Cold Feet: Shared-ownership with Sovereign Living

CarbonImage

It sounds like you have made a decision which is great.

My colleague has just sold her 2-bed Sovereign flat after living there for about 10 years. She had a 40% ownership, and while she always intended to staircase, realised very early on that actually by the time she factored in mortgage, rent, service charge, management fees, etc. she was not able to save very much money to do this.

She doesn't regret it at all and feels as if it's helped her step onto the ladder, but looking at it from the outside it does just seem like she's been treading water for the last 10 years. The only way she has managed to move on is due to a large windfall allowing her to put down a 30% deposit on a 3-bed house. I think her equity in the flat was very small, even 10 years on.

I think there are two things that maybe haven't been fully explored in this thread:

1. £778pcm is very reasonable for a 2-bed in central Bristol when you consider market rents are £900+
2. Do you think that you're going to be able to save enough for a deposit on a wholly-owned property? I'd estimate that for a £200k property you'll want at least £25k saved (£20k deposit + £5k fees). How long will it take you to save this? And could you be saving the same amount if you went with the Sovereign flat in the meantime?

Usually I am dead against shared ownership, but this does sound like it could work out ok if you did decide you wanted to go for it.

llewells

CarbonImage wrote: »

It sounds like you have made a decision which is great.
1. £778pcm is very reasonable for a 2-bed in central Bristol when you consider market rents are £900+

The price is extremely reasonable and would be lucky to get a 1-bed in the same area for that amount is renting.

2. Do you think that you're going to be able to save enough for a deposit on a wholly-owned property? I'd estimate that for a £200k property you'll want at least £25k saved (£20k deposit + £5k fees). How long will it take you to save this?

The reason i have been able to save as much as I have is due to having very low rent at the moment as I am in a shared flat. My current rent is around £338pm then all bills like council tax, energy etc are split, I would be amazed if my worst month breach £600.
We have been long term tenants (6 years) and are on very good terms with the landlord, so there is no issue with staying as long as I want.
i estimate to get a comfortable about might take and extra 12-18months, barring and dramatic changes.

...could you be saving the same amount if you went with the Sovereign flat in the meantime?.

Moving into the Sovereign property is will hit my monthly expenditure hard. Keeping my current allowance for food, travel and fun (approx £600pm) the same would leave me with very little money left to save.
My initial thoughts was that instead of saving money from my salary i would be paying off the mortgage and building equity. Though after using a mortgage calculator it would take me at least 9 years to gain £25k in equity (assumptions: £108k mortgage at 4%apr, and property price stays the same).

Using these figures it feels the safest bet is to stay put as within 12 months I will be in a much stronger position rather than rushing into something. Also, i feel there is a bit of power to be had with being a first-time buyer (no stamp duty, use of Lifetime-ISA). That I would be stupid to pass up.

I hope this has answered your questions.

CarbonImage

It sounds like you have considered this very well and are in a good place to save more, so go for it.

I always wonder if I should have gone with my FA's advice and stretched myself more when saving for/buying my first property, so it seems like a good option for you to take advantage of the facilities available, as you say.