Shared Ownership HELP

usefulmale

mije1983 wrote: »

Those figures are slightly misleading on their own though. It's not like you are paying £200 for the same thing someone who is paying £1500 is getting. The £200 gets you c.15% ownership, whereas £1500 gets you 100% ownership

It's great that S/O works for you, but you are comparing a £200 outlay against a £1500 outlay and they are not comparable.

Impossible to say who would be hardest hit so it's a moot point. Although it would probably be the person paying £200 a month as the chances are they have less monthly income than someone paying £1500 a month.

The £200 gets me a 25% share.

Put the numbers in percentage terms. That £200 is around 10% of my monthly income (£24k per year). Someone paying £1500 a month would have to have a yearly income of £180k to put it in the same proportion.

From a purely personal point of view, all I require is security of tenure. I have that with shared ownership and for a very low proportion of my monthly income.

Take my next door neighbour. They have just staircased to full ownership. What have they gained over me with my 25% share? They can't have any more security of tenure than I have but they have taken a 20 year gamble on having the income to cover the mortgage, that interest rates won't significantly rise and that house prices won't fall, trapping them in negative equity.

I appreciate that they will gain full ownership of the house at the mortgage terms end but if I were in their position (they are in their early 30s, we are just hitting 50) I would have stayed owning 25% with a low mortgage but if they want 'assets' put the difference between a 25% mortgage and a 100% mortgage into stocks and shares.

HampshireH

Take my next door neighbour. They have just staircased to full ownership. What have they gained over me with my 25% share? They can't have any more security of tenure than I have!

They have gained a more secure tenure than you have.

With your 25% your landlord / freeholder can revoke your lease and serve notice if you breach the terms and conditions to take their asset back.

Your neighbours who have staircased to 100% now own their home and the landlord cannot take that way from them.

HampshireH

*note the 100% no longer have said landlord.

usefulmale

HampshireH wrote: »

They have gained a more secure tenure than you have.

With your 25% your landlord / freeholder can revoke your lease and serve notice if you breach the terms and conditions to take their asset back.

Your neighbours who have staircased to 100% now own their home and the landlord cannot take that way from them.

Have they?

You could argue that the mortgage company could do the same if the terms of the mortgage are breached.

Sir_Robin

Are you sure you meet the criteria for buying from a housing association? They prioritise sales based on need and most people don't have 85k to put down like you.

If you do get it, it could work nicely for you as housing association rent is low and unlike most others you will own 50% mortgage free so you'll just be paying the £300? Rent on the 50% you don't own.

In my opinion a mortgage on a full house is the better move: why get into a situation where your paying rent instead of a mortgage ? the shared ownership is no benefit to you as your loaded.

mije1983

usefulmale wrote: »

The £200 gets me a 25% share.

Then I'm struggling to see how it would take £1500 a month to have full ownership of a similar priced property? And don't forget you pay rent on the remaining share as well, so it's not a complete comparison.

usefulmale wrote: »

Take my next door neighbour. They have just staircased to full ownership. What have they gained over me with my 25% share? They can't have any more security of tenure than I have but they have taken a 20 year gamble on having the income to cover the mortgage, that interest rates won't significantly rise and that house prices won't fall, trapping them in negative equity.

They have gained control over their property, and arguably have a larger market to choose from if they decide to sell up. They are also not at risk of any issues that may arise in the future regarding S/O (not saying there will be, but who knows how S/O will be viewed in 10 years, 20 years etc?)

While owing 25% you are also at risk of rising interest rates and negative equity. However, in addition, you are also at risk of rising rents on the other 75% which your neighbours are not. So it could be argued that your gamble is bigger than theirs

usefulmale wrote: »

From a purely personal point of view, all I require is security of tenure. I have that with shared ownership and for a very low proportion of my monthly income.

It's good it's currently working for you, but that is down to your individual circumstances.

HampshireH

usefulmale wrote: »

Have they?

You could argue that the mortgage company could do the same if the terms of the mortgage are breached.

Absolutely, so the 100% owner could be chased by the mortgage provider (but not a Housing Association as they no longer have a hold over the property).

The 25% owner could be chased by the mortgage provider AND the Housing Association as they own 75% of the property and implement their own rules etc as part of the lease. These could be very small/big things which a mortgage company wouldnt care about but the HA would.

usefulmale

mije1983 wrote: »

Then I'm struggling to see how it would take £1500 a month to have full ownership of a similar priced property? And don't forget you pay rent on the remaining share as well, so it's not a complete comparison.

usefulmale wrote: »

The housing association is responsible for the roof in our shared ownership house.

Don't forget, as a freeholder, you are also liable for 100% of the repair costs. My mortgage over 10 years for my share is £200 a month whilst the mortgage for full ownership over the same term is £1500.

Who will be hardest hit paying for a new boiler?

As I stated, my mortgage only has a 10 year term. The £1500 refers to a mortgage for the full property over the same 10 year term.

Obviously, a standard 25 year term would cost less.

mije1983 wrote: »

They have gained control over their property, and arguably have a larger market to choose from if they decide to sell up. They are also not at risk of any issues that may arise in the future regarding S/O (not saying there will be, but who knows how S/O will be viewed in 10 years, 20 years etc?)

While owing 25% you are also at risk of rising interest rates and negative equity. However, in addition, you are also at risk of rising rents on the other 75% which your neighbours are not. So it could be argued that your gamble is bigger than theirs

It's good it's currently working for you, but that is down to your individual circumstances.

I clearly stated that everything was from my own personal point of view.

We are not moving again so negative equity will not affect me. If interest rates go to 15%, my mortgage would only double. Next doors would increase to £2500 over a comparable term (or £2000 for a standard 25 year term).

Any rent increase is tied to RPI plus a fraction of a percent.

Any deal is only as good as your personal circumstances.