Buying a Private Property in Shared Ownership Social Housing Project? Worth it?

ANDY87

Hello - great to meet you all!

I'm a first time buyer in London and have come across a newly built 2 bedroom flat currently for sale. I'm interested in this flat for different reasons:

• The development is in Leyton (E10 - East London) which is where I live already so I know the area very well. I love living here, the commute into London is a dream and I've experienced myself how the area has changed for the better in the past 4-5 years. Leyton compared to London in general is still an affordable area and I do see potential long-term from an investment point of view as well.
• The flat is newly built, comes with allocated underground parking slot, and a balcony overlooking the London skyline. The appliances etc in the flat are brand new which is what I prefer. The flat was listed originally at £480K, but that's been dropped today to £465K. It's a flat I can afford purchasing if I want to.

Now to my concerns:

• The building itself has been developed by Newlon Housing Trust (charitable not-for-profit housing association). This development consists of 61 shared ownership appartments and 12 private sales appartments. My interest is in one of the private sales appartments. I've never lived in a Social Housing building before and I'm unsure how good an investment this would turn out to be in the future? Are Shared Ownership Housing Projects the modern equivalent of Council Estates? Or am I thinking about it the wrong way?
• I have plans to move abroad in the next 3-4 years for a longer period. In this period I would be looking to rent out this property. Again: Would this be a good investment from a letting point of view?

The development is called: NEST, E10 (in case anyone wants to have a look).

Any insights that you can share would be highly appreciated as I'm no expert on this.

Thanks,
Andy

hazyjo

Personally, I'd not be spending that on a flat in E10.

It's likely to be highly overpriced due to the shared ownership aspect (and the fact it's a newbuild).

There are likely clauses saying they can't be rented out (needs checking). I would add it's an absolutely terrible investment due to the high price. If it was a good one, they would be advertising it as such and the investors would be crawling all over it.

That view may well change. The area will continue to be redeveloped. How would you feel if a taller block of flats blocked your view?

Wouldn't buy in a [STRIKE]highrise[/STRIKE] tall block of flats in Leyton without a concierge type thing on the ground floor.

If you want new appliances, buy them. Hell of a lot cheaper than buying this flat.

Good luck.
PS the service charge is likely to be very high.

princeofpounds

Shared ownership is not really social housing, although I do understand that the developer is a Housing Association (not quite sure why this kind of development activity gets a charitable pass - seems entirely commercial to me - but hey).


So yes, it's not a council estate (although it may well be near some). Personally I wouldn't class it as social housing. It falls under that meaningless term of 'affordable housing'.


Shared ownership has its own issues. They are often overpriced; given the up-front costs are lower for buyers the developers often rely on them not realizing the full cost of ownership over time. You usually pay 100% of maintenance and 100% of service charges and ground rent for 25% (or whatever) of the property. There can be a bit of devil in the detail in the rules on staircasing (increasing your interest), renting it out and selling the property on, amongst other things.


But if you're fully aware of all those things, there's nothing fundamentally wrong with it in principle. But it's often not a great deal in practice.

hazyjo

FYI the OP isn't buying using the scheme, but wanting one of the private sales.

It's still overpriced though.

If you look at 2 bed flats in Leyton, this block and another new block are by far the priciest. All others are under.

debtfreewannabe2014

I can't put into words how strongly I would advise against purchasing a Newlon property. Please read a few online reviews. I can't bring myself to go into too much detail, I am already too miserable about the exit polls.

PasturesNew

One viewpoint is that shared ownership properties can't be rented out, so your neighbours are more likely to be "decent working people" who have a vested interest in keeping house values stable (not decreasing).

If you buy a flat elsewhere you could easily end up as the only owner/occupier, amid a sea of "couldn't give a t055 as I'm only here for about a year" ever-changing tenants who couldn't give a tinker's cuss about rules, regs, covenants and rights.

hazyjo

PasturesNew wrote: »

One viewpoint is that shared ownership properties can't be rented out, so your neighbours are more likely to be "decent working people" who have a vested interest in keeping house values stable (not decreasing).

If you buy a flat elsewhere you could easily end up as the only owner/occupier, amid a sea of "couldn't give a t055 as I'm only here for about a year" ever-changing tenants who couldn't give a tinker's cuss about rules, regs, covenants and rights.

They're looking to rent it out in a few years' time. Another reason why not to buy it.

ANDY87

hazyjo wrote: »

Personally, I'd not be spending that on a flat in E10.

It's likely to be highly overpriced due to the shared ownership aspect (and the fact it's a newbuild).

There are likely clauses saying they can't be rented out (needs checking). I would add it's an absolutely terrible investment due to the high price. If it was a good one, they would be advertising it as such and the investors would be crawling all over it.

That view may well change. The area will continue to be redeveloped. How would you feel if a taller block of flats blocked your view?

Wouldn't buy in a [STRIKE]highrise[/STRIKE] tall block of flats in Leyton without a concierge type thing on the ground floor.

If you want new appliances, buy them. Hell of a lot cheaper than buying this flat.

Good luck.
PS the service charge is likely to be very high.

I’ve definitely compared the price of this flat with other 2 beds in the Leyton area and you’re right. It is overpriced, but I guess that would be the case anywhere in London for a newly built flat. The flat is currently listed at £465K which is still way too much in my opinion. What price would you say is appropriate before it’s a viable investment?

ANDY87

princeofpounds wrote: »

Shared ownership is not really social housing, although I do understand that the developer is a Housing Association (not quite sure why this kind of development activity gets a charitable pass - seems entirely commercial to me - but hey).


So yes, it's not a council estate (although it may well be near some). Personally I wouldn't class it as social housing. It falls under that meaningless term of 'affordable housing'.


Shared ownership has its own issues. They are often overpriced; given the up-front costs are lower for buyers the developers often rely on them not realizing the full cost of ownership over time. You usually pay 100% of maintenance and 100% of service charges and ground rent for 25% (or whatever) of the property. There can be a bit of devil in the detail in the rules on staircasing (increasing your interest), renting it out and selling the property on, amongst other things.


But if you're fully aware of all those things, there's nothing fundamentally wrong with it in principle. But it's often not a great deal in practice.

I’m interested in a private sale flat within the development. There are 12 of them. The majority of flats are shared ownership though.

ANDY87

debtfreewannabe2014 wrote: »

I can't put into words how strongly I would advise against purchasing a Newlon property. Please read a few online reviews. I can't bring myself to go into too much detail, I am already too miserable about the exit polls.

Yes I’ve just read some reviews and it’s very shocking reading! Thanks for pointing this out.

ANDY87

PasturesNew wrote: »

One viewpoint is that shared ownership properties can't be rented out, so your neighbours are more likely to be "decent working people" who have a vested interest in keeping house values stable (not decreasing).

If you buy a flat elsewhere you could easily end up as the only owner/occupier, amid a sea of "couldn't give a t055 as I'm only here for about a year" ever-changing tenants who couldn't give a tinker's cuss about rules, regs, covenants and rights.

That’s a very good point. But my concern is more whether I’ll attract the right tenants when I decide to rent the property out in the future. Given that it’s a social housing establishment? The tenants would be paying much more for my flat than anyone else in the building since the flat I’m interested in falls under private sale and not shared ownership.