Shared Ownership- is it worth it

Sicily1991

Hi all,

I am in my 20s and living in London. My yearly salary is about £45k at the moment and have savings which I would ideally like to put towards first home. London prices however are prohibitive and I'd ideally like to own my own home rather than share with my partner.

Shared ownership could be a first step on the property ladder for me, where shares for 30% are around £150k which I can afford. I wanted to know whether opening a LISA can be used towards this scheme?

Mainly, what are people's experiences of buying shared ownership homes? what are the setbacks and how to get the best deals.. I've seen developers offering free furniture packages as well as paying off % of stamp duty towards them. It's hard to know how to go about it as it's such a big purchase and there is a lot of conflicting information out there.

I'd also probably want to sell on in a few years, are these properties likely to retain/ increase their value or not as they are all new builds.

Any advice/experiences much appreciated.
Sicily.

Smellyonion

I was in a similar position and decided to move out of London and go for an equity loan instead. don't like them for a variety of reasons;


1) Mortgages are often more expensive. You're very restricted.


2) You pay for all repairs and costs as if you were a full owner yet only own a share of the property.


3) As a lease, you pay a significant amount of rent on the share you don't own(usually hundreds monthly). If for any reason, you cannot afford this (which is likely since the rent is significant), they can reposes the property and leave you with nothing- you aren't entitled to your initial share. Hence the restricted mortgages who are willing to lend on such risk. On a normal (full owned leasehold), this is unlikely as the rents (ground rents) are very low. You could also sell the property before this. Again a shared ownership gets given by back rights so you cannot sell it yourself.

Cakeguts

It is probably the most expensive way to buy a home. You may only own a small percentage but you are 100% liable for all repairs.



Depending on the rules for selling on depends on whether it is hard or easy to sell a share.


Do you have to live in London? Have you considered getting a job in another part of the country where housing is more affordable? The problem with London is that although the salaries are higher than most of the rest of the country they aren't high enough to make housing affordable. It is possible to earn a lot less and still be able to buy a house in an area where housing is cheaper.

Blondetotty

I have a shared ownership (50%) in the south which my sister now lives in and I do when I go back south. I intend to sell as soon as my fixed rate is up and settle in a place bought outright in the NW. I wouldn’t touch shared ownership again with someone elses barge pole. If you get a bad Housing Association then you’re in for a whole life of aggravation (and there are many more bad than good HA’s). Sadly mine is through Hyde Housing which I wouldn’t recommend to my worst enemy.

Communal repairs and service charge issues are the bane of my existence. I’ve been trying to argue receipts and work not done but charged since 2005 and every year I have the same problem around September when the new statements come out. You’re basically at their mercy and good luck getting any sense or service from them. You can’t get anyone else in to do repairs in communal areas, you have zero choice in their contractors, cleaners, grounds maintenance etc and you’re expected to pay irrelevant of whether the gardeners turn up and sit in their van for 5 minutes and then drive away. The bureaucracy and getting any answers from even official complaints…well forget it. I know most of these problems you could get with a normal leasehold apartment but my experience is you have even less rights as a shared owner. My HA simply do not want to know.

You’re tied into them when you want to sell. Mine get 2 months to market the property. You have to have a chartered surveyor value the place and they will not accept lower offers than the value even if you then place it on the open market so you’re still tied. Say you had an offer 1k below your asking price. Nuh uh, not unless you want to make up the HA’s £500 loss with part of your share! There is zero flexibility. Two properties in my block took well over a year each to sell, even with the full 100% on offer. If you get behind on your rent or stop paying services charges in protest at their incompetence and inability to answer basic questions about charges (as my neighbours did) then they will simply contact your mortgage company and take the arrears from them, there’s nothing you can do to stop that. My neighbours eventually just sent the keys in and walked away!

You used to be tied into ridiculous mortgages for shared owners only with crazy rates but recently I was surprised when Santander (who I’m with) and NatWest both offered me regular mortgages. Apparently things have changed so you’re free to look at the “normal” mortgages that certain lenders offer. Not all lenders offer on shared ownership properties though so you’re still limited.

You’re also liable for all their fees when you staircase or sell up and as the conveyancing is more complicated, yes that means you have to spend out yet more ££.

With hindsight I wouldn’t have gone anywhere near shared ownership and tbh as soon as I’m able to, I’ll be getting out and going nowhere near a shared ownership, HA or even a leasehold property again.

I know the scheme has some fans, but I’m really not one of them, so sorry, but nope, I wouldn’t do it. I’d suck it up and carry on renting, find a way to save more, or give up on the dream of owning anywhere near London and move further afield. Personally I don’t see what the attraction is in London or the south any more but hey ho. I guess I’m one of the lucky ones. I’m on the same salary in Manchester, and have about one third of the living costs that I did down south.

scd3scd4

I purchased my shared ownership home 24 years ago. We picked a property on the open market. £58 000 then............now £375 000. We now have a very small mortgage with a few years left. We are still there and very happy. We never paid to staircase as they had a promotion to go from 50%-100% for no fees.


My daughter is purchasing her home now. There is no way a single girl can get on the housing ladder on her own as a nurse in London. She has purchased a 50% share.


Its a lovely newish flat in great condition in a modern block near a main station.....about 7 years old. I explained all the pros and cons to her but my wife and I, plus nan. Intend on helping as she go's along.


The mortgage offer was pretty good with no fees for Barclays and the broker. I knew it was fair because of this site. The Housing people wanted about £275 I think, plus she has legal costs.


Just my two experiences.

Mermaid89

Shared ownership here but in the North, so unsure if it'll help you. So far this has been the best option for us. We are able to live in an area otherwise un-affordable to us, and as we intend to fully staircase to 100% ownership after our fixed term has ended, this opens up the full panel of lenders. However, I suppose the downfall is that if you never intend to staircase your lenders are extremely limited and you pay for everything but only own 50%. I guess it depends on your long term plan

Trixsie1989

Blondetotty wrote: »

I have a shared ownership (50%) in the south which my sister now lives in and I do when I go back south. I intend to sell as soon as my fixed rate is up and settle in a place bought outright in the NW. I wouldn’t touch shared ownership again with someone elses barge pole. If you get a bad Housing Association then you’re in for a whole life of aggravation (and there are many more bad than good HA’s). Sadly mine is through Hyde Housing which I wouldn’t recommend to my worst enemy.

Communal repairs and service charge issues are the bane of my existence. I’ve been trying to argue receipts and work not done but charged since 2005 and every year I have the same problem around September when the new statements come out. You’re basically at their mercy and good luck getting any sense or service from them. You can’t get anyone else in to do repairs in communal areas, you have zero choice in their contractors, cleaners, grounds maintenance etc and you’re expected to pay irrelevant of whether the gardeners turn up and sit in their van for 5 minutes and then drive away. The bureaucracy and getting any answers from even official complaints…well forget it. I know most of these problems you could get with a normal leasehold apartment but my experience is you have even less rights as a shared owner. My HA simply do not want to know.

You’re tied into them when you want to sell. Mine get 2 months to market the property. You have to have a chartered surveyor value the place and they will not accept lower offers than the value even if you then place it on the open market so you’re still tied. Say you had an offer 1k below your asking price. Nuh uh, not unless you want to make up the HA’s £500 loss with part of your share! There is zero flexibility. Two properties in my block took well over a year each to sell, even with the full 100% on offer. If you get behind on your rent or stop paying services charges in protest at their incompetence and inability to answer basic questions about charges (as my neighbours did) then they will simply contact your mortgage company and take the arrears from them, there’s nothing you can do to stop that. My neighbours eventually just sent the keys in and walked away!

You used to be tied into ridiculous mortgages for shared owners only with crazy rates but recently I was surprised when Santander (who I’m with) and NatWest both offered me regular mortgages. Apparently things have changed so you’re free to look at the “normal” mortgages that certain lenders offer. Not all lenders offer on shared ownership properties though so you’re still limited.

You’re also liable for all their fees when you staircase or sell up and as the conveyancing is more complicated, yes that means you have to spend out yet more ££.

With hindsight I wouldn’t have gone anywhere near shared ownership and tbh as soon as I’m able to, I’ll be getting out and going nowhere near a shared ownership, HA or even a leasehold property again.

I know the scheme has some fans, but I’m really not one of them, so sorry, but nope, I wouldn’t do it. I’d suck it up and carry on renting, find a way to save more, or give up on the dream of owning anywhere near London and move further afield. Personally I don’t see what the attraction is in London or the south any more but hey ho. I guess I’m one of the lucky ones. I’m on the same salary in Manchester, and have about one third of the living costs that I did down south.

I agree with this, we almost bought a shared ownership property but backed out because of how difficult it was just to get started with the process. Let alone how it would be actually living in the property! We have bought freehold outright instead 👍

datlex

Shared ownership in the long term is not good. You will still be paying rent into retirement if you stay with one. In the short term however, it may be a stepping stone on to the property ladder.

Crashy_Time

datlex wrote: »

Shared ownership in the long term is not good. You will still be paying rent into retirement if you stay with one. In the short term however, it may be a stepping stone on to the property ladder.

Unless the market crashes, then it will just become a big PITA.


https://www.msn.com/en-gb/money/homeandproperty/help-to-buy-has-left-us-trapped-charles-and-jessica-want-to-sell-their-two-bed-flat-but-it-would-leave-them-%C2%A318k-out-of-pocket/ar-BBMSTlL?li=AA54rU&ocid=mailsignout

scd3scd4

The process was pretty simple for both my property and my daughters.

You don't pay rent into retirement you buy the other shares. That's the whole purpose and point. My daughter is only 25 and will be on the property ladder and living in a loverly flat and able to pay the rent and mortgage comfortably..

I had freehold on my shared ownership house.

Is it ideal........no but it's the best option than paying rent and owning nothing.

NineDeuce

Cakeguts wrote: »

It is probably the most expensive way to buy a home. You may only own a small percentage but you are 100% liable for all repairs.

.

But people dont take on shared ownership as an alternative to buying a property outright. People considering it generally have two options: -

1) Take on shared ownership and at least get on the housing ladder and build up some equity

2) Continue paying rent which will most likely be higher than the total monthly payment due on a shared ownership; and continue having no equity

If you are close to getting a full mortgage then it might be worth waiting for this. Otherwise, shared ownership is a pretty good scheme. Regarding maintenance, shared ownership properties are nearly all less than 5 years old or are new builds, so in theory you shouldnt need to pay much attention to maintenance at least in the beginning.

You should consider the following two scenarios however: -

1) the saleability of the property as a shared ownership property; or

2) how willing you would be to staircase up to 100% of the property so you can sell it to anyone on the market rather than just the first time buyers who are eligible to buy your share