Shared Ownership HELP

Clarko

Hello,

I am looking for some advice please...

We are currently looking into purchasing a shared ownership property...

The property we are looking at purchasing is going to be a 3 bedroom detached property in a good location. We are looking to purchase 45% of the property at £85,000. This is going to be funded through a cash sale and non mortgage.
We do have the option to staircase up to 100% at a later date if we wanted to!

The £85,000 is going to be gifted to us by my father. I have already spoken to the housing association and this is all possible. Due to our current circumstances we are not able to get a mortgage so this is the only way we can do it.

We have looked at buying a property at auction, however so far have been unsuccessful and we are now looking at the SO route.

Can anyone offer any advice on shared ownership? is it a good / bad thing? we have heard some good and some bad things but are now looking further afield for advice before proceeding!

Thanks in advance!

PersianCatLady

Have you considered the cost of maintenance and rent when calculating affordability?

Clarko

As I have originally stated the 85,000 cash is being gifted to us by my father as we are unable to get a mortgage.. therefore we have no other option?

Clarko

We have looked at the rent and service charges along with maintaining the property and it is more than affordable as we wouldn’t be paying a mortgage only rent of around £222 per month. Our concerns are more regarding what the issues are that come with shared ownership. Peoples personal experiences etc

usefulmale

On our new-build estate, the few shared ownership houses that went up for sale sold much faster than the private owned properties.

Clarko

We are hoping to stay where will purchase for the next fair few years yet so wouldn’t even consider selling within the first 5 years and by then would of hopefully purchased the remaining 50% so the selling wouldn’t be an issue for us I don’t think!

PersianCatLady

Clarko wrote: »

We have looked at the rent and service charges along with maintaining the property and it is more than affordable as we wouldn’t be paying a mortgage only rent of around £222 per month. Our concerns are more regarding what the issues are that come with shared ownership. Peoples personal experiences etc

Those were the main issues that I could think of with regards to shared ownership but you had already covered those.

Could you be a little more specific as to what you want to know more about?

Is it the process of S/O buying or the actual properties??

Clarko

We have been told a few different things by different people in regards to shared ownership..

Firstly we have been told that you can only staircase at certain times with the maximum amount being 3. They said that if we don't staircase during these 3 opportunities then we risk never owning 100% of the property. Obviously this is a major issue if we miss those opportunities.... that's where we wanted to know if anyone else has come across this?

Also, we have been informed of paying for maintenance of the street / road on which we would live including major works such as road maintenance etc..

takman

Clarko wrote: »

We are hoping to stay where will purchase for the next fair few years yet so wouldn’t even consider selling within the first 5 years and by then would of hopefully purchased the remaining 50% so the selling wouldn’t be an issue for us I don’t think!

What are the reasons you are unable to get a Mortgage?

Your financial situation can't be bad at all if your able to raise just over £100,000 in less than 5 years to purchase the other 55% of the property.

Clarko

The reason is due to my partner being self employed for less than 3 years, making it incredibly difficult also I am not working at the moment due to being made redundant in Dec and having a baby in November!
The remaining monies needed to own 100% of the property will be part mortgage and an amount from inheritance (My partners father passed away and left him and his brothers a share of the house in which his family still live in, this is due to be sold over the next few months, therefore releasing the monies).

Windofchange

I think it is on a case by case decision as to whether shared ownership is worth it or not. I would definitely say read very very very very carefully what you are signing up for - is it a freehold or leasehold? If the latter then have a look at what the clauses are on ground rent. Also, read how much the rent portion will increase each year. Obviously also have an independent solicitor look it all over - there are some horror stories of buyers being forced to use the developers solicitors and finding out a few years down the line that they have been screwed over.

As to the pros and cons, I think again it varies case by case. I think people using help to buy in London need their heads looking at - unless they are set to either earn lots or inherit lots then they will never staircase to 100% ownership. The places round my way are £6-750k for a standard two bed which represents a sum that for most people they will never clear. I'm guessing from your post you are looking a long way from the madness of London and the south east, so it makes more sense - you could certainly hope to clear £100k over the next 25 years or so. To my knowledge, you don't have to staircase at certain times, but I do believe you can only buy extra parts 3 times in total, so you have to think carefully about that.

I don't have any personal experience of trying to sell a shared ownership property, but I can imagine there will be some market for it. I guess if you plan on staying there a long time then you may have staircases up to 100% and then can sell it on the open market anyway, although check what you are signing in relation to that too as I have heard of some exceptions.