We are thinking about buying a shared ownership house...

MattW602

Hi!
Me and my partner have been thinking about buying a shared ownership house that has come onto the market recently. Its in a good location within our village so it has gotten our attention, it ticks a lot of boxes and it would be long term. Would this be a stupid idea with everything that is going on at the minute?
We are currently renting and paying £825 per month. We have been saving for a house deposit and have managed to get over £15,000 together so far.
I earn £26,000 a year and my partner earns £30,000 per year, not including any overtime, child benefit or bonuses
The house we are looking at has been valued at £225,000 and a 35% share is available at around £78,000. You can staircase to 100%
My thoughts are..
Buy the 35% share and after 2/3 years staircase to 100% and buy it outright? 
Has anyone got any experiences with shared ownership? 

[Deleted User]

MattW602 said:

Hi!
Me and my partner have been thinking about buying a shared ownership house that has come onto the market recently. Its in a good location within our village so it has gotten our attention, it ticks a lot of boxes and it would be long term. Would this be a stupid idea with everything that is going on at the minute?
We are currently renting and paying £825 per month. We have been saving for a house deposit and have managed to get over £15,000 together so far.
I earn £26,000 a year and my partner earns £30,000 per year, not including any overtime, child benefit or bonuses
The house we are looking at has been valued at £225,000 and a 35% share is available at around £78,000. You can staircase to 100%
My thoughts are..
Buy the 35% share and after 2/3 years staircase to 100% and buy it outright? 
Has anyone got any experiences with shared ownership? 

How much rent would you need to pay on the 65% share you won't own?  How much can the rent be increased and when? 

If you think you could afford to staircase to 100% after 2/3 years why even consider shared ownership?  Why not save a bit more and just buy somewhere non-shared ownership for £225,000?

MattW602

The rent on the 65% is around £390 per month, currently.

 The only reason this house has got my attention is the location. It’s within walking distance to the school and with young children this would be perfect.. houses around this part of the village are currently listed at around £270K which is out of our price range. 

Yes, my other option is to carry on saving and buy elsewhere within the village. Do you think this would be a better? What are the chances of getting a 5% deposit mortgage at the minute? 

I just feel this could help me get onto the property ladder

[Deleted User]

MattW602 said:

The rent on the 65% is around £390 per month, currently.

 The only reason this house has got my attention is the location. It’s within walking distance to the school and with young children this would be perfect.. houses around this part of the village are currently listed at around £270K which is out of our price range. 

Yes, my other option is to carry on saving and buy elsewhere within the village. Do you think this would be a better? What are the chances of getting a 5% deposit mortgage at the minute? 

I just feel this could help me get onto the property ladder

I think your chance of getting a 95% LTV mortgage at the moment is slim to none.  I also think that you being able to borrow enough to staircase to 100% in 2-3 years time could be very tight on affordability unless your incomes are set to increase.

[Deleted User]

As it is a HOUSE - this could be a good move for you. You also need to pay service charges but on houses they are around £50 a month. Then you have your SO rent on unowned part plus mortgage.

Round here SO houses are like gold dust !! They are snapped up as there are not many. 

1. Are you allowed to staircase to 100% ? Some rural properties have 80% max so they always remain SO and leasehold. 

2. If you are going to staircase either go to 100% or stick with what you have and overpay your mortgage - so if you decide to sell you have a big deposit for your next normal purchase. 

Its MUCH easier to sell SO that are around 25-40% SO as that places it within most peoples grasp. Those who staircase to 75% often have trouble selling 
3. look around the estate. Are the houses well kept ? Sometimes SO can attract less motivated owners / renters that can mean its not as nicely maintained as fully private estates 

Im looking around for a SO for my son and his girlfriend. Due to medical reasons they could never afford a proper mortgage - so SO will be the way to go. 

Also if one of you gives up work and have children, and then you claim Universal Credit ( old tax credits ) - if your income is low enough then UC can pick up the tab for the “rental element” of the SO 
Tap some figures in “entitled to” to give you an idea 

blue_max_3

Shared ownership properties tend to be overpriced and they often don't negotiate. In this current climate, you'll likely find your SO home is worth much less than the asking price before you even start.
You may be better renting in the area you choose. 
This is a good impartial evaluation of some of the pitfalls... https://hoa.org.uk/advice/guides-for-homeowners/i-am-buying/shared-ownership-what-to-watch-out-for/

MattW602

Thanks for the replies. 

To add it’s freehold and you CAN staircase to 100%

What if I was buy 35% at £78,000 with 
a 15% deposit. Mortgage £66,300 over 10/12 years if the lender allows. 

3 bedroom houses around the property are listed currently at £270K upwards. 

Maybe it would be best for me to carry on saving and to sit tight and see how the market is over the next 6 months. 

28tsw

You can buy more than 35% now If you want. They’ll do a finance check with you and recommend what share you should buy.

Mortgages for shared ownership are different to “normal” ones. My understanding is they still offer high LTV on shares.

we are selling a shared ownership property now and it is £15k cheaper than the non shared ownership houses same style same estate as EA overvalue. Not always overpriced at all.

rachel230

Is it freehold or fleecehold? Are there estate fees, service charges, permission fees etc to pay? Have the council adopted the estate? If not the owners will be expected to pay for the maintenance of it.

MattW602

Freehold and I’m not sure if there is any charges other than the rent. Possible service charge? But it doesn’t say in the listing. 

rachel230

It wouldn't necessarily say on the listing. You need to see the lease and TP document before you commit.
Do your research on the pitfalls of Shared Ownership/New Build Estates very carefully and whatever you do, do NOT use the developer's "recommended" solicitor no matter what discounts/incentives you are offered. It is really important to get your own specialist solicitor who will go through your contract with a fine tooth comb!