Why the big downer on Shared Ownership Schemes?

mickym

I have seen a few peeps on this board who have had a successful time with their sharde ownership home, and consider it has been a good way to get into the market.

However I see many on here slating them, saying they are a waste of money, and are likely to cause first time buyers more problems than if they bought a house outright.

We have already been accepted for the Homebuy and Open Market Homebuy schemes, however there are two new options available to us:

MyChoiceHomeBuy

Ownhome - www.ownhome.co.uk

do these offer a better option to us than the previous schemes?

phildamb

I have yet to buy my first home and still would not even consider a shared equity scheme. I dont like the idea of the government or a private organisation owning half of my home. If I bought a home I would want nothing more complicated than a mortgage on it.

Helga14

I would rather some of my flat be owned by a housing association than by a boyfriend or friend that I may one day fall out with. Most people buy with someone else and that can be pretty complicated too.

You need to go into it with your eyes open there are disadvantages. I can't rent my SO flat easily if I want to go travelling. I'm staircasing at the moment and it is an expensive process and slow. But then again if I had brought somewhere cheaper ( if i could have found anything) and was now having to sell and rebuy in order to go up the property ladder then that would be more expensive and more problematic.

It has given me the chance to live in a lovely flat, that I now have equity in. I had the choice buy a ex local authority flat in an estate in a bit of London I didn't want to live in or buy a percentage of a flat in an area i did want to live in. I am keen though to buy 100% as quickly as possible so that if i want to I can sell up easily.

westy69

i think they are a great idea as long as the price is reasonable, if it was a choice of renting and not getting on the property ladder or SO i know which i would choose.

fedupnow

Hi Mickym

We did it. We bought 70% of our home and a housing assoc bought the remaining 30%. There was no way we could have paid rent and saved enough for a deposit at the time. We have had no contact with the housing assoc since the day we moved in (12 years ago) so zero hassle so far.

We have been overpaying for many years and now have a very small mortgage. We have stopped overpaying and are saving to move to the house we want to die in. As we are now living here virtually free I think we are in a great saving position. We can save a large deposit (or more) for the next house and so hope to be able to be mortgage free on the next one when we sell this house and retrieve our 70% worth.

There may be a problem when we come to sell I suppose. I can't say yet. We are assuming they will want to protect their investment by asking for independent valuations from perhaps a number of sources which we are expecting to have to pay for.

Our biggest concern is that I also assume that if the house wasn't maintained properly they may have something to say. I am thinking 'stroppy landlord syndrome' where they pick holes in the colour or a leaky tap or whatever just to claim their investment isn't worth what it should be due to our failure to keep it at a certain level. Of course I think it looks fab and we have more to lose then they have so it shouldn't be an issue....but it is one we have thought of.

It has worked for us - I don't really understand what others are afraid of.

Good luck with whatever you decide

Jorgan_2

Shared ownership as a rule, isn't a bad thing, its just some of the schemes don't make sense financially.

We were briefly involved with a scheme that allowed people to purchase a 50% share in new build two bedroom properties, approx £75k , valuing the property at £150k. A twenty year old two bedroom property in the same area could be purchased for £105-110k. By the time you take the cost of the (50%) mortgage, rent and maintenance fees into account, it was cheaper to purchase the older property.

Bargain_Rzl

I agree with what Jorgan said.

You've got to have an eye on the bottom line of buying, renting, and shared ownership to work out whether or not a scheme makes sense. When I say the bottom line, there are really two bottom lines. The overall cost, and the monthly outgoing. Many of the schemes I have seen don't make sense on one or even both counts.

Having said that, I'm one of those who has posted in the past about my positive experience, and whose home adds up. I am slightly concerned that mortgages for SO might start to be seen as subprime (in a way they already are, but only in the sense that not all lenders cater for them - those prime lenders which do lend on SO will do so at their usual rates). My contingency plan is to make sure I build up enough savings and/or overpayments to ensure I don't end up in negative equity, then hope the market falls so I can staircase to 100% ownership at a lower price!

windswept

We bought our house via shared ownership in 1996, in 2003 we bought it outright, with a mortage of £70k on a value of £120k ( large 3 bed semi).
We originally went 50/50 with Beth Johnson HA, the original price was £46k and we had a mortgage of £22k, so in 6 years the value had doubled.
The main problem was the fact that we wanted to move but with prices shooting up in the last 5 years, had we sold the house, we would have had to pay Beth Johnson a big chunk of our equity.
We now plan to pay off our mortgage within 10 years and then buy a bungalow or flat.
How people cope with a £150k mortgage I'll never know, £70k seemed a fortune to us, even though my hubby earns £30k+.
There used to be only a couple of building societies who would touch shared ownership , don't know if it's still the case.

Conrad

Main negatives are;

1) Now difficult and complex to mortgage

2) Staircasing to buy remaining share is costly as you need to use a Lawyer, pay stamp duty, have a lenders and housing association valuation, fees for the additional mortgage, and complex to understand from a lending point of view

3) Very limited number of lenders now lending and none without clients own deposit which means there is limited resale market

LittleMissAspie

You don't save much money on it. Take this one:
http://www.rightmove.co.uk/viewdetails-9224199.rsp?pa_n=1&tr_t=buy

You're paying £208.53 in rent, while a 100k mortgage over 10 years is 1132.23. Total SO price per month is 1340.56.

Whereas if you borrow the full price over 20 years instead, it will cost 1453.07.

You're saving only £113 a month while you have all the restrictions that other people have mentioned. Not worth it.

mickym

LittleMissAspie wrote: »

You don't save much money on it. Take this one:
http://www.rightmove.co.uk/viewdetails-9224199.rsp?pa_n=1&tr_t=buy

You're paying £208.53 in rent, while a 100k mortgage over 10 years is 1132.23. Total SO price per month is 1340.56.

Whereas if you borrow the full price over 20 years instead, it will cost 1453.07.

You're saving only £113 a month while you have all the restrictions that other people have mentioned. Not worth it.

would be looking at a longer mortgage than 10years most probably. also as others have said, would need to ensure the property isnt over valued.