Shared Ownership advantages and disadvantages please

Helmon

Hi all,

I see a lot of negativity around SO but correct me if I am wrong but isn't it still better than renting 100%?


I rented for three years now and I've spent around £30000 in total (London)! If I get SO at least I am putting some of the money towards an investment and not just a money sink.


Is there any situation where it's still better to rent 100% than going for SO? I can't afford a normal two bed place without SO.


Thanks in advance!

vivster

I agree with a lot of what Graham_Devon says.

Back in 2005, I was coming to the end of my 20s and wanted two things.
Security of tenure and relatively affordable housing costs.

I was single and on my moderate salary, buying was out of the question in the crazy London housing market. I was sick of flatshares, and a privately rented one-bed would have swallowed up approximately half of my take-home pay.

So SO was the least worst option. I bought a 45% share in a new build flat in north London and stayed for six and a half years. I sold it at the end of 2011 very quickly and for asking price, and for more than I'd paid for it. The gain was relatively modest, certainly compared to my friends who bought outright, but I walked away enough to form the bulk of the deposit for the house my husband and I have since bought outright.

Advantages: I got six years of secure, very affordable living in decent quality accommodation in an extremely well-connected part of London. I had enough spare cash to stash, and to spend a little on enjoying life.

It always felt like my place. I didn't resent the rental payments or service charge, or obsess about it as money down the drain.

The building and grounds were very well maintained by the housing association.

Rent went up every year, but not outrageously so. My average annual rent rise was perhaps £12 a month.

Service charge fluctuated. I was paying £20 a month less in 2011 than I was in 2005. It's properly audited so overpayments are refunded. I got back about £1000 in all.

Disadvantages: the housing association could be difficult to deal with. Slow to respond to problems, bureaucratic and there seemed to be a very high turnover of staff. The process of just getting the flat on the market was a six-week ordeal and I felt it was poorly marketed. I lucked out in finding a buyer (who was a friend of my next-door neighbour) so quickly.

Very limited choice of mortgages and higher standards to meet as a SO customer and you're presumed to be a bigger risk for the lender (don't know if this is still the case). My one attempt at re-mortgaging failed, and so I gave up after that.

On balance, I'd say do it if it's the right thing for you in your circumstances. Make sure you understand all the risks and the downsides.

aileth

We currently live in SO, and our rent has gone up by £8 a month over three years. I'd say that's pretty reasonable. However, our house price has taken a bit of a knock and we'd probably only get a menial sum from it now. We couldn't afford to buy a house outright as OH already had a mortgage from a previous relationship, so I was able to buy it my sole name, and we've had a solid home for the past three years with no threat of a landlord deciding he wants us out or wants to sell it.

I'm sure I'll feel differently when we come to sell, but I'm pretty happy with our lot at the moment. The way we are to sell ours is through an estate agent, who advertises it as 50% SO, and then from what I gather the estate agent then refers the person interested in buying to the HA who will vet them, etc.

sturgeon

As others say, Brit1234 is just bitter about house prices that they think should come down (they won't) so slates these schemes that 'artificially prop up property prices'.

SO seems to be working fine for me. Bought a zone 4 London flat, new build for £150k in 2009 with my share at 50% (so £75k). £250 deposit (that's right, no zeroes omitted there). No rent at all for the first 3 years, after that it's 1% of the value of the bit I don't own, going up 1% a year to 3% where it stays (does go up with inflation).

Service charge is very carefully adminstered by a great management company that residents appointed (to replace the previous ones, who were a bit rubbish to say the least), so we're not getting ripped off.

Great location and right next to a tube station, not far from Westfield and Olympic stadiums etc.

A 1 bed in the same building but arguably less desirable (mine is top floor, no neighbour on one side) sold for £190k very recently-so that's £40k profit or £20k for me should mine go for the same. I'm hoping with the intense demand for properties in my area, particularly flats that values at least stay around that level or go up. Admittedly I bought mine right at the depth of the property crash and know my flat was cheaper than almost every single other in the development so that helps.

Realistically, these days there are less SO schemes available. And many require big rent up front plus a far bigger deposit, plus they may have inflated prices etc. Also some you can only sell to other SO buyers which makes things difficult.

But it definitely has worked for me, and very well, so I'm glad comments didn't put me off.

aileth

Actually the one downside I can think of was the Solicitor's fees! There were barely any Solicitors that dealt with shared ownership so I ended up having to use a Partner with a large firm.... ££££

Help4UKHomeSellers

Interesting post. Some mixed views that should be considered.

tpl

poppysarah wrote: »

Is it what you dreamed of as a child?

Would you consider it for anything else - such as a mars bar, holiday, or car?

Yes, i definitely would share my mars bar and holiday (but only with someone nice ). And yes I would also consider a car sharing scheme if it made sense logistically, as it would reduce costs and save the environment a bit....:)

My childhood dreams were alot more fantastical and magical than the adult ones!!

tpl

I've got a SO house, only because I couldn't afford a full mortgage on one salary....so its a bit of mute point for me....as if I'd had the choice I would have got a full mortgage. I'm not sure why anyone would consider it if they could get a full mortgage - so whether its a good or bad thing, it is a kinda 'don't have many other choices' thing.

I don't like:
- the possibility that the house price is inflated...I'm not sure if it is....but it wouldn't be good, if I ended up in negative equity.
- that I can't rent out my house (as HA rules don't allow this) even though I have a mortgage on half of the property.
- that I am responsible for full cost of all maintenance/repairs/improvements etc...when it is half owned by the HA, so they definitely get a good deal here!!!

Good things:.
- I might if I'm lucky have some equity when I come to sell it, if the price isn't overflated.
- I get reduced cost house insurance through a company recommended by the HA. And buildings cover is included in the service charge, which isn't too bad.
- I have some stability in where I'm living, that one doesn't get in the private rental sector (which would have been my only other alternative).
- my rent and mortgage combined are currently lower than a private rental (again, which would have been my only other alternative)

nkeaney

Hello,

My name is Nicola Keaney from ITN. We do the news for ITV and are looking for first time buyers interested in shared equity/ownership. We want to find out if the scheme is actually going to help people and follow your progress as you look into the scheme and try and use it. We are also interested in talking to people about why they want to use the scheme and how it will change their circumstances.

If that’s something that applies to you then please give me a call on 07903 757811 or email me.


Best regards,

Nicola Keaney
ITN Business Desk

emmah33

Has anyone bought a house on shared ownership that can tell me how long it takes between offer acceptance and completion, we are on week 8 now and getting a bit fed up now. Thanks, Emma.