Share your shared ownership experiences

WelshRachel

I bought my shared ownership flat in Surrey nearly 4 years ago and it's definitely a good option if you can't afford to buy a property. My mortgage plus rent is a lot cheaper than what I would have to pay on rent. Plus the flat is a lot bigger than one bed flats in the area (the square foot is bigger than most 2 beds I've seen too) so I have a bigger flat, for less money per month and am building up equity with my flat.

There have been a couple of downsides though. When trying to staircase, the HA only gets one estate agent to value the property which are renowned for over valuing - great when I want to sell, not for staircasing! They also wanted a mortgage agreed in principle before valuing the flat. I just wanted to know what the value was to see if I could realistically get a bigger mortgage or not.

Second biggest downfall are the service charges. We pay a lot of money for a very poor service. Have to constantly chase the HA to get them to do any work that's included in our charges plus any repairs. Plus repairs they carry out are ridiculously expensive eg last year, £450 to move a Sky dish, £500 to repair 5 ridge roof tiles (no scaffolding needed) plus £200 to replace a few lightbulbs!! They've also just said they need to replace the fire alarms which will cost around £3000 between the 4 flats!!!

turtlemoose

Like buying any property,there are pros and cons. It is more complex than an outright freehold purchase, but just make sure you read everything and understand what you are signing up for.

It was a positive experience for me. I did not buy a new build, I bought a long time empty LA property that had been refurbished with a view to selling. I bought 50% for 47500, no deposit, in 2007. I'm in the West Midlands, and this cost me around £300 a month in mortgage and £115 in rent, for a 3 bed end terrace. Before I bought it, I had been renting a studio flat for about 375 a month, so I felt much better off. As it had just been refurbished, it had brand new double glazing, has central heating, kitchen and bathroom - much much nicer than the outdated cramped cold studio flat!

In 2010 I started the process of staircasing to 100% . As the house price had plummeted, I was looking at paying less for the second half than I did for the first. This is where I had some problems, the HA were a nightmare to deal with (Mercian HA). I had a thread on mse about it - the HA's "independent" valuation set the property at 85k which was massively overpriced. It took a year of arguing, but eventually by going via their formal complaint process, the HA admitted the valuation was unfair. They agreed that I could choose any RICS surveyor (not limited to their approved list like last time) and that they would accept this valuation. I used a local surveyor who valued the house at 65000, so in 2011 I bought the second 50% and the freehold for 32500.

At this point rates had dropped so I was paying less for 100% mortgage than I was for mortgage+rent - about 360 a month. 2 years later I had a better ltv and switched to an even lower rate and now pay 263 a month. Comparable houses cost about 500-550 to rent locally.

I am restricted - for 21 years I cannot sell without the HA's permission, and must give them first refusal on buying the property - however if they decline then I am free to sell to anyone I choose at any value I choose. I did think this might be a problem given how crap Mercian had been in the past. However, they have since been bought out/merged in to Circle. Dealing with them has been delightful compared to Mercian! I did briefly consider selling a couple of years ago, I contacted them and received a letter a couple of days later saying they declined to purchase and I could sell, valid for 12 months. I received a follow up phone call saying that if I didn't sell in the year or wanted another one for some reason, just drop them an email and they'll issue a new one straight away. So while I've decided not to sell for now, I am not too worried about that restriction.

Overall it was a good thing for me. Just do your research first!

GetRichSlow

In short; avoid A2Dominion Housing Group properties at all cost. They have been a 7 year nightmare for me, other residents in the block I live in, and for residents in many of their other properties across London. I am an experienced complainer and generally know how to get companies to improve, but housing associations are from my experience almost uniquely unaccountable and are ineffectively regulated, with very little recourse to anyone. I have obtained about £1000 of compensation over 7 years from the company by persistent complaints, but this is small in relation to the stress and hassle caused.


More broadly I'd recommend that anyone considering shared ownership does detailed research into whoever the other party is. Ask existing residents what they think. I wish I had done.


Finally - Don't be put off shared ownership, it can work I suspect if you find a good company, and I certainly couldn't have otherwise got on the London property market at 23.

foofightin

Hello.


We bought a 3 bed semi in Milton Keynes in 2006 on shared ownership. We were first time buyers, not married and no kids, but were accepted as buyers. Different housing associations will have different eligibility criteria, so check those out.


We ended up using a broker for our mortgage, as not all lenders nor all of their offers can be used for shared ownership properties. Our rent has only gone up from £160 / month in 2006 to £188 / month now. This probably depends on the housing associations policies on increases.


I have probably only had to contact my housing association once in the whole time we've been here. This was because at one point I thought a leak coming through the ceiling was central heating under the floorboards and therefore on insurance. Sadly it was a leaky tap!


Legal fees will be higher as there is a bit more work to be done with a mortgage and a lease on the property. Each shared ownership has a lease that stipulates amongst other things, the right to staircase (purchasing more share and at what increments) and the responsibility of upkeep of the property.


The more difficult mortgage application and higher legal fees will obviously be a pain when coming to sell. However demand for good quality shared ownership properties is sky high, so the actual selling won't be a problem. And I am glad that when we do sell that it will hopefully go to a worthy purchaser.


For me, the upkeep part is a bit of a down side. If anything needs repairing, the onus is on you. However buildings insurance is included in our rent payment, so you'll not be paying for walls falling down etc. I'm dreading the day our boiler needs replacing though, as that is probably the biggest expense that'll fall on us.


Another downside can be premiums. These are an absolute bane of any shared ownership property. Luckily our lease prevents us from paying or claiming any premium on our property. But these are a lump sum that is payable when purchasing certain properties, that can't be added to the mortgage. I don't know if these premiums go to the housing association or owner - someone might be able to elaborate on this.


We probably have between £35 - £40k equity in our property now, which isn't too shabby when we bought our share for £84k 9 years ago. I was 22 and the wife was 20 when we moved in, so for us this is likely a stepping stone. However we now have 2 children so have really grown in to our place, and will find it hard to leave. Especially when you consider that our mortgage and rent comes to less than £540 / month. This is about two thirds what the equivalent standard ownership mortgage would be, and a similar difference for rental.


But then there is always that lingering thought that we are paying rent. We'd love to invest in a new kitchen, and maybe even a conservatory, but it isn't worth as we won't get the full benefit when selling on. 100% ownership is definitely the way to go, but as other people can attest, that just isn't possible in some areas.


Shared ownerships aren't for everyone, but the intention is there to provide a stepping stone on the property ladder, and there are good and bad housing associations out there that will help or hinder you along your way.

hutchy75

This is our 13th year in our shared ownership home. Having read other posts both good and bad, I personally couldn't have got on the property ladder without it. Our rent has increased year on year as you would expect, however its been a very small increase and my combined mortgage and rent on a 2 bed house is under £400 a month, i couldn't rent a beach hut for that in our area now. House prices have increased fairly significantly in that time, so feel lucky we bought when we dix (50%) shared owners. Our mortgage rate is also extremely low at 1.5% which helps. I have just over 12 years left on mortgage and have considered staircasing several times, however the mortgage payments would be much higher than rent, so not really cost effective for us. Perhaps we have been lucky with radian housing association who have invited us to shared owner meetings to discuss what works well and could be improved for future owners. We have been pretty much left alone. The only slight negative is you are responsible for all maintenance and repairs as you would expect, but when we have co sidered home improvements u you need to get permission and they will not contribute a penny even though it may contribute to an increase in equity. That said it's the best thing we could have done. Just to bear in mind if you get a house you dont pay ground rent but your rent includes a management fee and buildings insurance.

EmilySMC

I am very happy with my shared-ownership house.
My main message is that it really only works if you are buying a home, not an investment, because the bottom line is that the Housing Association that owns the other share will be getting a share of all your improvements for nothing, and it wont work if you resent that for ever.
In my case, I've now been here 21 years and about to make another BIG improvement, but I'd never have been able to have a whole house so near Central London if it hadn't been for the scheme. I am the one who has benefitted from the loft conversion and all the other improvements, house price inflation means I'd still get a massive chunk if I decided to move, and if I hadn't been able to do this, I'd still be stuck in leasehold flats with fickle freeholders and the constant hassle of sharing areas with unpredictable neighbours.
Now I've paid off my mortgage and bought another 20% with the lump sum from my pension, I pay a peppercorn rent, which I'd even get Housing Benefit for if my income went down drastically.
I know some people feel a need to OWN every inch, which I dont recognise... and I know that the Housing Association technically could evict me 100% for non-payment of 30% rent, but that seems so unlikely, it does not affect my joy at living in this house. I feel lucky to have had this opportunity.

Suzester

My main advice about getting a shared ownership property is READ THE SMALL PRINT and ENSURE YOU UNDERSTAND THE TERMS & CONDITIONS OF THE LEASE. This is so important as we have been caught out by this and what seemed like a very good deal at the beginning has ended up costing us a lot of money and stress! I don't regret doing shared ownership as we got a lovely 2 bedroom house which we wouldn't have been able to afford normally due to my partner having bad credit, however we probably would have been better off renting a property as shared ownership is basically like renting but without the benefits - for example when you rent it is the landlords responsibility to fix things if they go wrong, however with shared ownership it is YOUR responsibility. We were paying £900 a month and only £300 of that was going towards paying off our mortgage, so not cheap! There's been ongoing complaints about the service charge as this has gone up from £70 a month when we first moved in to £195 per month now! The housing association's response to this was they "under-estimated at the beginning". Not really acceptable! We've even been to our local MP who is the Housing Minister but not had any luck - it seems housing associations can pretty much do what they like!


Housing Associations can be VERY difficult to deal with, and seem to treat shared owners poorly compared to their "social housing tenants", e.g. we've had some bad experiences with social tenants in our block - drug dealing, smashing windows, breaking communal doors, etc. The costs of these repairs then get shared between EVERYONE instead of just being passed to the resident that caused them - VERY unfair. Shared owners get treated like social tenants when the housing association wants to enforce a stupid rule, e.g. you can't have a doormat because it's a health & safety risk, but then as private owners when they want to charge you for something!


It also wasn't easy to sell the property and we were shocked about how much we had to do and pay for, even though we only owned 30%. The thing that shocked us most was that when the property was sold we had to pay the housing association 1% of our sale price even though they own 70%! Very crafty!


Anyway, I wouldn't tell anyone not to do shared ownership but just be VERY careful and please ensure you understand everything - particularly around service charges, repairs and re-selling.


GOOD LUCK!

Scribe46

It depends very much on your circumstances. Paying rent, mortgage, service charges and other on-costs may not work out for you. However, shared ownership suited me because I had the funds (through the death of a relative) to buy 40% of the flat and therefore paid rent and not a mortgage too. (I wouldn't have been given a mortgage anyway.) Buying a used shared ownership property is likely to be better financially than one in a new development. The builders who construct shared ownership blocks to comply with planning rules in a new development price them at the same level as the open market sales (and Housing Associations may not negotiate well). The person I bought from lost money because the resale valuation was lower (not only because of a slump in the market). In addition, once a block has been lived in for a few years, any problems connected with poor maintenance or inconsiderate neighbours are likely to be evident. My own experience was that increases in the rent were modest.

Waywardmike

We bought a house on the open market using the key worker scheme in 2004 (Wife's a nurse). It was very different to the shared ownership schemes I see now though.

We were given a 25% equity loan to buy whatever we wanted (within certain criteria, based on need) and we'd just pay 25% back when we sell with no rent on the part we didn't own.

Worked out spectacularly for us. 25% deposit meant that we were eligible for some really great mortgage deals for the other 75%.

Luckily (or not, depending upon how you look at it) a critical illness insurance payout paid off the 75% a couple of years later. This left us paying nothing for about 5 years till we saved enough to pay off the remaining 25%. house prices had risen and fallen again so it wasn't worth much more than we paid so we ended up paying the housing association £625 more than what they'd given us. Absolute bargain.

I'm not sure the schemes I see available now though would have worked out so well in our favour.

John58_2

Ronaldo_Mconaldo wrote: »

So you're half renting and half interest-only mortgage? I'm not surprised you think it's so good as you're not paying off a mortgage. It's all rent for you and you own nothing.

Apart from the fact they own 25% outright, nowhere does it say their mortgage is interest only, but even that doesn't mean they don't own their 50%. Even with an interest only mortgage they would own their share.