Making Offer for a Shared Ownership Scheme

LisbonLaura

IMHO 'Bombata' is a developer or agent ramping for free.......just like the 'woman' the other day saying how wonderful Barratt's part-ex scheme is.

The low post count is the usual giveaway

SerenaGoode

bombata wrote: »

An update:
I went viewed the flats today. Its the East One Development www.east-homes.co.uk if you know it. I had put down my preference of three flats.
They said that they have about 60 people round and only about 10 flats for sale, so I am not counting my chickens.



I just think that this is my only chance of getting on the housing ladder. I could afford a one bedroom, but then I would have about 1000 pounds in mortgage repayments. The idea of getting a 2 bedroom flat with shared ownership was that I can rent out one room to my friend. I then have only about 450 pounds rent to pay a month and can save about 750 pounds a month for something else, and I don't have to worry about wasting money on rent.

It's a good plan, though with a bit of patience you may well find you could apply the same theory to owning a 2-bed outright in a few years' time. If you are talking about the housing ladder I'm concerned this is the wrong way to start. Look at PasturesNew's story again - s/he may have been happy in the flat, but spent the best part of a decade in negative equity, which is a serious obstacle to overcome financially. I fear the same may happen with these.

Also, another negative thought. Are you really sure you want to live in Stepney. It strikes me as the kind of urban 'edgy' area that 20-somethings seriously over-rate, thinking that living in zone 1/2 is the be-all and end-all. Are you likely to have children ever? I'd hate to bring up a child in Stepney.

bombata

LisbonLaura wrote: »

IMHO 'Bombata' is a developer or agent ramping for free.......just like the 'woman' the other day saying how wonderful Barratt's part-ex scheme is.

The low post count is the usual giveaway

I AM NOT A DEVELOPER! I just don't have time to spend all my time on the internet! I just wanted some advice.

bombata

It's a good plan, though with a bit of patience you may well find you could apply the same theory to owning a 2-bed outright in a few years' time. If you are talking about the housing ladder I'm concerned this is the wrong way to start. Look at PasturesNew's story again - s/he may have been happy in the flat, but spent the best part of a decade in negative equity, which is a serious obstacle to overcome financially. I fear the same may happen with these.

Also, another negative thought. Are you really sure you want to live in Stepney. It strikes me as the kind of urban 'edgy' area that 20-somethings seriously over-rate, thinking that living in zone 1/2 is the be-all and end-all. Are you likely to have children ever? I'd hate to bring up a child in Stepney.

Maybe I am a little bit to hasty with wanting to get on the housing market, but I am sick of having the move all the time.
Since I was 16 I either lived at boarding school, at university or in a shared flat and I never really felt at home.

Now I saved 30k and how much deposit do I have to save to buy a 2 bedroom flat in London outright. I am not planning to have children until I am 30 so I have a good 5 years still (and time to find a father as well :-) )

It's just I was quite happy with my flat, where i live now, but then the rent went up by 140 pounds a months! The reason I looked at Stephney is that I live close to there at the moment. (Bethnal Green) Also it's close to the City where I work, and since I cycle everywhere its quite close to the centre.

I do not know what you meant with "being in negative equity".

LisbonLaura

bombata wrote: »

I AM NOT A DEVELOPER! I just don't have time to spend all my time on the internet! I just wanted some advice.

Ok bombata, I was just checking.

With the way you are thinking at the moment I would suggest time spent on the net will be very well rewarded!

There are folk on here posting their (possibly hard won) wisdom.

Do you really not know what negative equity is??? !!! -- Google it & learn.... fast!

The internet could be your saviour. Many of us wish it had been around 30+ years ago

Sorry to sound harsh, but you have much to learn & an easy way to do it. Lucky you.

macaque_2

LisbonLaura wrote: »

IMHO 'Bombata' is a developer or agent ramping for free.......just like the 'woman' the other day saying how wonderful Barratt's part-ex scheme is.

The low post count is the usual giveaway

You are right.

Tim (nice but dim) Bombata said: "I just think that this is my only chance of getting on the housing ladder" And here we are in the middle of a credit crunch. I'm offended Tim, very offended. Did you honestly think you could get away with porkies like this.

SerenaGoode

bombata wrote: »

Maybe I am a little bit to hasty with wanting to get on the housing market, but I am sick of having the move all the time.
Since I was 16 I either lived at boarding school, at university or in a shared flat and I never really felt at home.

Now I saved 30k and how much deposit do I have to save to buy a 2 bedroom flat in London outright. I am not planning to have children until I am 30 so I have a good 5 years still (and time to find a father as well :-) )

It's just I was quite happy with my flat, where i live now, but then the rent went up by 140 pounds a months! The reason I looked at Stephney is that I live close to there at the moment. (Bethnal Green) Also it's close to the City where I work, and since I cycle everywhere its quite close to the centre.

I do not know what you meant with "being in negative equity".

Hi Bombata,

Well, five years is not so long in terms of housing, and you may not even be working in the area in a few years time. I appreciate the benefit of being close to work, but I'm not sure about Step[ney. If you wouldn't be happy to have a child in this flat that's worth bearing in mind if it becomes a situation where it is hard to move on from.

Negative equity is the situation where your property (or in this case you share of the property) is worth less than the outstanding mortgage. This makes it very hard to sell up and/or move. It was a serious problem for many people in the early 1990s.

It's worth looking hard at the terms that would apply if and when you come to sell. If you have a £52K mortgage and the HA's share is worth about £193K, what happens if you can only sell for £225K when you leave. Is the loss share between you and the HA or do they still get their £193K? If this is the case, the shared ownership can mean that you lose a disproportionate amount from price falls. For instance in this case it would mean that you only got £28K back against a £52K mortgage, leaving you with £24K of negative equity (debt in other words). Check that aspect of the situation whatever else you decide.

Price falls may not happen. But properties like this in London last time round fell by as much as 40% so worth being prepared for the possibility.

PasturesNew

Negative equity means: If you buy a house and the property values fall and you want to move out/on, it will be worth less than you paid for it - and your lender will require you to pay back the difference (the loss) before you can sell it (complete).

e.g.
£200k - Price of flat
£60k - You buy 30%

House prices drop by 33% and you want to sell:
£60k - You owe to the lender
£40k - What your portion is now worth
£20k - Will have to be paid to the lender before you sell. OR find a new lender that will add this debt to a new mortgage (extra effort, bigger fees, higher interest rate to be paid)

gabyjane

Couple of things not for any particular reason but on reading through it's made me think about them!!
Firstly in our contract we are not allowed to sub-let, my sister really wanted us to buy a 3 bed so she could move in and help towards the rent but it was a big no no, as we had fought so long to get one we weren't prepared to risk it..my friend is the same,different town but she has checks done, unless you are very orgonised it's not worth it. May only be where i am or this current housing co.

I also have to say that if the worst comes to the worst and we cannot buy the rest then we rent it, like somone else has said it's still our house and no one can make us move, our rent is £152 per month and that we can live with even in old age lol..if we had a proper house we could struggle to pay the last payments and lose the house..this way we may never own it but we certainly won't get a bang on the door from the landlord saying he's selling up!! Worth every penny for peace of mind!

OzzMosiz_2

Shared Equity Schemes are disgusting. They benefit no one but the people selling them.
You pay for half or 3/4 of a house, but pay the full council tax and maintenance on them. If house prices go up, you end up further away from the next rung up. If prices go down, then bank tighten lending criteria anyway, so unless you have increased salary then you are stuffed, but then your 1/2 or 3/4 of the the shared home has dropped in price too.

Stay well away.