Shared/Part Ownership - Do or don't?

oran-gaoil

Hi there,

My family are selling the 25% share of a flat that belonged to my mother. I am 21, and have just started a good permanent job in a bank and the thought occurred to me that it could be a good idea for me to get a small mortgage to buy the 25% share myself. It's in an excellent city, in a very good area and has 2 bedrooms. The share would cost approx 25k.

Would I be allowed to rent out the property if I didn't live in it myself?

Is part ownership a good idea? I personally think it's a really great opportunity for someone like myself and it means I can maybe buy more of the share as the years go on.

Any thoughts my fellow moneysavingexperts?!

Regards from an oran-gaoil

oran-gaoil

Any help really would be great?!!!

m00m00

depending on who owns the other 75% you almost certainly would not be allowed to let the property out to a 3rd party

frannyann

No you can't sub-let the property. I own 60% of my flat. In the fours years I have had it, its gone up in value faster than my earnings so can't afford to buy the remaining 40%. The rent element has gone up more than inflation. I have to pay all of the costs of maintaining the property and all cost involved with selling it. Moat will get the profit of my efforts with no further cost to themselves. So personally if you can afford to buy the rest of the shares quickly it can be a good way on the ladder but if not be prepared hand over 75% of any rise in value to HA. But for me its been a way of getting a secure roof over my head in an area I couldn't afford to buy.

SquatNow

Shared Ownership is a massive con.

If you can afford £100,000, instead of selling you a flat for £100,000, they sell you HALF a flat for £100,000.

It's basically the last gasp attempt by housing companies to push the price up before the collapse. Shared ownership tends to be on overpriced, poor quality, boxy new builds, usually the ones they couldn't shift off-plan to BTLers, which drop by 20% before you've got the sofa in. (If you're looking at shared-ownership you must already be desperate so they can get away with overcharging.)

On top of that they tend to come with restrictions as bad as those on a rental place, PLUS you have to pay rent on the share you don't own PLUS you're liable for the maintenance costs.

Basically they are the WORST parts of owning combined with the WORST parts or renting.

To Sum It Up:
My dad bought 100% of a nice house for 25% of his wages.
Why would I buy 50% of a rabbit hutch for 50% of my wages?

Relax, chill out, rent, and wait out the crash. Then your £25k will buy 100% of a similar flat.

frannyann

Squatnow, I tend to agree it is a con, backed up by the fact I was one of the very few who managed to get on the scheme which allowed me to pick a property on the open market which I then bought in tantum with HA. However this scheme disappeared very quickly and now only new builds are available, marketed at the price the builder sets. Locally 50% share of one bed new build flat is marketed as £125,000 and I really don't believe the flat are worth £250,000, the others they are privately selling maybe as they have balconys and are much bigger, but not the shared ownership ones.

oran-gaoil

Aw man, this is such a shame. I really thought this was my chance to do something good!

Its a cracker of a flat, in a really nice area in the Highlands, I can't see how I'd be lucky enough at this age to do any better? I'm living at home at the moment so thought I could rent it out (even if it was just to a friend) and not let on? Am I bad?! lol!

Surely the value of the quarter share would go up (well, it can go down too I know) so I'd make some sort of money back on what I put in? No?

The flat would be going on the open market and from what I've seen from other flats in the area, it would be a pretty fair price that would be accepted.

dolce_vita

oran-gaoil wrote: »

Aw man, this is such a shame. I really thought this was my chance to do something good!

Its a cracker of a flat, in a really nice area in the Highlands, I can't see how I'd be lucky enough at this age to do any better? I'm living at home at the moment so thought I could rent it out (even if it was just to a friend) and not let on? Am I bad?! lol!

Surely the value of the quarter share would go up (well, it can go down too I know) so I'd make some sort of money back on what I put in? No?

The flat would be going on the open market and from what I've seen from other flats in the area, it would be a pretty fair price that would be accepted.

And if the price of this place goes up - so does everywhere else.
And you find you're in the same position.

So if you ever want to move you can't unless you buy a 25% share in a more expensive property.

When shared-onership, 125% mortgages, 6X salary mortgages, 40-year mortgages, interest-only mortgages, buying with friends, buying wth strangers, buying and getting a lodger............etc get talked about as the only way of being able to afford to buy a house, I know from experience that we have reached the top of the cycle.



OP- don't worry abouit missing the boat. Just save up as much as you can over the next year or so and wait for the next boat.

best wishes

mr.broderick

dolce_vita wrote: »

And if the price of this place goes up - so does everywhere else.
And you find you're in the same position.

So if you ever want to move you can't unless you buy a 25% share in a more expensive property.

When shared-onership, 125% mortgages, 6X salary mortgages, 40-year mortgages, interest-only mortgages, buying with friends, buying wth strangers, buying and getting a lodger............etc get talked about as the only way of being able to afford to buy a house, I know from experience that we have reached the top of the cycle.



OP- don't worry abouit missing the boat. Just save up as much as you can over the next year or so and wait for the next boat.

best wishes

Thats a nice post, well educated, well intended and well mannered.

oran-gaoil

Thanks

I suppose there is an obsession just now with buying property. I guess I'm in a good position as I am at the moment, living at home in a decent job and still young enough not to look like a sado!

I'll keep saving til the piggy bursts :beer: St.Andrews Day tomorrow, bring on the ceilidh!:j

frannyann

Sorry, didn't mean to put a downer on you. If it works out cheaper to buy 25% + 75% rentable then you can do it to live in yourself. But don't expected to make any big money out of it. I have just accepted this flat will all I will ever live in as its combined rent and mortgage is about half of local rents, its a secure roof over mine and daughters head.