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Shared Ownership?
Comments
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Thanks to everyone who's posted about there experiences of SO.
If I could ask another question?
If you had your time again would you still go down the SO route and would you recommend it to a close relative (subject to suitability?)
I know that its the only way that I could ever hope of getting on to the property ladder but seeing so many 'negatives' associated with it especially recently concerns me.
I can't see house prices falling to any extent in London and besides I'm in this for the long haul so it should even itself out over time.
Its the unforeseen factor that has me most worried.
My job is more secure than most but theres no such thing as a job for life anymore. What if I have to move/sell?
Rent/service charge increases aren't capped.
Heard and read a few things about HA having very one-sided rules hidden in the T&C's of the purchase.0 -
well I just bought one in Mitcham, went into this with my eyes wide open so who knows what will happen. I know quite a few people who bought their own places at the height of the boom who will be stuck for years in neg equity. I'm fed up paying expensive rent to sh*t landlords who take your money and little else and London rents are just getting crazy now, so seems like a good option for me. However, that is just me, everyone will be different. Whatever negatives, I'll deal with them.
"Its the unforeseen factor that has me most worried"
that applies to any home buyer, not just SO0 -
The thing you have to remember when reading so many of these recent stories is that the people featured in the stories purchased their shared ownership property at the height of the property boom with the belief that house prices would continue rising. Now that they want to sell, they are finding themselves in negative equity so are stuck where they are, however, if they owned 100% of the property, their situation would be much worse.
Let's say for example, you buy a 25% share in a flat that's worth £160k for £40k. The value of the property drops to £100k so you're 25% share is now worth £25k, leaving you £15k in negative equity. If you owned 100% of that property, you would've been £60k in negative equity so would be much worse off.
It fails me why the news stories are focussing on people being in negative equity in these schemes and making out that shared ownership's are scams without considering what the consequences would be if you owned outright.Its the unforeseen factor that has me most worried.
My job is more secure than most but theres no such thing as a job for life anymore. What if I have to move/sell?
Rent/service charge increases aren't capped.
Heard and read a few things about HA having very one-sided rules hidden in the T&C's of the purchase
One advantage of shared ownership is that if you find yourself out of work, you are able to claim housing benefit on the rent portion of the property. You may also be able to get the interest paid on your mortgage.
Just make sure you get a good grasp of the terms and conditions of the lease. It's very likely that your mortgage lender will have a specific criteria that the lease will need to meet so you should be ok.0 -
If you're never going to get on the property ladder without SO then you need to weigh up the pros and cons of SO compared to renting not compared to full ownership.
SO has a lot of advantages over renting. You have long term security, you can decorate, have pets, have family/friends move in and generally treat it as your own place because it is (as much as any leasehold flat is). You need to maintain it yourself as there's no LL to repair the boiler or electrics however you aren't anwerable to a LL and having regular inspections. The main issues with SO come when selling and you are less likely to make money but renting doesn't make you money. SO property sales are more complex, expensive and can take a while, whereas with renting you can give a month's notice and go, say for example if you needed to relocate for work. You need to compare the price of renting with your mortgage, rent and service charge fees. However if you aren't happy with your rent increase you chose not to renew and move, but if your SO rent and service charges go up your stuck.
Not all associations doing SO are the same so you really must look at the terms and conditions first.Don't listen to me, I'm no expert!0 -
My sister bought a 25% share in a flat in a new housing development in central London a few years agp. There was strict criteria and one was that you had to work in the borough of Westminster. She does and now walks to work in 15 mins instead of the 30 mins she had on the tube before.
She loves it, very handy for her.. she wouldnt have been able to afford it otherwise. She pays mortgage and rent and pays just over £1000 a month I think.. not sure exactly. I think she would recommend it but obviously it depends on personal circumstances whether it is right for you. I think it is a good way to get on the property ladder especially in London. Houses/apartments on the same development but in different buildings cost about a million for a postage stamp! Her flat is really nice.
Just my two cents anyway!0 -
Yes, you're insulated against the downs, but you don't reap as much from the ups.
Couple of other points:
You can sublet SO properties (it may depend on the lease, rules of the HA), but I could have sublet, with permission.
The mortgage market is a lot more restrictive, and the bar can be set higher. Nationwide turned me down for a re-mortgage, although told me they would have accepted me if I'd owned outright.0 -
The mortgage market is a lot more restrictive, and the bar can be set higher. Nationwide turned me down for a re-mortgage, although told me they would have accepted me if I'd owned outright.
That's not strictly true - you just need to remortgage with a lender that lends on shared ownership properties. As far as I know, Nationwide don't.0 -
I still think shared ownership is well and truely a scam, I have many friends who have had a nightmare with it, I have studied it when considering it and the many downs put me off. There are too many horror stories on this site about the scheme.
The link below is a report into how bad it is released only yesterday.
http://www.independent.co.uk/property/house-and-home/property/shared-ownership-dreams-shattered-7878446.html
This is the link of a number of the shared ownership horror stories and debate on this site. Read before going any further:
https://forums.moneysavingexpert.com/discussion/3177256:exclamatiScams - Shared Equity, Shared Ownership, Newbuy, Firstbuy and Help to Buy.
Save our Savers
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Let's say for example, you buy a 25% share in a flat that's worth £160k for £40k. The value of the property drops to £100k so you're 25% share is now worth £25k, leaving you £15k in negative equity. If you owned 100% of that property, you would've been £60k in negative equity so would be much worse off.
It fails me why the news stories are focussing on people being in negative equity in these schemes and making out that shared ownership's are scams without considering what the consequences would be if you owned outright.
In other words, I think that SO is a significant contributor to the negative equity problem.Hi, we’ve had to remove your signature. If you’re not sure why please read the forum rules or email the forum team if you’re still unsure - MSE ForumTeam0
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