Shared Ownership advantages and disadvantages please

gazfocus

leveller2911 wrote: »

gazfocus wrote: »

I'm also well aware of the prices falling. We're in fact paying £8k less than what our sellers paid for the house but our lease does state that should we come to sell the property, we can choose to market the house as an outright sale rather than shared ownership!

Are you sure about that Gaz?. How can you market the house as a 100% sale when it clearly wouldn't be.

What benefit is there in marketing it as 100% sale other than deceiving the prospective buyer into thinking they are buying a whole house. If indeed the clause does exist then it smacks of the HA knowing shared ownership would not appeal to the vast majority of prospective buyers and as such trying to disguise the fact.

Why would it be deceiving any potential buyer? The buyer would pay for 100% of the house, I would get 50% of that figure as a 50% owner and the HA would get the other 50%. I fail to see the deception.

PasturesNew

I bought one. It was 20 years ago and an 'experiment', the first one (of two) where I lived. I was only allowed a studio as I am single (annoying as next door's 2-bed only cost about £2k more than mine).

Buying it was a problem due to lenders not being keen and there was nobody that could say who would mortgage it (you'd have thought they'd have done their homework forst and given me a list, even if it was a very short one, just to make it easier for them to be able to sell).

I owned it 7 years. After 7 years it was still worth 5% less than when I bought it.

It did enable me to live in a proper house for 7 years though - I'd previously been living in a caravan.

It works for some, for others it doesn't.

Make sure you fully understand the process of selling it.

wymondham

This is a marmite discussion when it comes to things like this. There are those who want to buy a house, and in these times when they cost too much the scheme allows you to get on the 'ladder'. However, you get nothing for free in this life and there is ALWAYS a down side to a scheme over purchasing normally - if you are aware of what this is and are happy with it then alls fine.

MoonJelly

We are thinking things over but I don't think we are going for a SO.

Sprat666

Ok iv looked up lots about this but I'm still after people's opinions. Right Iv never owned a house there's me my partner and child. There's only me working my partner is at full time uni there is no way without waiting 20yrs we will beable to save a deposit for a house and i don't earn a grate amount so wouldn't get a full mortgage if I did manage to get 20 grand from somewer. So we can ether rent costing around 600p/m plus bills or go for a part buy part rent which I understand are slightly over priced and sometimes harder to sell which from what iv worked out would cost around the same. Am I Right,wrong ,going to get ripped off or missing something???!! Help please!!!

Kynthia

I'm currently selling an SO property at the moment. I can't say that i'd recommend SO but it does depend on a person's circumstances and the individual scheme. Generally if you can afford to buy without the scheme the don't touch SO with a bargepole! However most who are considering SO can't buy without the scheme and therefore their alternative is renting. Even then, SO might be the worse of the two options as selling the property in the future can be difficult and has a very good chance of making a loss. However there are people with children who need a secure roof over their head in an area with jobs and SO as a long term option might work for them.

gazareth

gazfocus wrote: »

I'm fully aware that there will be small rent increases each year (at RPI+2%(max)).

This is not exactly pocket change. I sold my shared ownership flat earlier this year, but the previous rent increase was around 6% as the RPI was pretty high. In real terms this equated to around £50-60 extra per month. There is no cap on this amount so the longer you stay in the property the more you will be paying. It's also worth noting that if you buy a new build, the rent starts out as a fixed % of the unowned equity (in my case 3.5%), and it's usually relatively low, when you come to sell, the next buyer will have to pick up the rent at the same level as you are paying. My rent & service charge started at around £400 per month and 4 years later was more like £520 - my buyer started at £520 straightaway. This caused us problems with finding buyers as many were put off (or couldn't afford) by the rent level.

Selling in general was also a bit of a nightmare. Your mileage will vary here depending on your housing association, but ours did not appear to communicate effectively between viewers/buyers and us. Four times we were told that a buyer had been secured, and four times the buyers dropped out for various reasons (e.g. "they failed our affordability test" - should have been done before viewing, and certainly before telling us we had a buyer secured). Our fifth "buyer" stuck in the end and we sold earlier this year - roughly seven months after we first started the process. We just count ourselves lucky we were able to find a buyer at all.

It wasn't all bad though. Living in Oxford, property demand is very high and despite buying in 2007, the value of our property went up slightly. I also had several pay increases during this time and was able to overpay the mortgage significantly, so we had plenty of equity. However, if you are in a job where pay increases are not so likely, or if house prices are more subject to severe fluctuations, I can see it is much more of a gamble. In the worst case scenario, you could end up in negative equity (i.e. unable to sell) and with the rent increases eating away at your saving capabilities.

Personally, I would not do it again and I would strongly recommend looking into other options before committing.

Mrs_Arcanum

Advantages are you can claim HB for the rented part and SMI for the mortgaged part (for a couple of years) if you are out of work. Also the bedroom tax does not apply to SO as far as rents are concerned for HB. You also have service charges which often cover some maintenance and shared areas (this can vary widely). You have more security than private renting. Some schemes allow you to choose which property.

Disadvantages are often a higher than average purchase price with higher problems with negative equity. Unless you staircase up as soon as you can you may never reach full ownership. You may be stuck with a limited choice if the scheme you choose is tied to a particular development.

In the right area & on rising house prices you can make money despite what some may say.

shinydiscoballs

I live in a shared ownership property and it has it's adv & dis.

I really like it, I live in the south east and I would've been saving for about another 20years to get any sort of deposit for house. I may have bought half a flat, but at least I'm contributing to something! The mortgage and rent works out less than rent in the area anyway, which would have been 100% money down the drain.

I would avoid new builds if you can and try and go for a resale. I done some research and found that the new builds are over inflated and they lure you in with low service charge which jumps the following year when they find out what the real cost is!

I like that I can decorate my property (though check the lease) but I do have to ask the HA if I want to replace the kitchen/bathroom (ie major works) and I like the security, I was getting fed up of being thrown out of rent properties when the landlord decided to sell.

Problems? Well you are 100% responsible for the repairs and maintanance on the property, but you would be if you owned the whole house anyway.

Mortgage lenders are hard to find, I would go through an independent financial advisor.

My experience of the HA is well, awful! They are lazy, inefficient but we have a good residents association where I am and we keep a list of the jobs we have asked them to do and ensure that they carry them out to a standard we expect.

I can't think of anything else at the mo, if you have any questions, just ask!

Graham_Devon

gazareth wrote: »

This is not exactly pocket change. I sold my shared ownership flat earlier this year, but the previous rent increase was around 6% as the RPI was pretty high. In real terms this equated to around £50-60 extra per month. There is no cap on this amount so the longer you stay in the property the more you will be paying. It's also worth noting that if you buy a new build, the rent starts out as a fixed % of the unowned equity (in my case 3.5%), and it's usually relatively low, when you come to sell, the next buyer will have to pick up the rent at the same level as you are paying. My rent & service charge started at around £400 per month and 4 years later was more like £520 - my buyer started at £520 straightaway. This caused us problems with finding buyers as many were put off (or couldn't afford) by the rent level.

This makes no sense. First you say your rent went up by 6%, meaning an increase of 50-60quid a month, but then say your rent was as high as £520.

6% of £520 is £30.

I have a SO place. I'm actually looking at another SO place. It's not so much that I prefer these over 100% ownership, it's the grim reality that I can't afford the 100% ownership place. So I'm left with Shared Ownership, some various other schemes that I wouldn't touch and rent. I'm in one of the areas of the country with low wages and very high house prices.

Out of those options, shared ownership wins.

I don't see the point in comparing all this with something you cannot afford. There are advantages and disadvantages, but at the end of the day, if it's all you can afford it's all you can afford.

I'm currently saving a deposit for the next place, aiming to go 100%, however, I'm very keen to explore moving to a bigger SO house, buying the percentage outright (30%) and paying rent. So will have no mortgage, and a rent of around £250.

This will allow me to continue saving at the rate I am now, but with a house that better fits my needs, for the 100% place. Not sure it's a good idea yet, but I simply don't have the option to buy a bigger place on the general market right now and with kids, and needing space, it's the best option I can see.

Something shared ownership HAS allowed me is the freedom to enjoy life when I want to aswell. I haven't got the best house in the world. But I don't have a mortgage noose around my neck either, and can enjoy other things with my children which life offers, and that's a big consideration for me. ABove all, I'd rather have Shared Ownership and a fixed home to come back to each night, than a rental place on a 6 month contract or a massive mortgage for which I'm wondering how I'm going to meet the next payment.