Shared Ownerships ....whats your opinion

NinaSwiss

Hi,

I'm interested in getting into the property ladder through shared ownership schemes as I cannot afford to go it alone on my income (£20,000 in London).

This will be in about 2.5yrs time when I will have approximately £26000 saved for deposits and other costs.

My brother earns a similar income to me and thinks it would be a good idea if we did a joint ownership together(whilst he lives with my mum and takes in a lodger for his half).

However im leaning towards not doing it with family and hence the shared ownership scheme. Do you think these schemes are a good idea and roughly what % of the mortgage is rent pcm?

I know no one can tell how much prices will go up to in 3yrs time but is £26000 a realistic target to put into the idea or would it be better to save for even more years to gather more deposit

Thanks

PasturesNew

Prices are most likely to have dropped in 3 years' time. Significantly.

Yes, it would be a bad move to share a house with anybody, especially anybody you know. Financial and responsibility independence is important as it becomes tricky and clouded if either of you ever sign on, want to move a partner in, start popping out kids or want to buy a property to move in with a life partner. So best avoided.

I would say that a shared ownership scheme is good for somebody who never expects or wants to move out of it and are happy iwth their little portion and just see it as a way to fix their tenure for life. It is better than being moved on all the time with private rentals.

However, you are most likely (especially if it is new) to be paying over the odds on valuation for its newness. You are fuly responsible for all repairs, which some feel is unfair.

Rents vary tremendously. For a 50% share of a property I've seen variations of rent where the rent is the same as the mortgage all the way down to it being about half the mortgage.

If I were you I'd look to save HARD for 3 years. In 3 years' time the world will be a different place, you will be a different person. By then, the likelihood is that you will be able to buy something all on your own.

Good luck

Soprano

£26,000 is a good amount of money for a deposit now, in three years time, it will be very good if the overdue housing price adjustment arrives by that time.

I haven't heard many good things about shared ownership.

My sis in law bought a 40% share in a new build flat in September for £230k, the EA told her its 'worth about' £250k. So she thinks is she will make £10k profit selling it now. :rolleyes:

NinaSwiss

Thanks for the response guys

NinaSwiss

Soprano wrote: »

£26,000 is a good amount of money for a deposit now, in three years time, it will be very good if the overdue housing price adjustment arrives by that time.

I haven't heard many good things about shared ownership.

My sis in law bought a 40% share in a new build flat in September for £230k, the EA told her its 'worth about' £250k. So she thinks is she will make £10k profit selling it now. :rolleyes:

Soprano,
how much does your sister pay on the 60% rent part of the property?

My Flatmate seems to think that paying rent + mortgage will amount to the same cost for a full ownership.

tanikk£

if you can afford 75% better go for OMHB (GLO) scheme .. the best one among these

Soprano

bizzyjunky wrote: »

Soprano,
how much does your sister pay on the 60% rent part of the property?

My Flatmate seems to think that paying rent + mortgage will amount to the same cost for a full ownership.

Not too sure. Either is she!! Her husband pays the rent and her the mortage. Yesterday I was chatting to him in the morning where he said they were going to buy a higher %. In the afternoon she said they were going to sell up. They have a 10(!) year fix rate mortage. What a pair of oddballs!

I *think* your flatmate is right. The difference should be minimal. But SO seems a awful thing in reality. People feel pressured into owning somewhere so buy a very over priced new build flat made of balsa wood.

I'm sure folk on here have had good experiences with them. As said, if your happy live there for years and years, then no problem.

PasturesNew

tanikk£ wrote: »

if you can afford 75% better go for OMHB (GLO) scheme .. the best one among these

I didn't know what this was, so I googled it.

There are two parts:

1] Open Market
2] New Build

There would appear for many to be an issue in the eligibility criteria potentially.

Both schemes use the same eligibility criteria, which is located in Section 1.4 of the new build section here:

http://cfg.housingcorp.gov.uk/server/show/ConWebDoc.10223

So it looks like you have to be on the housing list and/or a key worker and/or in need and/or cannot afford a house on the open market.

Interestingly, (off at a tangent), section 1.4.6 seems to be saying: if you got a council house, then exercised your RTB, then messed that up and had a mortgage rescue where we bailed you out again, after two years you can have another bite at the fat cherry under this scheme. Nuts!

MadSebW

We are in the process of buying a 44% share in shared ownership. Our mortgage is for 62k. Our monthly payments are £409 for the mortgage and £160 for the rent. This includes our Buildings insurrance. There's also a monthly service charge TBA, but i think it's around £25. It works out a fair amount. But we have 2 small children and plan to stay there for a long time and make it our home so it's not a huge deal. TBH we just want a roof over our heads and it's big and in a stunning area. It's not a good step to make an investment or to climb the property ladder but ideal for settling down with a small income.

brit1234

In Reading every shared ownership service charge is well over £100. Together with the rent, the mortgage and council tax it doesn't leave that much to live on in a overvalued newbuild.

CYBERCIDERSAVER

Having done some calculations it would appear that the house we are thinking of buying (shared ownership resale 50/50) attracts a rent of about 160 a month. This is £100 LESS than the interest on half the cost of the property.


Surely if I can overpay on my mortgage to gain equity then I can in the future buy the remainder. If house prices go up then I have more equity to get a better mortgage deal. If they go down, then the other half won't be so expensive.