Shared ownership - London

izoomzoom

Hi, we bought SO 13 years ago and are doing the final staircase now.
Not in London, but I wanted to shared anyway.
We bought an older SO property. We found that the rental portion was more generous than new builds. As we were looking at a 50% purchase, new build SO rentals were much the same as the mortgage repayments, but on older properties, it was substantially less. Rental has increased every year (about tenner) but it has never been anywhere near even half the mortgage payments.
We struggled to get really decent deals for mortgage rates, and found the market was quite limited.
Our property always allowed us to staircase (in 10% increments) and up to 100%, but it took us about 2 years to find and be offered a property (and it was 20 miles from where we lived at the time).
Happy to answer any specific Q, but I think you'll need to research each HA / SO scheme.

annetheman

Resurrecting as I'm *just* about to sign the 125 yr lease on my S/O flat - here is what has brought me to the "go-ahead" decision...

The fact is that shared ownership is not ownership. I think of it as a long-term tenancy. I have been an assured shorthold tenancy (AST) renter for many years, have spent tens and tens of thousands of pounds of rent, and am moving to my S/O flat with no equity at all from all those 10+ years of AST renting.

Now, the way I view S/O is that it is NOT preferable to buying a freehold outright. However, it is better than renting (aka throwing money in the wind) and more attainable than buying freehold outright (alone in the SE anyway).

When I sign my lease, I will continue to rent, just that I am building equity on 50% of the rent I am paying (not to mention paying far less, all fees included - renting alone in the SE is not cheap). The price of being able to build this equity is a lot more building owner-type responsibility e.g. major repairs contributions, than I have as an AST tenant.

If you 1) understand that S/O is not real ownership, 2) you have read your lease and understood very well the limitations (e.g. I have to ask to keep my cat, can't sublet/AirBnB before 100%, etc), 3) plan to purchase more than 40% (to keep your rent low), 4) will have more disposable income with all costs than you do as an AST renter, and 5) plan to staircase to 100%, I think it's a great thing to go for.

Staircasing when you can, aiming to reach 100%, shares seems to be the best way to avoid some of the horror stories. Be realistic - if you don't see your disposable income increasing within the next few years (no bonuses/pay decreases/you want a baby/etc), you probably won't be able to staircase.

In which case, the unowned shares rent will all continue to increase - that's when things get quite difficult for people, I think. The lower you can get this the better. Other things increase too like service charge and ground rent (yes below market rate) but READ YOUR LEASE and ensure you are okay with the increases. 

Good luck to us all!

haras_n0sirrah

I am a shared ownership mortgage specialist on the panel of 3 housing associations. I also do affordability assessments for them.
My personal view having helped in thousands of shared ownership transactions over the last 15 years is to only get somewhere you can see yourself staying for 5 years, if staircasing dont go above 50% unless you can get to 100% ownership, if you can buy on the open market do that but it is better and cheaper than renting plus it means no 2month s21 meaning you have to move on a landlords whim.
Mortgage wise you can do a 5% deposit and the rates for this are mid 3's, 10% is high 2's and if you can do 15% you are looking at low to mid 2's. Not dreadful and 5% of a 25% share is much more achievable than 15% of the whole thing.

gsmg123

We got our mortgage through Nationwide - not sure this is still the case - but when we got our mortgage as well as the recent-ish remortgage, they include the portion you don't own as part of your equity. Sounds odd, guy couldn't really explain it. But basically I was asking during the remortgage if it was worth trying to hit 20% equity (of 50% share) and he said don't bother as you're down as having 59% equity overall anyway (i.e. ~19% of your 50% share, and all of the other 50% we don't own).
Think it was backed up by the rates as well -  low 2's when we got it (on 10% deposit of our share), and are now high 1's (19% of our share)

haras_n0sirrah

gsmg123 said:

We got our mortgage through Nationwide - not sure this is still the case - but when we got our mortgage as well as the recent-ish remortgage, they include the portion you don't own as part of your equity. Sounds odd, guy couldn't really explain it. But basically I was asking during the remortgage if it was worth trying to hit 20% equity (of 50% share) and he said don't bother as you're down as having 59% equity overall anyway (i.e. ~19% of your 50% share, and all of the other 50% we don't own).
Think it was backed up by the rates as well -  low 2's when we got it (on 10% deposit of our share), and are now high 1's (19% of our share)

They don't include the equity you don't own. On help to buy shared equity they do however on shared ownership it is based on your share only.