Shared Equity Scheme

GeorgeUK

Is it a good thing or a bad thing?

I currently live with my folks and do not earn anywhere near enough for even a one bed flat. I have looked at the (Low Cost Initiative for First-time Buyers) LIFT scheme that the Scottish government is proposing, but can't make up my mind about it.

I would own half a property but would probably require a full mortgage allowance plus personal contribution to get anything. The shared equity is (i think) a secured loan and after a while, i would need to pay interest on this loan.

I'm not looking for something for nothing, but is it wise to have a secured loan on your property? Seems fair enough if the house prices rise, but if they fall and you need to sell then it seems to me you are in the deep doo doo.

Also, will these shared equity schemes not keep the house prices inflated? The companies will be making money from the interest on the loan or increases in the market value of the property so they can't really lose. If this scheme didn't exist, surely the demand wouldn't be there for the higher prices that first time buyers can't afford which in turn would cause a decrease in the house prices.

I'd love to hear anyone elses opinion - i may be reading too much into it, but my MSE sense is tingling over this.

brit1234

Shared ownership has just extended the housing bubble. The government make lots of money through these higher prices, ie stamp duty, capital gains and inheritance tax.

I strongly advise against shared ownership in a falling market.

If you do buy the councils are increasing turning the unsold properties into council homes. My mate has problems with addicts picking up drugs in his shared ownership/council housing block and injecting in the stair wells.:mad:

Bf109

BE CAREFUL -

1. Factor in the market value of what you are buying. For eg. if you are paying £50k for 50% of a flat then the market value is £100k. How does this compare to the surrounding area? Can you buy a house or bigger flat for less?

2. Look at the place itself. Is it a new build "luxury apartment"? How many similar properties are on the market in the area and unsold. It maybe that there is a glut of flats and you will end up living amongst DSS tenants. Also the location, has it been built next to a motorway/railway junction/nuclear waste site?

3. What happens if the value drops? Does the governments equity share also drop or do you bear the full brunt of any loss in price?

4. Will the equity loan expire in a few years time? How will you cope with paying off the full mortagage when this does happen?

avrilallan

I live in Scotland and own a property which I lived in for 12 years as my only and main residence.
Due to ill health I moved and have been renting another property for 12 months.
I rented out the my bought property for 12 months and am considering selling.

Am I liable to CGT?