Shared Ownership opinions from people who have done it!

FireWyrm

Brit is opposed to Shared Ownerships from a philosophical point of view but as usual, is falling into the trap of viewing a house as an investement and not a roof over your head. Let me give you the other side of the coin. I grew up in a shared ownership bought by my parents. They owned 30% originally. The rent was £100 a month (although you would obviously be paying more) and they had a mortgage on the other 30%. When I grew up, I inherited that 30% and promptly bought the other 7 shares for £77K. I bought the whole house lived in it, improved it and then ultimately, sold it again. There were never any plans to move until then and it wasnt an 'investement'. It was simply the only thing my parents could buy in the 80's with almost no deposit and no credit history. During the time that we owned the house, we could not be thrown out because we owned a portion of it, this means you fall under very different eviction rules to those who simply rent. I dont know about shifting them, but honestly, I didnt seem to have much trouble. The reality is, lots of people are in exactly the same boat and have no realistic chance of ever owning their own home. Many see this as the only option and as long as you understand the terms, then there is absolutely nothing wrong with SO in my opinion.

J_i_m

poppysarah wrote: »

If you saved £30k then that's a whole house in some parts of the country.

Probably not many parts though if we're honest. I live near Luton.. which has a reputation for being a bit rough and has plenty of run down estates... Yet you'd be dammed lucky to get a shoebox for 30k around here.

Most 1 bed flats around here price at over 100k.

Moo7498

Ok so let me ask you this for your opinion my fellow money savers... The area that the shared ownership property is in I haven't lived in yet (although friends that have say it's a lovely area and it's only 20 mins from where I am now) so would you choose to go ahead and buy if you could or rent for 6 months/a year first to see if you like it??

wymondham

Does anyone know at what point it makes financial sense to buy on one of these schemes as opposed to renting and waiting?

TheMoneySavingator

hey, if it helps I've just moved out of a shared ownership house.
It was 50-50 with dominion housing and it worked fine for us, (yes there are 2 of us)
our income was £35k when we moved in and lived there for 2 years.
We did it mainly because we wanted to get out of our parents house and couldn't afford a full mortgage. The 5% deposit helped us out massively but we did only go for it becuase shared ownship houses never come up in this area, and so when it came to selling it, it sold in 3 days and we recouped what we paid for it (considering we bought at the height of the property bubble)

Not sure if this has helped, but we managed to save up a bit and now have just moved to a full mortgage house! :-) so it helped me loads!

princeofpounds

Does anyone know at what point it makes financial sense to buy on one of these schemes as opposed to renting and waiting?

The schemes are always so different. Some are much better than others, and the devil is in the detail on staircasing, service charges, resale fees etc.

Generally speaking they are more affordable in terms of year 1 cashflow than simply buying. And you have some rights over renting, mostly to do with security of tenure. But you pay for that in various ways:

- Increased risk profile (you suffer 100% of negative equity in some schemes, but only get 25% or whatever on price rises).
- Service charge escalation (the clauses permit this to rise)
- Resale monopoly (the original agent/developer combo take a chunky fee should you ever want to shift the thing)
- Restricted panels of lenders and solicitors. You might get a nice mortgage deal up front, but wait until you get put back onto SVR...
- Staircasing fees. Developer will want to you pay for all their legal and valuation work!

and so on.

I work in financial markets, and I know that the more complicated a financial product is the easier it would be to rip someone off. No-one EVER gives you a free lunch, if a scheme allows you to afford something you could not otherwise someone, somewhere, is fillling the gap and wants compensation for doing so.

To be fair, not all schemes are bad. In some the terms are not so underhand, but on the other hand the list price of the property is bumped up to cover for that cost. Also many of the risks are only particularly bad if people get stuck in negative equity, and that doesn't always happen.

hyposmurf

I bought a shared ownership property and have since moved to a property with full mortgage.It actually worked out well for me.The rent was low on the un-motgaged part and I got managed to get a low rate mortgage for 5 years.Overall it was actually cheaper for me to take on a smaller mortgage and low rent than to take on a full mortgage.I over paid as much as I could on the mortgage and marketed The property as both shared ownership and full mortgage value, it sold as shared ownership again.

Whilst I did well out of the shared ownership deal and others can do to, there are some negative things I came across, which are:
you have to gain approval from the social landlord for your buyer
pay the social landlord for their legal and admin fees when going to move
the rent you pay goes up year on year usually.I also wanted my own property in the end where I had no ground rent to pay.

Its hard to move to another shared ownership property, if you already live in one.Your occupancy to floor space has to increase to qualify.

You'll also find alot of people get confused with shared owner and shared equity, which are different.Shared equity I'm not a fan of.If you can find yourself a low interest mortgage,keep you overhaeds down and over pay on you mortgage you could use shared ownership to get you on the ladder.