Shared ownership or wait?

AliceBanned

Hi

I am saving for a deposit and anticipate I should have enough (around 10k) by this summer as I have a lodger at the moment and am camping out in my living room to make it possible.

In the meantime I have started to look at areas and flats so that I am familiar with what I want and what is available. I live in North Herts at the moment and will be moving to Hemel Hempstead as the properties are reasonably priced for the proximity to London where I work.

However, yesterday I viewed a shared ownership flat and unexpectedly felt I wanted to live there, even though I am not quite ready to buy but would have sufficient deposit to buy just this share, in the next month or two. It has been on the market for 3 days and when i saw it online (in fact the housing assoc also contacted me about it as I am in an assured shorthold tenancy with another housing assoc at the moment and am registered for s.o. properties), I was so excited that there might be a possibility i could live in an area I love. It is an area that I know well as I have a friend there and socialise there, 5 mins' walk to the train station. My current commute is horrendous, 1.5 hours minimum each way, hardly any parking, involves bike, bus and train blah blah which is my major reason for moving, as well as the fact that I miss London and like my social life there. I've had enough of North Herts, it was a kind of break from it all but now I feel I need to move, after 8 years.

The problem is I know that shared ownership is not usually a financially shrewd choice, but it is possible that in this case it might be as it is a trendy, sought after area and prices have been stable or rising, in the case of this flat, rising over the past few years, though only a bit. There are very few s.o. flats in the area, almost all is privately owned and most apartments valued upwards of £180k, as they are beautifully designed and 25 mins' away from London Euston. The share is 40%, price £62k, full price £150k which I doubt I would ever be able to afford to staircase fully up to, but I've been told by mortgage broker I could borrow around £110-120k when I have my 10% deposit. I will be viewing flats on the market near to the s.o. flat later this week - much more down at heel, very small, but affordable. I am a first time buyer. I think I know what people on here will advise me but would appreciate any feedback. It may be a case of my heart trying to rule my head but the s.o. flat is spacious, well maintained, in the perfect area for me (I've been slumming it for years in problem areas due to finances and feel I deserve more), has a beautiful kitchen, a place I could entertain, enjoy my social life more blah blah and I live alone so this is very important. Thanks for any feedback! I am thinking things through as much as I can..ps current salary £28k plus £3k per year from lodger (when I have one, not often). Oh yes,service charge on the flat £98 per month - not cheap and rent around 3% of remaining share. Full outgoing likely to be £750 pcm excluding council tax. Affordable for me but would mean any savings after that will be slow. i doubt i could have a lodger there though will enquire - that would make it more feasible. Where i live now my tenancy agreement allows me to have a lodger, halving my outgoings. Wish I'd done it years ago!:)

bitsandpieces

Depends what you want and what your longer-term plans are. How long are you planning on staying there for? If it's long-term you'll have more opportunities to build up equity and staircase, and any short term difficulties in selling a SO place/ups and downs in the market will matter less. On the other hand, if you might be wanting to move relatively soon then you're more vulnerable to these things. Also, how long do you have before you'll be thinking about retirement?

Either way, look very carefully at the details of the scheme and how the value compares to renting/what the implications are when you sell. Some did work out quite good value - with comparatively low rents - but that seems to less often be the case nowadays.

thequant

Can't be arsed reading all that (paragraphs ?), anyway probably don't need to. WAIT! plenty of threads on here about this topic.

AliceBanned

thequant wrote: »

Can't be arsed reading all that (paragraphs ?), anyway probably don't need to. WAIT! plenty of threads on here about this topic.

OK, thanks, but I had done a search and not found anything relevant enough. Just people arguing over SO or not SO. I find the forum can help me think things through if I get some feedback that's all.:)

Will bear in mind I need to shorten my posts or use better sentence structure.:D

AliceBanned

bitsandpieces wrote: »

Depends what you want and what your longer-term plans are. How long are you planning on staying there for? If it's long-term you'll have more opportunities to build up equity and staircase, and any short term difficulties in selling a SO place/ups and downs in the market will matter less. On the other hand, if you might be wanting to move relatively soon then you're more vulnerable to these things. Also, how long do you have before you'll be thinking about retirement?

Either way, look very carefully at the details of the scheme and how the value compares to renting/what the implications are when you sell. Some did work out quite good value - with comparatively low rents - but that seems to less often be the case nowadays.

Hi, thanks, I am 27 years from retirement (if retirement age stays at 67). Would be likely to stay there for a minimum of five years, as far as I can tell at the moment. Not likely to change.

The rent and service charge there are pretty steep but usual for the area - yes I've seen others with low rents so I could find something more affordable. Will speak to the HA tomorrow and get more information about the scheme. Thanks

mrginge

I'd rather eat my own weight in tesco value burgers than go anywhere near shared ownership

barnaby-bear

AliceBanned wrote: »

Hi, thanks, I am 27 years from retirement (if retirement age stays at 67). Would be likely to stay there for a minimum of five years, as far as I can tell at the moment. Not likely to change.

The rent and service charge there are pretty steep but usual for the area - yes I've seen others with low rents so I could find something more affordable. Will speak to the HA tomorrow and get more information about the scheme. Thanks

For some people these schemes can be spot on - if you are on your own - late-30s / early 40s - that's a lot of social life sacrificing. I've done the commute to get on the ladder thing and well life throws all sorts of curved balls - if the location works, the right home doesn't have to be an on-paper financial investment; 5 years is a lot of lifestyle to invest in something based on financials. Yes a really nice new build can be uplifting everyday if that new kitchen/bathroom thing ticks your boxes.

The rent part on these can be quite reasonable and with the equity you'll have a secure tenancy which beats private rental.

On your own can be tough and with that kind of commute - somewhere you feel safe and proud of has a lot to say and to be honest if you are happy you do only have yourself to please. You still may meet someone especially if better placed to socialise - so in your situation which may well change - I can see a strong argument for something that gives you what you want now rather than in a mythical 5 years....

leveller2911

No one is more sceptical of SO than me and the fact remains the reason SO is around is that people can't afford to buy a whole house and until the Governments of the day allow house prices to find their true level people will still struggle.

The facts are that since 2003 only 5% of people who bought SO went on to staircase to 100% so for the vast majority they will still be paying rent each month and be liable for all maintenance costs.This IMO says all you need to know about SO and that is 100% ownership is and will continue to be out of reach for the vast majority.

I do however think that if people go into SO having educated themselves about the pro's and con's(which there are many) then for many it may be the only option.

I would recommend reading the following, its a bit long winded but very interesting:http://www.cchpr.landecon.cam.ac.uk/Downloads/Shared%20ownership%20second%20hand%20market%20-%20proofed%20final%20for%20publication.pdf

Where I think it may be a good option is if people are tenants of HA and fully intend to live in the property for the rest of their lives with no intention of moving.

Gelly123

Hi AliceBanned,
Just thought I'd drop by and offer my experience in the hope it might help.
I live in Hemel Hempstead and bought my first property in 2005 which was a shared ownership 1 bedroomed flat near to the station (could be the same area you are looking as it's just 5 mins from Apsley station).
At the time, I was 26 and earning 23K and bought a 40% share of a the flat, paying rent and service charge to the Housing Association - the combined monthly payments for the rent/service charge/mortgage was about £750. The flat indeed was much nicer than many 1 bedroom flats in the area with bigger rooms and much newer build.
At the time, I was single and worked in the area so thankfully I didn't have to commute to London as that would eat up a large chunk of salary on train fare.
I subsequently met my now husband and after a period of time, our combined salary meant we could buy the rest of the shares (60%) from the housing association so we could own it outright. I could never have done this on my own salary.
The HA sent a valuer to price the flat and it was valued at £155K (silly amount I know but that's Herts for you!) - you have no say over what it's valued at, it's whatever the valuer sets.
Once the sale was completed, we had to wait a minimum of 3 months before we could sell it. Fortunately, the market was still on the rise (2007) and we sold it for £172K - making a bit of profit which was enough to put down a deposit on a house in HH and pay the fees involved.
In 2007, the markets were sky high and prices were extremely over inflated but it's just the way things were.
You may find that in time, your circumstances change but you have to do what's right for you.
I was the first of my friends to get on the property ladder and once people saw what I had through shared ownership, many of them also bought SO properties. It's a little helping hand until you can buy on the regular housing ladder.
If I can help in any way or you've got any questions, please feel free to ping me a message but I hope this might show you that it's not always a bad idea.
Best wishes
Gelly
x

AliceBanned

Gelly123 wrote: »

Hi AliceBanned,
Just thought I'd drop by and offer my experience in the hope it might help.
I live in Hemel Hempstead and bought my first property in 2005 which was a shared ownership 1 bedroomed flat near to the station (could be the same area you are looking as it's just 5 mins from Apsley station).
At the time, I was 26 and earning 23K and bought a 40% share of a the flat, paying rent and service charge to the Housing Association - the combined monthly payments for the rent/service charge/mortgage was about £750. The flat indeed was much nicer than many 1 bedroom flats in the area with bigger rooms and much newer build.
At the time, I was single and worked in the area so thankfully I didn't have to commute to London as that would eat up a large chunk of salary on train fare.
I subsequently met my now husband and after a period of time, our combined salary meant we could buy the rest of the shares (60%) from the housing association so we could own it outright. I could never have done this on my own salary.
The HA sent a valuer to price the flat and it was valued at £155K (silly amount I know but that's Herts for you!) - you have no say over what it's valued at, it's whatever the valuer sets.
Once the sale was completed, we had to wait a minimum of 3 months before we could sell it. Fortunately, the market was still on the rise (2007) and we sold it for £172K - making a bit of profit which was enough to put down a deposit on a house in HH and pay the fees involved.
In 2007, the markets were sky high and prices were extremely over inflated but it's just the way things were.
You may find that in time, your circumstances change but you have to do what's right for you.
I was the first of my friends to get on the property ladder and once people saw what I had through shared ownership, many of them also bought SO properties. It's a little helping hand until you can buy on the regular housing ladder.
If I can help in any way or you've got any questions, please feel free to ping me a message but I hope this might show you that it's not always a bad idea.
Best wishes
Gelly
x

Hi Gelly

It's very helpful, thanks. The area is indeed Apsley and the flat is in Stephenson Wharf, though not facing the barges, just behind. . I think it's somewhere quite special and unique, and yes feels right for me. I also have a close friend who bought nearby two years ago and still loves the area. I've visited him several times and we always remark how quiet it is, despite being fairly built up. I work near Regent's Park so the commute would be so much better. Being five mins' walk from a mainline station close to London and yet not have traffic jams outside is pretty good too. I'm looking at other flats in HH and they don't compare, true, though are cheaper.

Good that you have done so well out of SO and i know that some people do. I am now much more keen to follow my heart, without ignoring the financials but quality of life is important. Thanks for offering to answer questions, I may well have some soon. The flat is with MHO - the tenant/owner at the moment said they have been pretty good. If I have more questions I will PM you. Thanks again.

AliceBanned

barnaby-bear wrote: »

For some people these schemes can be spot on - if you are on your own - late-30s / early 40s - that's a lot of social life sacrificing. I've done the commute to get on the ladder thing and well life throws all sorts of curved balls - if the location works, the right home doesn't have to be an on-paper financial investment; 5 years is a lot of lifestyle to invest in something based on financials. Yes a really nice new build can be uplifting everyday if that new kitchen/bathroom thing ticks your boxes.

The rent part on these can be quite reasonable and with the equity you'll have a secure tenancy which beats private rental.

On your own can be tough and with that kind of commute - somewhere you feel safe and proud of has a lot to say and to be honest if you are happy you do only have yourself to please. You still may meet someone especially if better placed to socialise - so in your situation which may well change - I can see a strong argument for something that gives you what you want now rather than in a mythical 5 years....

Hi barnaby-bear. I really appreciate your post. . The truth is I am smitten with this area and that flat (though even it does make me compromise, I'm being realistic), and in some ways there does have to be some room for lifestyle, fun, and even a decision from the heart, it is a home after all. I have had a very tough time in social housing - people only see the fact that it is cheap and sometimes resent that they can't have it - but I have it for a reason and in some ways have been ghettoised by it. that is not good.:(. I appreciate the secure tenancy but it has not always offered that - I've had death threats from previous loud and crazy neighbours. Who wants to live like that?!! And here I am with a bit of savings and possibly the chance of yes being uplifted by a beautiful home, which won't risk me going bankrupt but yes is fairly near the top end of my budget. So what?!!! I need to live a little, travel and work less, and be in a pleasant, peaceful yet very practical area and yes enjoy my life and the benefits of having worked so hard and scrimped so much, living in some really grotty places for long enough.:D