, and are responsible for all of the falls in value on the entire house (rather than just your share). However, you don't gain on the entire HPI until the loan is paid off.

Often you are restricted to a certain house, under certain conditions, such as having to use a certain solicitor etc. You can't sell the house until you have paid off the loan, so you really are stuck, moreso as you can only do SE on new builds which literally cost more to buy under the SE scheme than they would for a normal mortgage (example of this near me. 2 bed new house on a development, £179,000. However, the homebuy scheme house is exactly the same, just on plot 3 instead of plot 1, £187,000). So instantly you are in negative equity with loan interest looming.

Word of caution, there are far too many versions out there now, so not all schemes will have the above issues. Some will be a lot worse than others.

Also with shared equity, WE, the taxpayer, are often at risk.

Graham_Devon

JohnHunter wrote: »

But as people want out they will realise they have to drop the price a long way to find a mug who wants to buy their share.

With shared ownership the seller generally cannot drop the price.

It's market value according to the associations valuers, and nothing more or less.

The biggest problem is not being able ot find a buyer willing to pay and ending up with a property on your hands you don't want. But to be fair, that's not different to being in neg equity on any old house.

However, from my experience of people moving around me, there appears to be no shortage of people willing to buy.

IveSeenTheLight

Graham_Devon wrote: »

However, from my experience of people moving around me, there appears to be no shortage of people willing to buy.

It's nice to hear your VI market is strong, with plenty of buyers.

Graham_Devon

IveSeenTheLight wrote: »

It's nice to hear your VI market is strong, with plenty of buyers.

What's with the bitterness?

It's hardly VI. Look on the housing board and I have strongly reccomended many don't go down the SO route.

IveSeenTheLight

Graham_Devon wrote: »

What's with the bitterness?

It's hardly VI. Look on the housing board and I have strongly reccomended many don't go down the SO route.

Graham,
No bitterness at all.
I'm genuinely happy for you that your area is doing well.

Surely it is VI if strong transactions are happening in your area