Shared ownership disadvantages

tbo127

Doodlebugs said:

HanPop said:

Not all new builds have over inflated prices. We bought a shared ownership house owning 75% of it for a very reasonable price. The rent portion is lower than private rent as it is subsidised. Our service charge never went up in 6 years, it was only £10 a month. Also the housing association do not have first refusal if you wish to sell anymore (pre-emotion clause) that clause is no longer used. We ended up staircasing and owning the freehold and we never paid any legal fees as the housing association had an offer on staircasing at the time. We also made £20,000 on the property when we sold. I find that most people who are negative about shared ownership have never actually owned a shared ownership property.

Completely agree with this. Our shared ownership was one we could staircase to 100%. We bought a 35% share initially and our mortgage, service charge and rent on the part we didn’t ‘own’, was cheaper than renting a similar property. Our service charge went up once in 6 years by <£5 a month and our rent went up annually, but again only a minimal amount. Definitely research the housing association, there are some good ones out there.  

We staircased and bought the freehold, sold on the open market at a price we chose and made a decent profit. Would never have gotten on the housing ladder without shared ownership at that time in our lives. 

Interesting. Which housing association were you with? I looked at L&Q and Origin. 

HanPop

We also would never have got on to the housing ladder without shared ownership. We paid less mortgage + rent for a 3 bed property than we were paying in a privately rented 2 bed flat. 

I agree with the above poster to research the housing association. We were with Bromford Homes and our rent hardly increased at all over the years. However I know of a friend whose housing association was midland heart and that increased by much more every year. 

tbo127

Interesting posts. If looking at shared ownership, is it generally better to look at lower monthly payments (I.e. from lower rent on the portion not owned) or is it better to look at lower full market value? 

Sotts

Im in SO. It was my only option.  We bought a 35% share with a £70k deposit and in 2 years when the bad stuff falls off my credit file, I'll purchase the other 65%.
Our mortgage/rent/service charge on our brand new 3 bed apartment is cheaper than what we were paying to rent a 1 bed flat.
We don't plan to sell at this stage of our life.
If we could have bought without SO we would have, but unfortunately we couldn't.

princeofpounds

Given no-one has mentioned it - you have no right to extend the lease of your apartment (the long lease you 'own', I'm not talking about the part designed to simulate shorthold rental)  in a shared ownership block unless you own 100%. Some SO freeholders will let you do it, many won't.

That means you can be left with an unsellable property and a bill to extend that is getting more expensive at an accelerating rate if the lease drops below 80 years. And many SO properties are sold with relatively short leases, e.g. 90 years.

Also, the freeholder basically having control of marketing your property on sale. Plus all the extra legal costs you have to fund for them.

tbo127

I found a SO flat where the full market value is 360k in an area where the average new build is sold at 320k. Lease length is 250 years and the rent on the proportion not owned is charged at 3% of the value not owned per year. 

Another I found is 125 year lease with full market value of 420k. Rent on proportion not owned is 1.5% per year.

tbo127

I’ve also seen a HTB new build for 370k which is share of freehold. I’m trying to weight up the pros and cons of all of these options.