Shared ownership - is it worth it?

getmore4less

Rosa_Damascena said:

tigger462 said:

SO for me was great, as I had very limited time to move due to circumstances & couldn't rent due to a pet I refused to give up. I've been able to staircase to 100% aswell which I appreciate not everyone can.

I was 50/50. The rent/mortgage for my 2 bed house was about £400 a month less than similar rentals in the area (I'm in a London commuter town too). I wanted a house over a flat too and SO enabled me to do it. I know with flats there are higher service charges too. I liked that I was paying off part of a mortgage but I'm also glad I now have the freehold for my property over a leasehold 

For me this is the issue. How many people do actually progress to 100% ownership?

I would argue that the first step on the housing ladder is the most important wrt accruing capital. Get it right, and the move up a few rungs becomes so much easier.

Moving to 100% in the SO is not that important.

It can be done with a move.

If the SO gets you a more appropriate property cheaper than renting you can build up equity.

A SO may remove a ring or two of the ladder, moving is very expensive.

Could be afford studio/1bed or SO 2/3 bed
The first for many would be the get out of as soon as possible, the later good for many years to build up to the next move.

thejunk1

We have a SO and it’s been really good because it’s allowed us to live in London for a few more years in a good standard flat in an area we like. We were lucky with the housing association I think - Peabody. They are super clunky and slow but the rent / service charge doesn’t shoot up every year like the horror stories you hear. We live in a block of 30 flats and that’s important too because we can act as a body more easily when something does go wrong. My advice would be to look carefully at the lease - how much does the SC go up. How about the ground rent. It’s going to be a pain and expensive for us to sell as we’ve now outgrown it, but we see it as “renting plus” - not everything we’ve paid out on it has gone down the drain into a landlord’s pocket. I wish I had known how much they charge to sell ahead of time so we could have saved for that. But overall, I’d say it’s been a good decision. If you know you’re going to stay there for several years then it’s worth looking into more. 

Floss

My aim is to staircase to 100% by the time I retire in 2031, most likely funded by savings & pension lump sum, which will eliminate rental payments in retirement. I'm not planning to move, my home is ideally placed for bus routes & GP surgery, has lower light switches/higher sockets and (as my sons find highly amusing) is already wired for a stairlift!

Snookie12cat

Floss said:

My aim is to staircase to 100% by the time I retire in 2031, most likely funded by savings & pension lump sum, which will eliminate rental payments in retirement. I'm not planning to move, my home is ideally placed for bus routes & GP surgery, has lower light switches/higher sockets and (as my sons find highly amusing) is already wired for a stairlift!

If you claim some kind of pension credit in retirement, the rent portion may actually be paid for you? So you might not need to pay it off. My sister is in a SO and gets the 60% rent element paid for as she is on a low income...

seatbeltnoob

do9 you research,

make sure all caldding issues have been remedied and all the costs have been paid for by previous leaseholder or the landlord. check the lease lenth, make sure it's the longer 990 year lease and also makes sure ground rent is fixed and isn't double ground rent every few years.

Just be aware that during your ownership property price may go up and you will staircase with the current market value. Also rents will go up at current market rates as well.

I understand for people who can't save for a deposit for a full mortgage, shared ownership would be a way to get the foot in the door but make sure you know about the pitfalls.

boundy

I and my wife purchased a 35% of our house under the SO scheme in 2014, it was a new build.  We overpaid the mortgage for a few years and in 2020 staircased to 100%.  We got to choose our own surveyor for the valuation survey, this turned out very well as he talked to us about weather we wanted to staircase or sell and set the price to help us the most. Even on my now higher salary compared to when I first purchased I still couldn't afford to buy the 3 bedroom house I now own 100%

Floss

Snookie12cat said:

Floss said:

My aim is to staircase to 100% by the time I retire in 2031, most likely funded by savings & pension lump sum, which will eliminate rental payments in retirement. I'm not planning to move, my home is ideally placed for bus routes & GP surgery, has lower light switches/higher sockets and (as my sons find highly amusing) is already wired for a stairlift!

If you claim some kind of pension credit in retirement, the rent portion may actually be paid for you? So you might not need to pay it off. My sister is in a SO and gets the 60% rent element paid for as she is on a low income...

I am hoping my pensions will put me above that line, but thank you - I hadn't realised that.

Floss

seatbeltnoob said:

... also makes sure ground rent is fixed and isn't double ground rent every few years.

Just be aware that during your ownership property price may go up and you will staircase with the current market value. Also rents will go up at current market rates as well...

Housing association SO properties will have lower rent & ground rent / service charge increases because they are tied into the legislation for their own housing stock - developer SO properties are more likely to have the bigger increases of RPI + x% for rent.

seatbeltnoob

why is it so hard to sell shared ownership? I would have though in London you can sell anything. Some people sell the gap between terraced houses to a developer and get turned into a 4ft wide terrace house and it sells.

I understand that a staircased SO property with 50% bought, 50% rented would exclude most SO buyers because they can't afford the 50% and would exclude regular buyers because they dont want to rent the 50%. But surely in such a depressed property market, someone desperate enough in the latter group would just buy the 50% SO and staircase up in one move?

I have relatives trying to buy and they get into a bidding war 15 to 1. They were looking to buy for a year now - have the mortgage offer and everything - just can't actually buy due to the compettiion.

boxer234

I’m strongly tempted I’ve been looking for a year now.  I could move an hour away from work and buy a tiny house I don’t like in an area I don’t like.  I work from home half the time and don’t want to be depressed sat in a house that’s not for me.  If I buy SO I can be closer to family and friends, closer to work in a house big enough to swing a cat or a boxer if I do wish.  

I know financially it’s not the best option. When does happiness come in ? I won’t move for years so that’s not an issue.  Would appreciate good news stories.