Shared ownership, what do you think?

saajan_12

Agree one case from 20years ago may not be representative of the typical situation with SO today, but don't dismiss the pitfalls.

1) Worst of both worlds in a sense: can't just move on a months notice as you can with renting, but not all yours to do as you please with freehold ownership.

2) Will the SO company contribute to maintenance / repairs / improvements? If not, you're paying 100% of costs for 50% of the property value gain.

3) Restrictions on who you can sell to (limited to the SO market, and you may have to give first refusal to the company). This can limit how much you get back, and increase timeframe if you need to move on due to life changes.

4) You are young and may have big life changes soon. House buying/selling is expensive and stressful, so any money saved over renting can be lost if you have to move within a couple of years.

5) Rents can be increased, knowing you are fairly 'locked in' as it's a big hassle for you to move and sell your share.

6) Price of the remaining 50% share can be increased knowing you are fairly 'locked in' to wanting to staircase up on the same property.

IAmWales

Every SO scheme is different, you need to weigh up the negatives and positives of the one you are looking at. My SO property was perfect, it allowed me to get on the property ladder in a good area. Rent increases were restricted to inflation, and it was a 999 year lease, so no worries about renewal. When I came to sell the first people that viewed it offered the full amount and I made a very healthy profit.

Home ownership in itself has pitfalls and many ongoing costs, it's not something to enter into without research. If this property is right for you then forget what other people think and go for it.

NOVAMET21

Alleygator wrote: »

Hi everyone,


I'm really just looking for advice, do you think this could be a viable option for us? Has anyone got personal experience with S/O whether it be good or bad?

There are lots of cons in SO scheme but there is only one pro which is, it will be affordable and cheaper at the beginning. As you may own 50% share and pay rent on the remaining share, the rent itself is calculated so that it is affordable. However, the rent does increase annually depending on inflation.


You may be paying less monthly at the beginning but then 10 years down the line might be paying more than owning 100% of the house.


So before, you plan on purchasing a SO property, you need to make a plan about either stair casing to 100% (some SO scheme do and some don't) or selling your SO property and buying freehold property in the near future.


People who doesn't have experience on SO scheme are welcome to their opinion as they might have read or heard about it but I have nearly 5 years of experience with SO scheme although not with the same property but same housing association. There seems to be different rules depending on the housing association. I think the main difference is being able to stair case to 100%. That itself will put people off if you are going to sell it on. I sold my previous SO property in just couple of weeks as it was only 2 years old and no obligation to staid case to 100%. Not able to decorate is bull !!!!. I got wall paper everywhere, painting and some of my neighbour even has conservatory put in. The only problem you will have is if you want to break a wall where you need permission from HA and they will authorise depending on criteria.


If you can afford freehold in your area then do that if not save whilst living with your parents for deposit. If you want to move out and want your space then it's up to you. Like I said it is not bad as these people make out to be, you just need to be smart and have a plan.

Lgas

I bought a shared ownership 2 bedroom terraced house just over 6 years ago now and I love it. No problems with the house at all, we have decorated how we wish (it is nothing like renting) and without it, we would never have gotten on the propert ladder.

Or salaries are double what they were when we bought the house so now we are wondering what makes more sense - to staircase to 100% (a few hundred more a month than our mortgage and rent combined) or overpay on our existing mortgage of 50% of the property. Next door just sold for £192K, it was £155K new. On staircasing to 100% we get the freehold (you must staircase within 25 years).

usefulmale

Hello Alleygator,

We bought a 25% share three-bed new-build shared ownership house nearly two years ago. Best move we ever made.

We are in our late 40s with three kids. I'm a domestic and my wife does not work.

Our lease is 125 years so both us and our children will be long dead before it runs out, so I don't give it a second thought.

Our combined mortgage and rent is just under 500 a month. Way lower than renting an equivalent house in this location.

We don't need permission to decorate (we would though if we wanted to build an extension) and we don't need permission for pets.

Any rent increase (once per year) is limited to inflation plus a fraction of a percent at the time of increase.

Yes, if the boiler breaks, it's our problem but, then again, if you are mortgaged to the hilt to fund a house you own, can you say that you would have savings to cover it, or would you need to borrow?

Fact is, for us, we have a very comfortable life, with security of tenure and plenty of spare cash (not funded by debt) to spend on US, rather than paying the bank and having to watch every penny. Life is for living, after all.

Finally, can you guarantee your income for the next 25 years? How do you plan to fund a full mortgage if you become unemployed or unable to work? If that happened to us, we could get housing benefit to cover the rent and the mortgage is so low, we could probably service it from JSA.

bouicca21

I'd be investigating the reputation of the housing association as well as doing the various checks suggested above. Some are very good, others not so.

The pro is that you get bigger space than if you bought outright - so almost certainly more comfortable. You have to weigh that against the possible restrictions, and the cost - paying a mortgage and rent doesn't come cheap.

Red-Squirrel_2

The big 'pro' compared to private renting is that you will have much more security. The only 'pro' compared to full ownership is that it's cheaper at first.

As low paid full time workers there was a time when you would have been exactly the kind of people that council housing was for, but sadly those days are long gone!

I think the downsides have been outlined very well by other posters.

Personally, I think SO is a good idea only if it's the only way to get out of private renting. If you could buy 100% but just not as nice or as big a place, then go for 100% not SO.

Elfbert

We're currently in our second shared ownership place.

Bought 40% of a 1 bed (my name only) in 2012. Sold it in Jan 2017, for a price I couldn't believe - but it is in London. Bought 50% of a larger, nicer flat. It's only about 3 miles from our old one, but it's about twice the size, huge balcony, lovely communal grounds/play areas etc. on an estate which is mainly privately owned. The quality of our life has improved no end by moving here. Our old one served a purpose, but it wasn't a great area.

We might eventually buy 100% of it, but as we have always planned to retire back to the Westcountry, where we both grew up, even if we didn't buy 100% what we sell our 50% for will still buy us a perfectly nice property outright in the areas we would like to live out our days in. I can't imagine the London market will dip so much that it won't always fund this.

We love it because it's a great area for us (in terms of our getting to work easily), family friendly, great community, good transport links to get back to the Westcountry to see family. We have security of knowing it's 'ours' to live in as long as we want, we can decorate etc. if we need.

I do think the London market makes it easier to sell SO though - I'm not sure I would have been as keen if we were in a different area. Demand for our old flat and for this one was very high - we were very lucky to get this one.

Bonniepurple

We lived in a shared ownership house for almost 11 years. At the time, it was right for us. It gave us security in a way renting never did. The low rent meant that we could afford it when my husband lost his job a few days before my eldest was born - an that he could be self employed/SAHD instead.

About 2 years ago it was obviously becoming too small and we started to think about moving - but that would have meant me going full time, which health wise I was unsure about- so we did nothing, until I unexpectedly inherited some money and we were able to move to a larger house.

Yes, being liable for 100% of repairs was a nightmare sometimes - but having the security in return for a low rent was amazing. When we sold, we probably just about broke even (bought £28,125 in 2006, sold £41,250 Dec 2016) due to the work we did to it - but it was home.

The final thing to bear in mind is I'd rather part own a property that you have space for starting a family in, rather than own (or the bank own for you!) a tiny property that you could grow out of very rapidly.

Sgethin

It's the only thing to emerge in the last 60 years to give Rachmanism an air of respectability