Shared Ownership - A Scam???

Cakeguts

AdrianC wrote: »

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

Yes I think I was trying to make a comparison between someone buying an open market house or a shared ownership one at the same time. At the same time shared ownership is much more expensive than open market. I also didn't count the rent which if only £200 per month is another £2400 per year.

AdrianC

Cakeguts wrote: »

Yes I think I was trying to make a comparison between someone buying an open market house or a shared ownership one at the same time. At the same time shared ownership is much more expensive than open market. I also didn't count the rent which if only £200 per month is another £2400 per year.

...compared with twice that while you're waiting to buy 100%.

getmore4less

A lot of people don't have an exit strategy.

if you can't afford a full place now then what will change so you can afford one in the future.

It needs an increase in income and/or more savings, HPI does not stack up.

Another issue is you only own part of the place but are 100% responsible for the maintenance and costs.

Out,_Vile_Jelly

"Scam" is a strong word. I think these schemes can be problematic due to:

-the houses being overpriced in the first place
-the houses being harder to sell, especially if for whatever reason you need to move within a few years (no longer new new-builds difficult to shift)
-the worst of renting and owning; ie being responsible for all maintenance and lease issues without full ownership

NineDeuce

Boler1985 wrote: »

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.

The typical dumb response. One person suggests the housing market is broken. The respondent implies North Korea.

If, as you say "We live in a free society with right to own property" then can you see how you are totally contradicting yourself. Try telling the millions who struggle to pay rent (i.e. pay off the mortgage of a richer landlord) let alone save for the massive deposit which previous generations didnt have to do, that there is a right to own property. Perhaps you could even campaign for it....

If you have any sense, you will realise how silly that sounds. Otherwise, continue believing that migration is the root of all evil, pretending that an increase in the population of around 5-10% has pushed house prices up by about 300% in the past 30 years... Bogus comment....

NineDeuce

AdrianC wrote: »

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

They did for all of the older generations who were able to benefit.

This was never the issue. The issue was banks giving mortgages to people who couldnt afford them, plus the fact that there is no support whatsoever for people who fall on hard times, which should be totally expected over a 25 year or so period.

Tenants of rented properties, get housing benefit. This housing benefit then goes to... you know who... the richer BTL landlord. So why can this not be used to assist mortgages of people who just want to own their own home, rather than somebody else who wants a second home for his/her amusement?

LookingTo

Thanks for your replies, it's good to see their isn't some big negative that I have missed about shared ownership.
The property I'm looking looking at is a 57% share and it's not new and other properties in the development have been up for sale and sold quickly so no issues in reselling. The value is determined by an independent valuation so no chance of being overcharged compared to the true market value. When it comes to sell you have to go through the company but they charge a flat fee of 3% of the price it's sold for and that includes everything, so not much different than using an estate agent.

The fact that if the prices increase you only benefit from the increase on the 57% you own doesn't really seem too much of a negative to me. If I spent £100k on 50% of a shared property or £100k on 100% of property I would still only benefit from an increase on the amount I spent no matter how much I own.

But the big difference with the properties I'm looking at you do not have to pay rent on the other part you don't own. So it actually works out cheaper to get a mortgage on this property per month than it is to rent the cheapest property in the area.

Another good point raised is the cost of repairs. But if I'm paying £500 into a mortgage then that's money that I still have in equity so I'm not really spending it. The only real cost is the interest I'm paying offset by the increase in the house value. Interest will be around £220 a month over 5 years while cost of rent is £600 a month here for similar. So I'm saving £380 a month compared to renting.
So if the cost of repairs and maintenance are less than £4560 per year for the time I live there I'm better off.
Realistically this house will cost nowhere near £4560 a year to maintenance so I'll be much better off and even better again if house prices increase.

If I wanted to buy a higher share of the property then I agree if prices increase then I will have to pay more than now. But this applies to anyone who sells their house and wants to buy more expensive one at any point in the future.
Plus I'm don't see why I would want to buy a higher share unless I was looking to make major improvements to the property and spend alot of money on it, which I'm not planning as it's more than big enough.

But feel free to correct me on anything I have said that is wrong. I've been doing alot of research on this to make sure it all right before I commit!.

haras_nosirrah

I have probably done somewhere around 1,000 shared ownership mortgages and have a lot of clients who come back to staircase or move to the open market. I don't get many complaining about the scheme and for most it is a stepping stone to home ownership

As long as you have done your research and you are happy with the scheme then best of luck

AdrianC

NineDeuce wrote: »

They did for all of the older generations who were able to benefit.

No, they didn't. 100% (and up...) mortgages were a short-lived (terrible) idea.

This was never the issue. The issue was banks giving mortgages to people who couldnt afford them

I'm not so sure they're inseparable. Sure, self-cert mortgages and ridiculous multiples were also a terrible idea - but people who can afford to own a property can afford to save for a deposit. They're going to need some headroom in their finances for maintaining that property, after all.

plus the fact that there is no support whatsoever for people who fall on hard times, which should be totally expected over a 25 year or so period.

There is support. Provided people are honest and upfront with their lenders.

Tenants of rented properties, get housing benefit.

Umm, not quite that simple, is it...?

So why can this not be used to assist mortgages of people who just want to own their own home

It can.
https://www.gov.uk/support-for-mortgage-interest/what-youll-get

haras_nosirrah

3% seems quite high. The shared ownership housing association I work alongside charge 1.75% OF THE SHARE not of the whole property value