Shared ownership..are we making a mistake?

broccoli25

Thanks for all the replies. Just to say, it is not a flat, it is a three bedroom semi detached house with a garage and driveway in London, so hopefully that explains the high price tag and why we are having trouble affording a house outright.

We have lenders that will lend on a 76 year lease, they have said anything under 60 years is a problem; the housing association has confirmed that we would only have to pay 40% of the cost to extend the lease when we choose to.

So that leaves the £10,000 in works for which the price of the share is 'marked up'.

I understand what everyone is saying about paying a mortgage plus rent at the same time, and all the other downsides to shared ownership. But...is there any hope at all that this could be better for us than continuing to pay a high rent? Our monthly overall payments would go down a few hundred pounds a month if we buy this property. And although many people would choose to move outside of London to a more affordable area, our life is here so we want to stay nearby. And we feel the property value will almost definitely rise due to the area of London it is in.

Is there any one who has ever had a positive experience with shared ownership? Maybe I am hoping for something that is just not possible!

Thanks again I am definitely a lot more sceptical now.

Windofchange

I think the way I look at it is that the shared ownership is a guarantee to the banks etc that should there be a crash, you are invested in covering some of the losses. Yes, the housing association or whoever would lose (imaginary) money on their 60%, but lets face it, whenever this house was first brought/built, you could probably have brought the whole thing outright for 100k, so are they bothered about the loss?

Help to buy, shared equity, government backed mortgages, key worker etc are all vehicles the powers that be are using to keep this whole thing afloat just a little longer. Instead of helping us all out and letting property fall to levels you and I could afford, they are protecting their buddies at the top of the pyramid from losses. As you can probably tell, it makes me angry. A functioning housing market shouldn't need a dozen or so props to allow the middle classes to buy somewhere to live.

I feel sorry for you as all you want to do is have somewhere to raise a family, and due to the past decade or so of greed and stupidity, you cannot. Who knows what prices will do in the future. I guess if it suits your budget and allows you a decent place to live then it's your call. For me personally, this madness cannot continue forever. The world is drowning in an ocean of debt, and something is going to give sooner or later. If the money you are spending is worth it for you so that you can paint the walls purple and hang a picture up, then so be it, but for me, this situation cannot go on much longer, and the fallout is going to be huge.

chanz4

the way I look at it is that 10k negative

stator

Personally I wouldn't pay that £10k extra, I doubt anyone else will either. He's being unrealistic, but it might take a few months for him to realise no-one is going to pay it.

The lease issue would put me off too, but it's up to you to decide.

getmore4less

What's your exit plan

Without a plan it's a trap.

If the housing association won't value the £10k input as part of their share why should you?

andyuk01

I had a SO property (now fully staircased) and i wouldn't touch this

dinofabio

ok

Here's my pennies worth.

76 years left on a lease is short but providing the HA agree to sharing their proportion of the costs to extend seems reasonable.

If you are intending on making it your home for a long time, and not worried about resale value, then it's a way of living in London that you otherwise wouldn't be able to do.

It's better than renting - you may build up some equity which is better than nothing.

When / if you leave, state that you have spent X amount on improvements (even if you haven't) cancelling out the £10K mark up, so that you can recoup some / all of the money. The HA seem to think this is ok and not negotiable so you do the same when the time comes!

I'm not saying I would choose to to buy a SO property, but if you've got no other option, then at least you have got a roof over your head in a area you want to live in that you otherwise wouldn't be able to afford

londonbabe73

Is the 10k for 'improvements' ? . I'm just selling my SO after 8 years. I have a 50% share. The prob with buying a so resale is the price is the price there's no negotiation if you buy it thru the H/a . Would I buy a so with 76 years ? Get in writing that the HA will pay towards the lease extension because its not usual that they do even tho you owe 40% you pay 100!of all the costs on everything and note that getting the lease ext on a so is not mandatory. If you go ahead and buy this property insist that you get the lease ext in place upon purchase.

londonbabe73

Also note some HA are stopping being allowed to claim for improvements so 5 years from now you might not be able to recoup. Also ask what the HA charge for selling your share.

acs901

10,000 premium on 40% of the property means he thinks hes added £25000 total value 10000/40%*100%
Has he added a bedroom? I think he's just demanding a premium from you, isn't he? It's up to you if you want to give him £25k. I'm sure he'll be your friend for life if you do.
-- -