Your views on shared ownership?

Andrew_Ryan_89

Hi all,

A friend of mine recently purchased a property through shared ownership and we were having a debate around the pros and cons. For me, I find it to be a rather silly scheme for the most part. It's like the whole thing was dreamt up by property developers as a way of selling one house twice whilst also receiving rent and fooling the government into thinking that it is helping with the so call housing crisis.

The reason I feel it is a little silly is because I go by the idea that the main, if not entire point, of taking out a mortgage to buy a house is that after 20-25 years, your main expense is no longer a concern. My friend currently pays around £900 in mortgage repayments and £400 in rent. After 25 years he still has the £400 rent to pay and only owns half of his house.

There are some people who are quite fortunate with shared ownership. Another friend purchased a home 5-7 years ago in Hackney, buying 40% of a 3 bedroom flat worth £275,000 at the time. It has since more that doubled in value and put him in a position where he could sell up, move further out and put a deposit down on a much larger house so it has worked out well for him.

The first friend I mention, his property has also gone up by a significant sum since he purchased it. Thing is, between him and his wife, they earn very little to a point they don't save much. Unless he plans to move way out of London/South East, chances are he can't take advantage of the increase in value and buy somewhere bigger as those bigger places have also gone up in value and no bank will lend him that sort of money on his and his partners current salary.

Thoughts?

Cakeguts

It usually works out cheaper not to buy shared ownership. Apart from the rent aspect even if you only own 40% you are responsible for paying for 100% of the repairs. Shared ownership is not really good value for money.

Fireflyaway

Personally I wouldn't. The reason might sound snobbish but at least where I live, shared ownership properties seem to unfortunately be in areas where there is lots of antisocial behaviour going on.
If it were in a nice area I might if I could ultimately buy the whole property in the end. If that wasn't possible I'm with you. I'd rather be house payment free in my old age.

martinsurrey

Andrew_Ryan_89 wrote: »

The first friend I mention, his property has also gone up by a significant sum since he purchased it. Thing is, between him and his wife, they earn very little to a point they don't save much. Unless he plans to move way out of London/South East, chances are he can't take advantage of the increase in value and buy somewhere bigger as those bigger places have also gone up in value and no bank will lend him that sort of money on his and his partners current salary.

Thoughts?

Where would this second friend be now if they HADN'T bought the SO flat?

With their incomes they wouldn't have been able to buy anything, market rent is similar to mortgage+SO rent, so they wouldn't have saved much in rented, but they would have lost out on the house price increases, and they would be massively exposed to rent increases (they are currently shielded by owning 50%).

so in my eyes its done them very very well.

SO is a risk, just like buying, there are winners and losers, generally like house buyers, you "win" (relative to NOT buying at all) if house prices go up.

aviii

Personally, i find it a big rip off - it allows the developer to charge a huge amount for the property and encourage the buyer to go onto one of these share ownership schemes.

A lot of the time these properties, especially flats are really small for what you are buying and at a price where you could, if you had the fund, purchase a house.

It sounds good in principle – but of you are not skilled or in a profession with progression – you will be unlike to purchase more of the share.

i have been looking into it to for myself and I fall into the below average worker – so the thought of paying both a mortgage AND a rent which could easily be over £900, excluding bills, does not work out for me.

I do think its good for young people who able to keep moving after a few years if there property increase.

Out,_Vile_Jelly

It's the worst of both worlds IMO; you have to pay rent like a tenant, but are financially responsible for maintenance like an owner occupier. No thanks.