Easy explanation of shared ownership

yksi

I'm going to leave aside the definition because you've had explanations and there are some good resources to look at them and to understand that SO is far more expensive in the long run.

But I'll say this, I am also looking to buy in Torbay and have been following the market there for almost a year. And the shared ownership homes on the market there which are not new, are simply not selling. Those owners are in hell. They have no say in the marketing price as it is decided by bits of paper and the managing body. To give you an example there was a decent one-bedroom shared ownership flat for sale in the area, but its price and percentage ownership meant that the "total value" was over the £100K mark - so about £30K over what it was worth. It sat there for more than six months, presumably because the owners could not drop the price. (I am not even sure if it sold because the listing just shows that it is no longer available.)

You have at least a year, so put all shared ownership properties into your saved list (even if you wouldn't buy them) and sit and watch for a while. Also do the maths on what the "full price" of each property would be and see if it stacks up to the market price of non-shared-ownership homes. I think you'll see that brand new builds aside, they just don't match. Try to imagine the annoyance of keeping your home "showroom clean" for months while nobody is even coming to view it and you just can't sell!

You didn't really mention your total budget because I assume that the rent on a SO has been factored into your spending. But two people on minimum wage would probably manage to get a mortgage that would buy a nice two-bedroom flat or maisonette in Torquay, and you & the bank would own it all, no management company will ask for huge rent each month and they won't interfere with your buying and selling process. Or a 3br renovator's dream flat. Or a 3br semi in Newton, Kingsteignton etc. If it were me I would seriously consider these options especially since you plan to move up the ladder in a few years' time.

GraceD_17

yksi said:

I'm going to leave aside the definition because you've had explanations and there are some good resources to look at them and to understand that SO is far more expensive in the long run.

But I'll say this, I am also looking to buy in Torbay and have been following the market there for almost a year. And the shared ownership homes on the market there which are not new, are simply not selling. Those owners are in hell. They have no say in the marketing price as it is decided by bits of paper and the managing body. To give you an example there was a decent one-bedroom shared ownership flat for sale in the area, but its price and percentage ownership meant that the "total value" was over the £100K mark - so about £30K over what it was worth. It sat there for more than six months, presumably because the owners could not drop the price. (I am not even sure if it sold because the listing just shows that it is no longer available.)

You have at least a year, so put all shared ownership properties into your saved list (even if you wouldn't buy them) and sit and watch for a while. Also do the maths on what the "full price" of each property would be and see if it stacks up to the market price of non-shared-ownership homes. I think you'll see that brand new builds aside, they just don't match. Try to imagine the annoyance of keeping your home "showroom clean" for months while nobody is even coming to view it and you just can't sell!

You didn't really mention your total budget because I assume that the rent on a SO has been factored into your spending. But two people on minimum wage would probably manage to get a mortgage that would buy a nice two-bedroom flat or maisonette in Torquay, and you & the bank would own it all, no management company will ask for huge rent each month and they won't interfere with your buying and selling process. Or a 3br renovator's dream flat. Or a 3br semi in Newton, Kingsteignton etc. If it were me I would seriously consider these options especially since you plan to move up the ladder in a few years' time.

Thank you so much everyone, if i didn't read half these posts i feel as if i'd have got myself into a bit of a rut. 
I knew it seemed a little too good to be true that you could own a house for such a low price without there being some sort of a catch, and the fact they're hard to sell is a red flag for me, we'd be looking at living in the first house for no longer than 3/4 years until we could up our budget and move to a bigger property but like you say, if we struggle to sell it without lowering the price we're leaving no room for any sort of profit. 

Our budget up north was £150,000 which would get you a standard 3/4 bedroom semi detached in an estate or a 3 bedroom smaller detached that probably needed a bit of doing up, but as you can imagine prices in Cornwall, Devon and the areas we've been looking around we'd need a way bigger budget for a nice 3 bedroom semi detached that wasn't shared ownership. If anyone has any area recommendations it'd be appreciated, we aren't set on any areas at all we just want to be toward the Cornwall/Devon area mainly for the beaches and towns, a 30/40 minute drive from any beaches is fine and we want a family friendly area as we would be looking to start a family after a few years of being there. 

I also appreciate someones post about a lot of the houses being more likely offered to people already living around the area that we choose, that is something i've picked up on a fair bit with shared ownership, it seems that unless you're a resident already or have something to do with certain areas it's a bit of a grey area. 

Another question that i'm trying to figure out, will the fact that we're moving from way up north (5 or so hours away) affect us buying a property in any way? 

blue_max_3

I was looking to buy a shared ownership flat in North London, but decided against it.
Firstly, it was a OPSO (over 55's) flat that allowed you to own 75% max. There was no rent on the other 25%.
So it was two rooms and a bathroom. The full value was £450,000 and it was on sale for 75%. 
The full price was definitely overpriced, even for the area. The 75% not too bad value, but you needed to add a £160pm service fee, which isn't insignificant.
I waited for two weeks for the housing association to 'approve' me. That told me all I needed to know.
The fixed price thing is a massive reason for not going ahead though. It's probably not a problem in a rising market. But in a falling one, your only hope is to keep getting it revalued at a cost of £500 a time and hope it comes in less. Otherwise it seems even more overpriced. To make this work, you have to be sure you'll be there for at least five years. 
I was dead against SO, but was tempted by the idea of getting out of rented accommodation. I'd rather keep my powder dry for now. 

ctbfc

Shared ownership really worked for us. Got us out of expensive rented accommodation and in to a 3 bedroom house we'd never have been able to afford outright (West London / Surrey borders), we chose the house for a long term home and we aim to staircase to 100% as soon as we are able to.

We were incredibly lucky as we got a resale property (very rare around here) which became available just as we started looking. Do your homework and think about what you want long term rather than going for it just because you want to get a foot on the ladder.

yksi

This. I would not say that SO is "bad" but it has clear ideals on when it's appropriate. It's for people whom without it would not be able to get onto the housing ladder and it is for a long-term home. This doesn't apply to you, OP. Normally when you sell a house you pick the sale value according to looking at other properties. With a SO you don't have any say and the management company decides on the price - this leaves you stuck if it's overpriced as you can't drop the price down to attract buyers. As blue_max_3 noted you have to pay to revalue it and then you're still praying they agree - they can still turn around and refuse to drop the price.

You have a significant budget which is more than enough to get you do Devon. Do some research and look at what the budget will get you. You say that it will be 4 years or so before you actually "need" the bigger property, so think about what kinds of sacrifices you would make in the meantime (either location, or size, or condition). 

getmore4less

The key when you can't afford a full house is the exit plan if you buy any alternative. 

More income.
Inheritence.
Price rises don't work well.

Whatever you buy has to be sellable that can be an issue.

The second hand ones give you a better idea of what you are up against as everything is smoothed for first time purchase or it would not word

GraceD_17

Thanks again for all your replies, some of the asking prices for SO are incredibly high, I came across a SO 4 bedroom detached new build for £120,000 with 25% shared ownership, so the asking price would have actually been waayyyy over budget, even for the house that it was, but SO made it seem affordable. But like many of you have said selling that on would have been a problem due to not having any say over the asking price or any say in budging the price lower making a bit less appealing to buyers. 

Many houses I've come across that are not shared ownership seem to be under Section 106? or something like that, where you have to have lived in the area for an amount of time or have a close family member who does or have a job within a certain radius. To me it almost seems like these areas aren't too fond of 'outsiders' so to speak coming to live in their area so they make it a little harder to find an area that i'd like to live. 

Has anyone bought a SO house around the Devon/Cornwall area that has had a big nightmare with it? I feel like I need to hear the massive red flag stories before I consider any further.

Also has anyone moved from up north to any of these areas that has any tips or pointers that could be useful? I try not to live in the dream world of 'beaches and sunny days' I like to try and remember that eventually everything looses it's novelty and that will just become home after a while, so anyone with anything helpful would be great! 

gsmg123

In my experience shared ownership has been really good. None of the issues that have been mentioned in here. We have not come to reselling or staircasing yet, but don't envisage any issues. Look into the housing associations is the key - some are awful and probably the ones who hike prices (not sure why they'd do that, but apparently they do), but some are really good and very fair. 
Not sure about the comments about costs being more than if you just had a mortgage on the property. The rent on the 50% of ours is insanely good value for the area.