Shared ownership eligibility and questions

Australiana

I have some questions about shared ownership in London. I'll start with the caveat that I know many people are wary of the scheme. But in my case, I could definitely *never* afford to buy outright in London, and in central London the mortgage+rent+service on an SO is almost always significantly cheaper than market rent on the same kind of flat, because rent in London is insane. So Shared Ownership would be my only option other than renting!

I work in central London and make almost exactly £50,000. My partner works in Reading and we live there. We rent, and I commute. My partner has been offered a job opportunity that would involve him moving to Amsterdam for two years, after which he could move back to be with me in the UK and work primarily from home, with semi-regular visits to main office Amsterdam. He has informally accepted but asked to begin in September 2021, so not for over a year. 
With this change in our circumstances in mind, I'm thinking it might be time for me to look into shared ownership. I'd be looking for a two bedroom flat within 5-8 miles from Euston. I am nervous of new builds because of dodgy building standards, and would rather buy a resale where I'd hope any cracks would have had time to appear and be fixed. I would be planning to cover the cost of rent+mortgage+service+bills myself, as my partner's salary will be covering the cost of his bachelor's pad in Amsterdam (!)
With that in mind I have a few questions and would really appreciate your thoughts! 
1) I would want to apply for this alone, and on the basis of my salary. This is because my partner's salary (coming from the Netherlands) would presumably not count, plus if it did count we would likely be over the £90,000 threshold for eligibility in London (only just). Would this be a problem when they assess my 'household income' for eligibility purposes? I wouldn't want to hide the fact that I have a partner who works abroad and would be visiting sometimes. But I would want the mortgage/lease etc to be in my name only, for eligibility reasons. Would this cause any potential problems (ie would they insist on counting my partner's salary and thus excluding me?)
2) Assuming the above is fine, once the two years in Amsterdam are finished and my partner hopes to work from home in London most of the time, would there be potential issues getting his name put on the property deeds and/or lease? Would it be advisable not to for any reason?
3) Given my preference for a resale, are there any particular issues to be aware of in SO resales vs new builds? I have noticed that some of the resales in the areas I would be looking have remarkably low rents. I know that the rent increases are capped to a certain extent, but these rents are about 40% below what the market rate would be (for that share of a property in the area). IS this a red flag? 
4) As I have about a year to plan for this, what should I be getting in order financially? Apart from making sure my credit score is good, saving for the deposit etc, any other prep I should do for applying for SO and my first mortgage? 

Thanks so much for your help!

Australiana

Bumping in case it gets lost! 

bucksbloke

Remember shared ownership you actually need to demonstrate housing need to the housing association. Therefore if there is someone who has a housing need for a two bedroom property (ie - a 2nd bedroom for a child) they will get this over you.

Shared Ownership takes longer to resell than non shared ownership properties. So I'd question myself at this point what my next 5-10 years look like. You might find by moving out a bit, you could find something more affordable or larger that would mean you would spend more time there. 

Australiana

Many thanks for your response! 
Can as a clarification question on the shared ownership; I know if you apply through a housing association you need to demonstrate need (ie it might be hard for me to demonstrate need for two bedrooms over someone with a child). But in London a lot of shared ownership appears to be sold by/through developers. Would the same rule apply re the bedrooms? I've certainly heard of people (colleagues) who are a couple or a single person with a two bedroom they bought through SO in London.
To be honest, I actually feel I do have a 'need' for a second bedroom; I have a widowed mother who lives in Australia and when I was being treated for cancer recently she came and stayed with me and my partner, looking after us so he could keep working while I recovered. I would not want to move to a situation which made it hard for her to come and visit if this happened again. Hence why I cannot move to a one bedroom. But I understand this may not be recognised in the same way as someone with a child...
I understand about taking longer to sell, and I am comfortable with this; we are quite sure our long term base is London. 
In terms of moving farther out and buying outright; we would have to go very far indeed (to Birmingham?!) to find something outside London that was larger and we could buy outright for the same monthly cost as a shared ownership even in Zone 2... 

Australiana

Hmmm I think the comment re cucoon.co.uk might be an ad - either way it definitely would not be an appropriate scheme for me, no interest in buying with another person/couple especially given the situation I explained re health etc! 

wjr4

That is definitely an ad. 

Bookgal88

I have a few thoughts on this and I own a shared ownership property myself, so hopefully I can be of help. 
Firstly, on your salary alone you'd be able to borrow about £225,000 and I'm assuming you have a deposit of some sort. So you'd have around £250,000 to spend. This probably wouldn't get you something within a 5-8 mile radius of Euston, but you could definitely get something for that without the need for any kind of scheme. So I think you need to reframe your thinking a little, because it's the location that you want rather than your salary that's an issue if that makes sense. You could get easily from Euston to the edges of north London / MK / Luton etc. quickly, and you'd probably be able to get something there without a scheme, and maybe even a house rather than a flat. 
You are correct that new-build SO properties aren't always constructed to the highest possible standards (mine included). But even re-sale SO properties are more than likely max. 10 years old and just because there have been issues, this doesn't mean that they've been ironed out. 

But to answer the questions you asked. 
1. If you are buying the property alone and only your name will be on the lease and the mortgage, the HA won't concern themselves with your partner. I wouldn't even mention him - it's just not relevant. And the people that work for the HA aren't always the sharpest tools in the shed - the more info you give, the more confused they'll be. Supply what they ask for - no more, no less. 

2. I wouldn't be putting your partners name on the lease or the deeds if he hasn't contributed financially to the property, which you say he won't be doing. If he's on the lease and the deeds, but hasn't contributed to the deposit and wasn't part of getting the mortgage, you're essentially giving him part ownership of the flat for nothing. He either needs to be 100% part of this, or 100% not. Make sure you protect yourself here. 

3. New builds are usually more expensive because people like living in a pristine property where they're the first person to ever sit on the toilet seat. A re-sale should still be in good condition but you have to bear in mind that someone has lived there, so it won't be as 'perfect'. If you buy a re-sale, you also won't be able to flag any snagging issues to the HA. It's sold-as-seen. Consider the lease on a re-sale. It should be fine, but beware of anything where the lease has dropped below 85-90 years. I'm a bit unclear on what you mean by the "40% below market rate" of your question. 

4. If you have any credit card debt, try to get rid of it. Otherwise, scrape together as much deposit as possible and all the other usual bits. 
  

Australiana

Thank you so much for your reply vickya, that is very helpful! 
I do understand what you mean re my partner and the lease; it's not a dealbreaker for me if he's not on the lease (and I like the idea of owning something myself!) I guess I was more wondering if the HA might have a problem if he moved in with me two years down the line, but it sounds like probably not. That's a very useful tip re not giving the HA unnecessary information! Definitely don't want to confuse them In your experience, did the HA you dealt with have a cap on the size of the property you could apply for depending on how many people would be occupying?
Thank you also for the clarification re the new builds - that is helpful and seems to confirm my thoughts re a resale (as I don't mind not being in a 'pristine' home). Also useful though to know that the HA is not responsible for structural problems if it is a resale. What I meant about the '40% below market rate' was just that on some of the resale the 'rent' portion really did seem remarkably low and I was wondering why that might be! I'm talking about a resale in an area where a two bedroom flat would be at least £2000/m but the rent on the 50% share was £400. That seems very low and I thought it might indicate some kind of problem...
In terms of buying something on the edge of London/in the commuter belt - this may be possible though I've not seen a tonne for £250,000 anywhere that is fast into Euston. I guess I tend to be a believer in living not too far from where you work; I live in Reading now which is indeed far but it's close to where my partner works so we have friends and colleagues here. I don't love the idea of moving to a commuter town far from work where I wouldn't know anyone and be alone when my partner is in Amsterdam. That might be a luxury problem but I still feel the downsides of shared ownership would be outweighed by the benefits of living within a decent radius from work, where I have colleagues and a support network...

Bookgal88

The HA said they had a cap, but I never tested it. I initially bought mine with a friend, so we got a 2 bed. The HA said you were allowed one bedroom over your requirements ie. a single person can get a 2 bed but not a 3 bed. I guess this is to accommodate a change in circumstances. 

The HA are still responsible for structural problems, as they insure the structure of the property. By snagging I meant little things that might not be exactly right eg. a bit of dodgy paintwork on the kitchen walls. You can bring these to the attention of the HA if you purchase the flat brand new and they may (or may not!) rectify the little snagging issue. If you buy a re-sale, you won't have that same recourse to either the seller or the HA. 

My understanding is that the rent on the portion you don't own is something like this:
Resale property now available. Full market value of the property when it was new 5 years ago was £300,000. If you own 50% and rent the other 50%, and the annual rental is 2% of the part you rent, the annual rental payable is £3,000 / £250 pcm.
Brand new property now available. Full market value of the property today is £400,000. If you own 50% and rent the other 50%, and the annual rental is 2% of the part you rent, the annual rental payable is £4,000 / £333 pcm.
So house price rises account for the difference in the rent payable on the part you don't own. Rental increase caps will also play a part. 

I hear what you mean about living in the commuter belt. They can be soulless and the trade off is extra commuting time / expense. 

kingstreet

You should download a copy of the Shared Ownership affordability calculator as you will be required to purchase the largest share which remains affordable. Rent is typically 2.75% of capital value and this and ground rent & service charges will be included in mortgage affordability, so test different lenders' affordability calculators with these costs included.

onetimeatponycamp

Have you looked at buying in Reading with Help to Buy? As with Crossrail coming that might be a good option and keep you near your friends.