Shared Ownership - A Scam???

LookingTo

I've seen on here alot of people refer to shared ownership as a Scam, but why?

I'm looking to buy a house and can't afford one at full price due to my wages. So my options are either rent a place or buy around 50% in a shared ownership house.
If I rent I throw away money and never get it back and it's not very secure compared to buying a place as you can be given notice at any time.

I really can't see how it can be considered a scam?

NineDeuce

The only scam in the housing market is the system overall that requires that you save tens of thousands for a deposit on top of having to pay huge rents.

This is why shared ownership is viable. Granted that it isnt for everybody but I did it and have ended up with equity and have been able buy my property outright since.

If not, I would have been resentfully paying off the mortgage of a richer landlord to the tune of around £7,000 per annum. Now that is a scam....

yllop1101

I don't think everyone thinks it is a scam. It works for many people, suiting their financial situation and giving them security.
Personally, i'm a massive fan of it- for me, it worked.

haras_nosirrah

I am a mortgage advisor who has specialised in these schemes for 11 years.

As I say to my clients - if you can afford the open market then buy on the open market, if you have 2 children and it is a choice between shared ownership of a 3 bed house or buying a 1 bed flat outright then buy the shared ownership house with a view to buying outright when affordable to do so or saving to make the jump to the open market when viable to do so. Chances are it would be cheaper than renting the 3 bed house and also you are gaining equity.

It is preferable to buy on the open market if you can. If you can't then it is certainly not a scam

deFoix

Come on that's a stupid comment. We live in a free society with right to own property. It's not a "scam" if owing to high demand and low supply that both rents and prices go up!

It's also not "wasted" to pay for rent at market rates as you're buying yourself a roof over your head.

If you want to have a communitst/socialist system where the govenment owns everying and hands out dorm rooms then go and live in North Korea.

Fix the problem at the source, either build a LOT more houses (prob on greenbelt) or reduce net immigration.

AdrianC

NineDeuce wrote: »

The only scam in the housing market is the system overall that requires that you save tens of thousands for a deposit on top of having to pay huge rents.

100% mortgages didn't work out too well, did they?

eddddy

I think the suggestion that it's a scam might be be because shared ownership properties can be a little over-priced.

For example, you might end up paying £110k for 50% of a house, when similar 100% ownership houses are available for £200k.

Sticking with that example, perhaps the reason is that there are more people with a budget of £110k than people with a budget of £200k...

... plus there are fewer options available if you have a budget of £110k, than if you have a budget of £200k.

So it's essentially supply and demand.

the_quick

I'm not sure if properties are overprices, as they usually value by RICS registered surveyors.
We are in process of selling and we had to do that.

I would say it all depends who is housing association, we had good one as they keeping prices fair - this year our small rent gone down by £5 and maintenance fee stayed same.

As the flat value went up, we will make some money on the sale.

Cakeguts

People say it is a scam because it is probably the most expensive way to buy a property.

Here is another example. On the open market you can buy a property costing £200k. The equivalent shared ownership is £100k for say 50%. If house prices rise you don't get to pay another £100k for the other 50% you pay the market cost at the time so if the £100k has risen in value to£130k you pay that which means that your shared ownership house has cost £230k plus the rent. But an open market house bought at the same time as the first 50% would only have cost £200k

AdrianC

Cakeguts wrote: »

People say it is a scam because it is probably the most expensive way to buy a property.

Here is another example. On the open market you can buy a property costing £200k. The equivalent shared ownership is £100k for say 50%. If house prices rise you don't get to pay another £100k for the other 50% you pay the market cost at the time so if the £100k has risen in value to£130k you pay that which means that your shared ownership house has cost £230k plus the rent. But an open market house bought at the same time as the first 50% would only have cost £200k

You forget that if you'd waited until you could afford 100%, it'd have cost you £260k.

Norman_Castle

LookingTo wrote: »

I've seen on here alot of people refer to shared ownership as a Scam, but why?

A scam generally involves trickery or deception. Not understanding something does not make it a scam.
Regardless on how good or bad the purchase of shared ownership is its only a scam if the buyers are not fully informed of what they are agreeing to with the intention of deceiving them.