Renting vs shared ownership

Dave_606

We near!y went down the shared ownership route, so glad we never and spent severely more months saving to buy our home outright.

Most points over shared ownership has already been covered. But for me the key issues that made us walk away from shared ownership where various. These included service charges you have no control over, no matter how small your owned share your responsible for the entire maintenance and insurance costs (then why service charges to eh?). If you want to increase your share you'll find you have to cover the legal costs of both sides, so in the region of £3000 each time. Then if you don't agree with the valuation you've little scope to appeal that or make a cheeky offer, tends to be take it or leave it valuation. If its a new build development your paying a massive premium that your unlikely to see much if any gain on as an investment. Numerous sales of shared ownership here to indicate people are losing quite a bit on what they paid, so makes a mockery of "affordable housing" too.

Also there is a new build development near us (the 1 we was going to buy on shared ownership last year) that's mixed social housing & shared ownership. Despite that the development was supposed to be complete late Jamuary (this year), half the development is incomplete as the original contractor \ builder went into administration as did the second firm that came in. And out of the homes completed many have structural faults & issues such as unexplained cracks etc. Now with the original and then second building contractors having gone bust, who's responsible for the warranty on such properties?. Those on shared ownership in those properties are likely to be at serious risk of negative equity!. So all the more reason to walk from shared ownership, the risks are to big, especially if new builds!.

csgohan4

If you can wait to get a house via normal channels I would, IMO SO has too many negatives to consider. Your at the mercy of the HA and could you cough up thousands for repairs??

NOVAMET21

There seems to be lots of negativity about SO scheme in MSE forum and makes me think, have most of the people who have given their opinion about this had experience themselves (probably not I'm guessing!). Of course, everyone can have their opinion.

I personally think for people who cannot afford fully mortgage property is a good option only if they have an exit plan. You must have an exit plan otherwise, yes I agree with all the people who think it's bad.

I actually had 2 shared ownership scheme not at the same time but I sold the first one and bought another one. Now I sold the 2nd shared ownership house and bought a fully mortgage house

In a way SO scheme helped me to build my equity as if I had rented and tried to save, I don't think I would be in a position I'm today. I had a clear exit plan which was to build my equity and the house price increase during 2015 to 2018 helped a lot giving me £40,000 increase to my equity. There is no way I could have saved £40,000 in 3 years. Yes, I was lucky in a way because the house prices are static now.

My recommendation is do more research and if you only plan to rent for short period of time lets say 1-2 years then rent otherwise maybe SO is not a bad investment if you plan to stay longer.

Everything has pros and cons. Obviously, pro is you are investing and building your equity.

However, I do agree that there are more cons than pros. Even though rent is social renting rate it does increase every year. It is difficult to sell than normal properties but I manage to sell my 1st within 4 weeks but 2nd one took 6 months but could be because of Brexit. Not sure.

To conclude, SO is not bad as people point out but Please do have an exit plan, whether you staircase to 100% or sell it to purchase fully mortgage house in the near future.

Thanks

General_Applause

Shared ownership has worked well for us. We bought a 25% share of a 3 bed new-build house after years of renting and we have never looked back.


We have security of tenure which was important for us and the combined rent and mortgage is just over £500 a month. We don't have any service charges and buildings insurance is included in the rent. A rental for a similar property in this area would be £800 a month.


We don't need to ask permission for pets or interior decorating but would need to ask permission for an extention.


There is no way I could afford a mortgage on a full ownership house on my salary and at my age.


Someone mentioned earlier about being at the 'mercy' of the HA. I am not sure what they mean by that but our rental increases are clearly set out in the terms of the lease. Other than varying the standing order for the rent once a year, we have no interaction at all with the housing association.


Someone else mentioned 'investment'. We bought this house to live in. If you want to invest, buy shares, not a shared ownership. Personally, I don't care about negative equity. If house prices fell by 50% overnight, I would only be in negative equity by 10 grand at the most. The full ownership people over the road who are paying 250 grand for their houses will be much deeper in the poo. Negative equity only matters if you are forced to sell for whatever reason.


Speaking of selling, the shared ownerships that have come up for sale on our estate have all been snapped up within a month. Far faster that the full ownership ones.


Another benefit, as I see it, is that if I were to lose my job, housing benefit would take care of the rental part and I could pay the mortgage part from my DLA (or JSA or UC). That wouldn't happen if I fully owned this house.

AdrianC

The other option, of course... Increase your income.

Buying on a single income is never going to be easy. But, if there's any way you can get more in, it'll be easier to save for a deposit and easier to pay the mortgage when you do buy,

happy35

I don’t know enough about shared ownership to advise whether it is a good thing, just wanted to mention that in my area there are a number of new builds being sold at below market value by about 30% to help local people get on the property ladder. You have to sell at 30% below market value, but there is no rental element to pay.