Consequences of shared ownership

Mrs_pbradley936

There are some new flats/houses being built in Harlow on land that was the ski slope and sports centre. A friend was send some details because they were on an Estate Agents list, well anyway these flats are £200K. Hardly first time buyer prices but financing them is my point, they are available on a shared ownership basis. Can anyone in the know tell us the long term consequences of this policy?

In the 70s they started to take what a woman earned into account when considering a mortgage application (before then women did not get credit). What that did was to push up the price of the lower end of the market. Will having funds available via part buy do the same in this day and age?

Asher

Do you mean that the other part of the shared ownership is artificial? So that without it the place could only be say £120,000 (60% of the £200K). Makes sense to me if that is what you mean.

lynzpower

There are some new flats/houses being built in Harlow on land that was the ski slope and sports centre. A friend was send some details because they were on an Estate Agents list, well anyway these flats are £200K. Hardly first time buyer prices but financing them is my point, they are available on a shared ownership basis. Can anyone in the know tell us the long term consequences of this policy?

I sold my SO in january. I bought mine for 197 ( in 04) , sold for 295. ( in 06)

personally, I tihnk its madness- but you just cant argue with market forces.
"Along comes a bigger mug"

it does ramp the market to a certain extent, in that in some areas ( i bleieve in manchester now there are SO) but in london where I am, property prices rise so fast that there was no way i wuld have been able to get on this so called ladder without it . It does stay reasonable as well as your mortgage share is small, whereas your rent share cant rise as fast as IRs are rising IYSWIM

Rimo2021

pbradley936 wrote: »

In the 70s they started to take what a woman earned into account when considering a mortgage application (before then women did not get credit). What that did was to push up the price of the lower end of the market. Will having funds available via part buy do the same in this day and age?

It might do but so what, why should women and single or poorer folk's opportunities be suppressed to keep prices lower for others' benefit?

Part-ownership makes sense for a lot of young people for example in the past people tended to settle down with a permanent partner at a much younger age (say 25) so could buy a place then. Part ownership could provide a solution for the fact that many 25 year olds would like to buy but may not meet a permanent partner for some time. So you might have the 'boy' buying 50% share of a flat somewhere and the 'girl' buying 50% of a flat on the other side of town. Then their eyes meet one fine day when she drops her door key in the gutter and he picks it up for her and rubs the gunk off on his hankie then takes her for a cappuchino (or she takes him as she's a modern girl) and they kiss, get married and both sell up to realise the equity (assuming they've had repayment mortgages and prices haven't crashed) in their respective 50% flats to use as a deposit for a love nest together.

Guy_Montag

Rimo2021 wrote: »

It might do but so what, why should women and single or poorer folk's opportunities be suppressed to keep prices lower for others' benefit?

Part-ownership makes sense for a lot of young people for example in the past people tended to settle down with a permanent partner at a much younger age (say 25) so could buy a place then. Part ownership could provide a solution for the fact that many 25 year olds would like to buy but may not meet a permanent partner for some time. So you might have the 'boy' buying 50% share of a flat somewhere and the 'girl' buying 50% of a flat on the other side of town. Then their eyes meet one fine day when she drops her door key in the gutter and he picks it up for her and rubs the gunk off on his hankie then takes her for a cappuchino (or she takes him as she's a modern girl) and they kiss, get married and both sell up to realise the equity (assuming they've had repayment mortgages and prices haven't crashed) in their respective 50% flats to use as a deposit for a love nest together.

While the story is beautiful, I would say that shared ownership is the worst of all worlds.
1) you are responsible for maintenance
2) you cannot (normally) let it out if your circumstances change
3) you are tied to a location
4) they will be worthless after the great crash of 200X (or possibly 20XY, or heaven forfend 2XYZ)
5) you have to pay rent which can rise faster than your income
6) they artificially prop up the market (people are buying them who shouldn't be buying at all)

lynzpower

5) you have to pay rent which can rise faster than your income

The rental share can only rise once per year in OCtober, and no more than inflation.

Rimo2021

Guy_Montag wrote: »

While the story is beautiful, I would say that shared ownership is the worst of all worlds.
1) you are responsible for maintenance

as you are in a 100% owned property

2) you cannot (normally) let it out if your circumstances change

probably true and definitely a down side

3) you are tied to a location

As you are if you own 100% of the property

4) they will be worthless after the great crash of 200X (or possibly 20XY, or heaven forfend 2XYZ)

Then you only take a share of the loss as you only own a share of the property.

5) you have to pay rent which can rise faster than your income

So can mortgage payments on a fully -owned property

6) they artificially prop up the market (people are buying them who shouldn't be buying at all)

They probably are proping up the market which I agree is a bad thing but i don't agree that that they shouldn't be buying if they want/can afford to. I would say it denends on the property and the amount being asked for it.

I totally agree my story was pretty daft and didn't make much of a point.
but I'm not sure all your points are completely valid either.

jonathon

Im in a shared ownership the biggest benefit is you only need a mortgage on the percentage you are buying. we brought 50% for £48k and pay £199 rent on the other half. if we choose we can buy a higher % at any time.

littlesaint

I am living in an area where Shared Ownership could be possible for me. What puts me off doing it now is that I am planning a once in the lifetime round the world working holiday next year. If you owned a house you could rent it in such circumstances, but with shared ownership, you are not allowed to do this.

I can see the reasons why, but this rule does cause problems for some people. My friend is a junior doctor. He was eligible for keyworker SO and considered it while he is working in London, but with the current uncertainty of employment for junior doctors he may have to live elsewhere next year. He turned it down because of the rules preventing you from renting it out.

I am also concerned about how keyworkers will be affected if property prices change for the worse. People who take up SO are being pushed into high density new build properties. Many of the properties in London are outside the hotspots. I know people mean well by providing SO properties, but I worry whether they really are in those buyers' long term interests.

Mrs_pbradley936

Rimo2021 wrote: »

It might do but so what, why should women and single or poorer folk's opportunities be suppressed to keep prices lower for others' benefit?

.

That was not what I meant - sorry if I did not make myself clear but Asher made the point better than I did. If there was no shared ownership scheme would the prices be lower as in the example Asher gave?

Rimo2021

pbradley936 wrote: »

That was not what I meant - sorry if I did not make myself clear but Asher made the point better than I did. If there was no shared ownership scheme would the prices be lower as in the example Asher gave?

I don't think there's much doubt that if less people had access to less credit house prices would be lower.

Personally I don't think the government should really be subsidising private purchases. I think they should make renting more attractive in terms of security of tenure and controlled rent rises and less attractive to 'amateur' landlords. I think this would reduce competition for FTB properties and cool the prices to some extent.