Shared ownership - is it worth it?

shapala

Leggitte said:

This thread needs some input from people who do have a positive SO experience. I live in a SO and am very happy here. I have not made an attempt to sell it so can't say much about that. But it is true that selling an SO is harder than selling a full ownership house. 

I suggest when buying an SO to buy a new build which gives you a limited time warranty so you can test everything properly. I also suggest, given your age, to not buy more than 25%. The higher percentage you own, the harder to sell it becomes. Lastly, SO is not a short term game. If you plan to stay there 2 or 3 years, go and find a place to rent. If you plan to stay for up to 10 years, SO can be a very healthy step on the property ladder, for which is was intended.

There are plenty of stories of young people/couples who started in a SO and now own a house outright.

My wife and I certainly have a + outlook. We managed to get our foot on the property ladder thanks to SO. 25% deposit down on a 134k new build 3-bed in Edinburgh in 2010. We were the first coupe to get a set of keys for the entire development of 600ish properties (now it's 1000s as more were built over the years - a huge development).

Rent did go up a little but, if I remember, it was something like £220 to begin with and £270ish when we moved, inc all factoring costs.

Sold it 4 years ago for 215k so made some profit on our quarter - we had saved in the meantime but since we knew we were going to move at some stage never decided (or wanted) to put in another quarter, unlike our neighbours. The only issue was selling not because it was difficult and no-one wanted it but bureaucracy between solicitors and having to sign things just about everyday at one point. We actually sold it to the very first person who viewed so other than paperwork, it sold with funds in the bank pretty quickly.

Loved our time there and with the proceeds we had enough to put a 10% deposit on a 4 bed Victorian flat in Southside of Glasgow. The SO flat was really the only chance to have our own flat - 2 bed flats to rent in Edi were at the time about 800/m for the areas we were looking at (we didn't have a car then so had to be reasonably central) so the SO flat saved us a small fortune over the years and worked very well for us. OP, definitely one to think about as it can be bit of a minefield and also what your longer term options are (if planning to stay put for instance etc).

Leggitte

Interesting observation: Most if not all negative comments about SO is from people who have not tried it. Most if not all positive comments about SO is from people who have tried it. I have drawn my conclusion.

Mahsroh

seatbeltnoob said:

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've seen this thread on here for a few days but didn't open it until yesterday after learning that a friend is considering a SO. So I came to read this thread, then spoke to another (non-mutual) friend who I know bought their first house as a SO. Firstly, interesting that everyone generally has negative views of it, apart from those who've actually done it!! But that aside, to pick up on this particular point, I asked my friend about how hard it was to sell and his response was not at all. 

Effectively the HA / Developer who owned the other 50% stake sold it for them. The only downside is they set the price, and you have no control over it (i.e. cant choose to accept a slightly lower offer) but what they did was market the property to "anyone" and sold the house 100% to a standard buyer. Took their 50%, gave the other 50% to my friend who then redeemed his portion of the mortgage and had enough left over to fund the deposit on their 2nd purchase (bought outright). Not sure if that's how all Housing Associations work, but he said his sale was really easy (but admitted it helped that he was happy with their valuation / asking price)

tigger462

Leggitte said:

Interesting observation: Most if not all negative comments about SO is from people who have not tried it. Most if not all positive comments about SO is from people who have tried it. I have drawn my conclusion.

Yeah I can't fault it because it helped me get the house I still live in today. Never in a million years would I have got a mortgage for my house, or a similar one, without it. I'm glad it was around when I needed it and now I'm the owner of it but I've no plans to sell or move as I love it ❤

super61

Hello, does any one know if I can buy freehold this myself as solicitors are quoting £1k plus. Own 50% now and want to end up with freehold. With a housing association plum life. Anyone any experience of this please? No replies from solicitors saying it can’t be done please.

mashmash90

I purchased a shared ownership 2 bed newbuild flat in London in 2015 and we have just exchanged to sell this week. We have no regrets - the value has increased, the rent and service charges never went up a crazy amount as some people are suggesting (in fact we were happy to see our housing association capped rent rises this year despite it being tied to inflation). We did have a few hurdles along the way that made us regret it on occasion - mainly with some areas of management and yes selling it was more difficult than if you were selling a normal flat. 
Our timeline was - purchase a 40% share initially, then we staircase to 75% about 4 years later. We could afford to staircase to 100% but didn't see the point as the rent payment was so minimal that the amount of extra interest we would be paying didn't outweigh the rent and we would have had to pay additional stamp duty (as you don't pay stamp duty on staircasing transactions below 80%). Owning only a percentage of the property also means you unlock very low interest rates due to having a low LTV (loan to value), so we were only paying about 1% interest on our 75% share but that would have gone up to at least 3% had we owned 100% of the property as the LTV would be much higher.

In terms of selling, the annoying thing is we (as agreed in our lease) had to give our housing association 8 weeks to try and sell it through another shared ownership scheme before we could sell it outright on the open market. The fact we owned 75% meant that the affordability was actually impossible for someone to meet as they would have to be able to buy a minimum 75% share (they can't buy less) but there was a cap on how much income they could have to benefit from shared ownership. What that mean was the pool was extremely small - we saw on the advert that they had to have a minimum salary of 85,000 and a maximum of 90,000! So anyone below or above that wouldn't be able to put in an offer. Safe to say we had no viewings as a result and lost 2 months, a very valuable 2 months as when we finally were allowed to put it on the open market, the interest rates had steadily been rising and values or number of first time buyers interested seemed to have dropped. Had we been allowed to just sell it from the get go, we probably would have got a much better offer.

Saying that, because the housing association had arranged professional photographer and someone to draw up a floorplan for the advert, we were able to reuse these and list them on Strike and sell the property for free. Had we sold through our housing association, we would have had to pay them 1% of the property value as a fee. 

All in all, we are happy with how things turned out. We now have enough equity after paying off our mortgage and gaining equity as a result of small but steady price rises in our area that we are buying a more expensive property at 100% now. Had we been waiting and renting, this would have taken much much longer to do.

I tentatively recommend shared ownership as long as you can afford it comfortably and definitely can't afford something similar on the open market. We were lucky that our salaries have gone up quite a bit since buying so we never had to worry about service charges etc.

[Deleted User]

Look at it this way. They aren't a charity, they aren't trying to help you get a flat. They are trying to make money out of you, so naturally the deal is very good for them.

Gycraig

[Deleted User] said:

Look at it this way. They aren't a charity, they aren't trying to help you get a flat. They are trying to make money out of you, so naturally the deal is very good for them.

As is literally anyone who will sell you a house or flat, be it private or business. 

YoungBlueEyes

super61 said:

Hello, does any one know if I can buy freehold this myself as solicitors are quoting £1k plus. Own 50% now and want to end up with freehold. With a housing association plum life. Anyone any experience of this please? No replies from solicitors saying it can’t be done please.

Your last sentence. If you don’t want replies from solicitors saying it can’t be done (when you presumably think it can) what use is there in non-solicitors telling you to go for it?

If that’s all you’re after I’ll say it - this non-solicitor says go for it! The world’s ya lobster!