Buying shared ownership - Buy to stay for 2 - 3 years?

croto

Hi all,

me and my wife are living here in London for a while now (a bit over 1 and half year) and we always lived in Woolwich area, which in my opinion is one of the worst places to live in east London.
My rent is about £1050 now and it is very likely to increase when my landlady renew the contract (I rent directly with her, no agency). All the surrounding flats are being rented at about £1200 for the same size, but through agencies.
I have seen a nice flat around Bermondsey on Shared Ownership scheme, which through their "budget calculator" would cost me around £1200 a month including mortgage , service charge and all that. It sounds tempting, especially because it is so close to my wife's workplace and the area is so much nicer than Woolwich.

My question is, me and my wife kind of agree that we might move out of London in the next 2 - 3 years, should I get the flat or keep renting until then? Will all the expenses to get the mortgage and the money for the deposit, plus the uncertainty of UK's economy worth the risk?

Thanks a lot everyone!

booksurr

intending to sell after 1 - 2 years is the worst possible reason for buying, even with London house price inflation. You would be lucky to cover the buying and selling costs let alone come out ahead compared to renting

add in that you are talking shared ownership :eek:

read the many threads about problems with agreeing valuations, time delay and the sheer hell of trying to sell the shared ownership you think you own

lewishardwick

I looked at Share to Buy schemes in SE London. I cane to a similar conclusion to the above. Selling after just a few years would be expensive and possibly very slow. There's usually small print in the T&Cs that states you must first attempt to sell through the HA that owns the remaining share.

I also got concerned with the 'service charges'. Many were in the region of £240 a month, nearly £3,000 a year to maintain somewhere the HAs are notorious for NOT maintaining?!

I'm looking further out. Significantly cheaper, more likely to have a parking space included and the service charges are much cheaper.

If you're looking for a short term fix, avoid STB like the plague, but given the costs involved with buying, you may wish to consider your options more carefully.

If/when your LL wishes to renew your tenancy, perhaps agree a modest increase in return for a 24 month fixed term? Bermondsey/Woolwich/Deptford much of a muchness really. All have good and bad areas.

croto

Thanks all for the suggestions! I appreciate a lot...

I have been looking on other topics about shared ownership and it actually does not sounds like a very good deal. So many people facing problems with rent increasing and the fact that HAs don't have any responsibility on maintenance. Not mentioning the difficulty on reselling it!

magicpork

If you have to use one of those government schemes then I'll always prefer Help To Buy Equity Loan over Shared Ownership.. You don't need to pay rentals (for 1-5 years anyway) and they're much easier to sell (no HAs involved!), there're higher chances that your service charges are actually being put into good use and the build quality/fitting may be of higher quality. You'll still be facing issues like valuation and staircasing but in general it's much easier to manage than SO.

Affordability wise, with 40% Equity Loan in London I don't think it's much less affordable than shared ownership.

Obviously, there're much higher demand for HTB properties compared to shared ownership so you may have to reach out to developers more proactively

Either way...buying a property to sell in 1-2 years is not a great idea!

sann420

You can buy 25% of a 600k flat for 150k. It will be less stamp duty and when you look to sell it 2 years later you will be selling some thing worth maybe 200k.

Or you can buy the same 600k flat for 360k with a 40% London HTB with full stamp duty. 2 years down the line you will be trying to sell a 800k flat.