Shared ownership or wait?

AliceBanned

RoxieW wrote: »

Our rent rose about £3 a year but I know that this can widely vary. It's also good to check if you have the option to buy further shares if and when you should wish to. best of luck with whatever you decide.

Thanks. I've emailed the Housing Assoc today to try and get an idea of possible rent rises and possible likelihood of me purchasing further shares. I know it is possible to staircase up to the full amount and I would want to get as close to this as possible and not be stuck paying a lot of rent for many more years!

My friend who lives in the area said there is nothing to stop me buying and then moving on in a couple of years - as I am still so unsure about a final decision. He thinks that the nature of the area means values are rising, and it does seem to be the case and has been for a few years. Of course this could dramatically change, who knows! The more I think about it, the more a big and difficult decision it is. The Housing Assoc's mortgage person has been putting on some pressure because of the timescale. this hasn't helped! Of course it could be snapped up if I back out so she is right but I need to do what's right for me.

bitsandpieces

AliceBanned wrote: »

My friend who lives in the area said there is nothing to stop me buying and then moving on in a couple of years - as I am still so unsure about a final decision. He thinks that the nature of the area means values are rising, and it does seem to be the case and has been for a few years. Of course this could dramatically change, who knows!

Certainly you can buy and then move on a couple of years after, if you want. An issue with this kind of timescale is that (especially with shared ownership places) the cost of buying/selling can be a significant chunk of cash compared to the purchase price, so can make living in a place for the relatively short-term costly compared to renting for the same period. You're also vulnerable to short-term property price shifts - great if they go up, less so if they drop!

zzzLazyDaisy

My cousin has just sold her SO house for the asking price - 3 days after putting it on the market. That is in South East where property prices are generally too high for a lot of FTB's to get a foothold.

The point is, if it is in a nice area, and if property prices are generally high, you should have no problem selling it on when the time comes.

kingstreet

It's not the rent you have to be wary of. Shared ownership rent is set at 2.75% of the value of the share you don't own. AFAIK this only increases if you have the share revalued, perhaps when staircasing (which is usually allowed in 10% increments).

The service charges are the area usually subject to ad-hoc rises which don't require justification. These I would be wary of. Make specific enquiries of the HA of the historic changes in the service charges over the years and check the remaining lease term too.

bitsandpieces

kingstreet wrote: »

It's not the rent you have to be wary of. Shared ownership rent is set at 2.75% of the value of the share you don't own.

In some schemes it is, in others it's set in completely different ways.

Good point about service charge, though.

AliceBanned

bitsandpieces wrote: »

Certainly you can buy and then move on a couple of years after, if you want. An issue with this kind of timescale is that (especially with shared ownership places) the cost of buying/selling can be a significant chunk of cash compared to the purchase price, so can make living in a place for the relatively short-term costly compared to renting for the same period. You're also vulnerable to short-term property price shifts - great if they go up, less so if they drop!

Thanks. Buying at all is costly compared to renting for me at the moment. As I have a lodger my outgoings are small. I know that when selling with this housing assoc I have to pay their and my own solicitor's fees!:(

AliceBanned

kingstreet wrote: »

It's not the rent you have to be wary of. Shared ownership rent is set at 2.75% of the value of the share you don't own. AFAIK this only increases if you have the share revalued, perhaps when staircasing (which is usually allowed in 10% increments).

The service charges are the area usually subject to ad-hoc rises which don't require justification. These I would be wary of. Make specific enquiries of the HA of the historic changes in the service charges over the years and check the remaining lease term too.

Yes the service charge was putting me off, £98pcm at the moment. Most flats in the area are the same. Don't see how I can avoid it in a leasehold flat. I find it so difficult that I don't get much written info until I actually start the process!

I wasn't aware that staircasing might only be allowed in 10k increments. I've sent an enquiry to the HA as I wouldn't go ahead if there were too many restrictions with the staircasing. I am only able to purchase 40% to start with and would like to get as close to full ownership of possible in a few years. The mortgage broker has told me this isn't possible but surely if I can get the deposit together I can get whatever mortgage I need. it's still quite unclear and seems restrictive.:(. I love the flat but don't want to rent it for ever, I want to own it!

kingstreet

The level of service charge is one thing, but the rate at which they can be increased is the issue. Are you sure that what you might sign up to today is what it will be in two or three years' time?

I didn't say staircasing was typically in £10k increments, I said 10% increments. A bit pedantic, perhaps, but the difference could be dramatic.

I don't understand the comment about your adviser. What do you mean by "The mortgage broker has told me this isn't possible." Please clarify what you have been told what you can't do.

kingstreet

bitsandpieces wrote: »

In some schemes it is, in others it's set in completely different ways.

Good point about service charge, though.

Apologies for the assumption. The schemes I deal with in the Midlands all use this level.

AliceBanned

kingstreet wrote: »

Apologies for the assumption. The schemes I deal with in the Midlands all use this level.

Thanks. Am checking with this HA anyway. I think it can be a bit arbitrary so I need to make sure this is clearer.

Agreed, with the service charge - this can seem expensive with very little "service" appearing to be done in some cases.