Shared Ownership Student Flat

TcT3

csgohan4 said:

barge pole for me. The old generation of thinking rent is wasted money. You are paying for a roof over your head. Do you grow your veg since it's cheaper than paying someone to grow it for you?

That is a very poor analogy, I buy veg, I eat veg, the veg no longer exists.  I buy a house, I live in the house, the house still exists.
If I was serious about growing my own veg, i might well buy land and stick poly tunnels on it rather than renting it.

TcT3

rexmedorum said:

bbat said:

I know this isn't what you asked but as others have said, is this something your daughter really wants to do? What if she feels lonely and isolated? What happens then if she wants to change to shared accommodation? Sharing can  be difficult if its not with the right people. But if she lives with people she knows who care about each other, you know that they care enough to check up on each other. Are they home etc. 

Also is the responsibility of looking afther the property etc. putting unnecessary preassure? Would she feel she'd have to stay in that location because of the property?
Also on another note: would she resent her parents interfering and arringing a place for her? Maybe she wants to sort this herself? 

She is fully involved in the discussion, sizing up her options, sussing out whether there are a group of people she want to live with.  This is something we as a family are looking to do for her to to her! The idea that we'd just rock up and go "here, this is where you are living next year, surprise, is a little preposterous.

TcT3

Lunchbox said:

Have you factored in ground rent? Legal fees for buying then selling probably £6k for a leasehold property. Then nearly £6k for stamp duty. The service charges will also increase over the period (potentially substantially with the constantly changing fire regs and new reports/certificates being required), and there’s the possibility of major works that can come out of the blue. 

SDLT would only be £2850 on the property but you’re right the OP doesn’t appear to have included SDLT or the other costs of buying and selling in the calculations which are usually the reasons renting works out less expensive than buying over shorter <5 years periods. 

Facepalm re. SDLT - I was writing quickly and being an idiot. Exactly though; and leasehold comes with so many hidden additional costs/risks compared to a freehold property. It equates to quite a gamble over such a short term.

Ground rent is under £100, but you are right that I have not factored in legal fees or SDLT.  That might make it sufficiently unattractive to be untennable.

csgohan4

TcT3 said:

csgohan4 said:

barge pole for me. The old generation of thinking rent is wasted money. You are paying for a roof over your head. Do you grow your veg since it's cheaper than paying someone to grow it for you?

That is a very poor analogy, I buy veg, I eat veg, the veg no longer exists.  I buy a house, I live in the house, the house still exists.
If I was serious about growing my own veg, i might well buy land and stick poly tunnels on it rather than renting it.

normal people don't buy a house when they study or start out working.  Buying to maybe save some money on rent is false economy. Service and maintenance charges are not insignificant and the fact you want a flat will lead to issues with the cladding scandal has brought

Like any service, you pay for, rent is no different. 

If one can't buy a house straight off, renting is reasonable. The notion of buying a house is cheaper than rent is often spouted on here. If I bought my first house if I had finances, I would not have coped. For my job I moved house and to another city 6-7 times or at least once every year. While I would be saddled with becoming a LL while renting elsewhere.

Buying a house too early also implication beyond cost as well, which is chaining you to that city, or at the very east financially exposed. You rent it out to someone else. How much is it to evict and how long? costs to repair damages

Various examples

https://forums.moneysavingexpert.com/discussion/5983050/taking-tenant-to-small-claims-court
https://forums.moneysavingexpert.com/discussion/5896992/evicting-tenants-via-court-and-bailiffs/p1

Don't forget buying a house at the wrong time and wrong place can have consequences as well. Loss of FTB benefits as well amongst others.

Something to consider perhaps than the it's cheaper than rent argument. No LL to cry to when things need repairing. Guess who pays?

Lunchbox

TcT3 said:

Lunchbox said:

Have you factored in ground rent? Legal fees for buying then selling probably £6k for a leasehold property. Then nearly £6k for stamp duty. The service charges will also increase over the period (potentially substantially with the constantly changing fire regs and new reports/certificates being required), and there’s the possibility of major works that can come out of the blue. 

SDLT would only be £2850 on the property but you’re right the OP doesn’t appear to have included SDLT or the other costs of buying and selling in the calculations which are usually the reasons renting works out less expensive than buying over shorter <5 years periods. 

Facepalm re. SDLT - I was writing quickly and being an idiot. Exactly though; and leasehold comes with so many hidden additional costs/risks compared to a freehold property. It equates to quite a gamble over such a short term.

Ground rent is under £100, but you are right that I have not factored in legal fees or SDLT.  That might make it sufficiently unattractive to be untennable.

We bought a new build leasehold flat 5 years ago. In that time the service charges have increased 150%, and we’re facing a £4K bill per flat for a new front door for each, to comply with fire regs. We know there are upcoming charges for a waking watch and further remedial works. There are so many hidden potential future costs; I certainly wouldn’t have bought it for the short term as we’re now stuck with it for the time being.

rexmedorum

csgohan4 said:

barge pole for me. The old generation of thinking rent is wasted money. You are paying for a roof over your head. Do you grow your veg since it's cheaper than paying someone to grow it for you?

Buying a flat now given flats are clearly not the flavour of the year, not to mention restriction on where your Daughter will live and work. I am currently 100 miles from where I studied, I would not want to live where I studied, expensive and rip off. 

Renting gives more freedom. Flats lock you in and service and maintenance. Least a house less so a problem but more expensive generally.  

Lenders don't like to lend on BTL where tenant is a close relative. Also loaned deposit are often frowned by Lenders as well. 

Just put the money in premium bonds and save it for a rainy day if it is a gift otherwise if for investment in BTL, your grand mother should look into the pitfalls of being a LL

In pure moneysaving sense it probably is "waste money" to rent forever. But when starting out it's really useful to have some flexibility, especialy if you don't know exactly what you want to do or where you want to be yet.

penners324

Legal fees to buy it likely to be £2k.
 legal fees and estate ahent fees to sell likely to be £4k (or more).
Stamp duty £2.5k.
Mortgage fee could be £1k.
If you buy something that is then found to have the wrong cladding, can't get a EWS1 form it, etc etc, the property becomes unsellable.

Do you really want all that for a 3 year purchase?

csgohan4

penners324 said:

Legal fees to buy it likely to be £2k.
 legal fees and estate ahent fees to sell likely to be £4k (or more).
Stamp duty £2.5k.
Mortgage fee could be £1k.
If you buy something that is then found to have the wrong cladding, can't get a EWS1 form it, etc etc, the property becomes unsellable.

Do you really want all that for a 3 year purchase?

Your forgetting, it's cheaper than rent right?

AlrightBab

Important to remember that you'll be paying even more SDTL than usual since it'll count as an additional property! 

KeepOnKnitting

I think I would also suggest that this might be an imperfect option. I won't touch on the financials, as plenty have above. Instead I am thinking of options and flexibility for your daughter. I went to uni in 2016, and so many of my fellow students changed life-course in those three years. Failing out, moving back in with family, changing university, changing course, moving in with partners, moving in with other friends, switching to a sandwich course, taking a year out for health or personal or family or work reasons, pausing to have a child. None of these could have been foreseen.

Your life changes so much when you are in your early adulthood, and being tied to one location can be a complication that isn't necessary. Rent may appear more expensive, but you are paying for flexibility. I think you need flexibility more than security when you are still trying on lives for size. I wish I had known that when I was 21.