Help to buy shared ownership

cmbrookes

I have a viewing of a new build shared ownership on Friday with the housing association. Would anyone recommend going ahead with the shared ownership scheme if I’m eligible. I’ve had an affordability assessment and they advice I own 25% and rent 75%. The only problem is I’ve had a couple of negative comments regarding the free hold/lease hold situation. So I take it, it will be leasehold as there is an estimated service charge of £100 per month. Is the £100 service charge included in the monthly rent with the housing association?

K_S

@cmbrookes For the SO properties that I've come across, the service charge is separate to the rent.

ResourcesShared

Service charge is different from rent. Shared owners pay 100% of all service charges (maintenance and repair costs, insurance, management fees, etc) regardless of the size of their equity share. Services charges are uncapped; ie. there's no upper limit. As for rent, Homes England's model lease specifies an 'upwards only' annual rent review calculated as RPI plus 0.5%; something to think carefully about given current high levels of RPI.
Regarding the tenure, shared ownership is a very specific type of leasehold. From a legal perspective, shared owners are assured tenants or assured shorthold tenants (depending on the ground rent terms). Shared owners have fewer rights and more burdens than leaseholders more generally. For example, they don't have a right to lease extension, and they are subject to possession with no reimbursement of equity in the event of rent arrears.
It's definitely worth doing a fair amount of research if you're considering shared ownership to make sure you make an informed decision, whatever you decide.

yksi

Spend hours, no, days, reading everything you can find about shared ownership. Search these forums and read every post. Honestly, if you can figure out a way to avoid it and just buy at 100%, I would. There are sooo many pitfalls and selling it later on is going to be a nightmare (you generally cannot have any influence on the asking price, which means it will be stuck on the market if they tell you to list it higher than the market around you).

ResourcesShared said:

Shared owners have fewer rights and more burdens than leaseholders more generally. For example, they don't have a right to lease extension, and they are subject to possession with no reimbursement of equity in the event of rent arrears.

Essentially, so much this part above - in simple terms you can have "your" home repossessed for even small amounts of payments late.

AleksandraK

@cmbrookes I am in the process of selling a shared ownership house. The service charge you've been offered seems a lot - I pay £20 a month. The building insurance is £8 and the rent for 25% is £180. The rent goes up every year by approx £10. 
I haven't had any problems during the 5 years of living here, had one phone call from the housing association about a year ago checking if I have any complaints or suggestions. The house is 2-bed semi and luckily sold within one weekend! (a sought-after area, I admit, so lots of interest)
I personally think a lot depends on the housing association so perhaps read as much as possible about yours (mine is Orbit) 
There is also extra cost when selling such a property - in my case valuation was £300 and extra fees (£300) paid directly to Orbit. 
Although my experience has been good I don't like paying the rent every month! Therefore selling and buying a freehold (need a bigger house, too) 

DE_612183

check as well when you sell that the HA don't want a % of your profit as well to put into a sinking fund.

cmbrookes

AleksandraK said:

@cmbrookes I am in the process of selling a shared ownership house. The service charge you've been offered seems a lot - I pay £20 a month. The building insurance is £8 and the rent for 25% is £180. The rent goes up every year by approx £10. 
I haven't had any problems during the 5 years of living here, had one phone call from the housing association about a year ago checking if I have any complaints or suggestions. The house is 2-bed semi and luckily sold within one weekend! (a sought-after area, I admit, so lots of interest)
I personally think a lot depends on the housing association so perhaps read as much as possible about yours (mine is Orbit) 
There is also extra cost when selling such a property - in my case valuation was £300 and extra fees (£300) paid directly to Orbit. 
Although my experience has been good I don't like paying the rent every month! Therefore selling and buying a freehold (need a bigger house, too) 

I got it wrong haha the service charge is £25. The HA are incommunities. I’ve looked into and it all seems ok.

goldhair86

I'm just buying my own Shared Ownership house. After affordability I was told I could buy 40% and rent the rest. With mine though I can staircase to 100% which I intend to do. 

I've read every forum, googled everything I could possibly find on SO and I just think as with everything, there are always going to be pros and cons. For me the pros outweigh the cons and as a single parent I can finally get on the property ladder and get my daughter out of our horrible little flat in to a gorgeous house with her own garden. I could never have done this without Shared Ownership even though I have a good job and steady income. 

cmbrookes

goldhair86 said:

I'm just buying my own Shared Ownership house. After affordability I was told I could buy 40% and rent the rest. With mine though I can staircase to 100% which I intend to do. 

I've read every forum, googled everything I could possibly find on SO and I just think as with everything, there are always going to be pros and cons. For me the pros outweigh the cons and as a single parent I can finally get on the property ladder and get my daughter out of our horrible little flat in to a gorgeous house with her own garden. I could never have done this without Shared Ownership even though I have a good job and steady income. 

That’s also what I intend to do and when I purchase 100% the housing association hand over the free hold to me. I’m in the same position as you regarding wanting to get my family out of a 2 bed council house when there are 6 of us. The council have done nothing to help us. I also have a good job and steady income.