Is shared ownership a good idea?

flyingember

Hi,

I am thinking of buying a SO house at 50% of the value. I can buy it as a cash buyer as I have money from the sale of my old house due to divorce.

As my job is not very secure I am scared to take out a mortgage to buy normally. So it is really this house or continue to rent. I am looking for an other job but well paid secure jobs are few and far between around here

It is in a rural village so I would only ever able to buy 80%.

I would live in it for the foreseeable future and would make some improvements as my finances allow.

What are the pitfalls of SO and is it generally a good idea?

Thanks

fe

kingstreet

Have you been vetted by the Housing Association/HCA HomeBuy Agent?

Can you buy on SO without a mortgage?

I didn't think you could, TBH.

scheming_gypsy

I've got shared ownership and i've no issues with it. My rent is relatively low though at about £60 a month, I've seen some at a couple of hundred and wouldn't be any cheaper than if you had a full mortgage.
Whenever I've seen people saying they're not worth it, their main argument is that you have to pay for any repairs yourself... but it's my house, I live there and I wouldn't expect the HA to pay half just because I'm renting 40% off them.

leveller2911

When you come to sell you will have to give the HA a few weeks to market the property internally through the HA to other tenants rather than advertising from day 1 via a local estate agent.

As already mentioned you will be responsible for all maintenance. If you want to extend,convert the attic etc you will need permission from the HA (usually not a problem) and you will have to satisfy their surveyors with regards to the work along side the Local Authority Building control dept. All HA drag their heels and take ages to carry out the most basic of tasks.

If/When you decide to sell if you haven't staircased to 100% you will have a limited market as many buyers won't want to buy 50% of a house. Its also worth remembering that many SO houses in small villages and towns will have a Rural restriction on them which do not allow staircasing to 100%.

Make sure that the rent you will pay is the correct percentage of the whole rent. So for instance if the rent for 100% is £100 per week and you buy 60% ,make sure your only paying £40-00. Some HA will increase the rent before purchase. Check to make sure any future rental increase is linked to the rents for tenants who rent 100% or you may find your rent has been increased more.

The HA will also carry out affordability checks in the same way that mortgage lenders do. You may be asked to send off proof of deposit,income via pay slips or SA302 if your self employed.

33rayner

Loved ours, bought 50% flat, sold it for a profit and are about to move into a 2 bedroom house with the profit going into that deposit. The scheme made buying a house easier than even buying privately.

Doubt that they would let you do it without proven income though? The financial checks were fairly rigorous and you would need to prove you can pay the rent every month.

gazfocus

I bought a shared ownership house about 15 months ago now and have no issues with it.

Like what's already been said, most people that complain are complaining about the upkeep of the house such as repairs, but if you owned the house outright, you'd have to do the repairs anyway. Plus, one bonus is, the Housing Association will have building insurance in place so that's one less thing to pay for.

Your best bet would be to find out who the housing association is and give them a call. I would definitely check whether you'd be allowed to buy as a cash buyer, because these houses are intended for people that don't have that sort of money, but even so, there'd be no harm getting the house with a mortgage, then paying the mortgage off within a few months.

My only other concern would be the maximum 80% ownership. When we were looking for a house, we got our mortgage with Leeds Building Society and they wouldn't lend on a house unless we could staircase to 100%.

opinions4u

It can be a trap if you want to move on at a later date.

That's not to say it's a bad thing. But I'd encourage you to seek out the pitfalls that occur further down the line (and posts from those who've been there) and understand them.

brit1234

https://forums.moneysavingexpert.com/discussion/3177256

Main debate on shared ownership with pitfalls.

I wouldn't touch with a barge pole. Lots of extra costs, excessive restrictions, you don't own it and far harder to sell.

gazfocus

brit1234 wrote: »

https://forums.moneysavingexpert.com/discussion/3177256

Main debate on shared ownership with pitfalls.

I wouldn't touch with a barge pole. Lots of extra costs, excessive restrictions, you don't own it and far harder to sell.

And here speeketh brit1234 again...

Lots of extra costs: like what?
Excessive restrictions: such as?
You don't own it: Fair enough but it's meant for people that can't afford an equal sized property outright.
Far harder to sell: can't comment as not gone through that process.

ohlookabee

I've been researching this too, we have enough for a deposit but wouldn't be able to get a mortgage high enough on any of the houses here. So I'm looking into shared ownership, sadly their doesn't seem to be any SO houses here only 1 bed flats! Also do you have to be in receipt of housing benefits or in a council house to be able to get a SO house?

leveller2911

ohlookabee wrote: »

Also do you have to be in receipt of housing benefits
or in a council house to be able to get a SO house?

No you don't need to be in receipt of HB or have a Council house. The HA will check to see that you can afford to buy a SO property in the same way that the banks will. Many of the SO houses will be advertised on the openmarket and there is a criteria you have to meet.