Shared ownership (good or bad)

redrabbit29

Just wondering what your opinion is on the shared ownership schemes? Are they good or bad? I've heard someone say that it's probably better to wait 5 years and buy it all yourself, rather than buy through shared ownership?

The opportunity is there for me to get a 50% equity loan (I think that's the right term), to put towards a house. Any thoughts on this?

ruggedtoast

People who like them state that without them they would have been stuck renting anyway and instead have got to live in a nice place, part of which they own, and part of which they rent with the opportunity to own more later.

The downsides are that you dont actually "own" the 30% or whatever you are a stakeholder in, you just have an unpaid mortgage for it, for which you are 100% liable. In the meantime you are paying rent on the rest with many of the restrictions of being a tenant applying to the whole property. Its not unheard of for people in SO schemes to start to look at what theyre paying overall, the fact you have all the disadvantages of owning plus the disadvantages of renting, look at what they would be paying if they just had a mortgage for all of it, and conclude that it isnt worth the hassle, or uncertainty of how easy it will be to move in a falling market.

You have to do the sums yourself to work out if its worth it, but bear in mind that SO schemes were orignally engineered by the government to enable developers to charge first time buyers inflated prices for new-build properties that were completely unattainable for most first time buyers, and which would then be subsidised by the tax payer, under the guise of helping the people they were intentionally pricing out.

Whether you want to buy into this is (in a falling market) , of course up to you.

redrabbit29

ruggedtoast wrote: »

People who like them state that without them they would have been stuck renting anyway and instead have got to live in a nice place, part of which they own, and part of which they rent with the opportunity to own more later.

The downsides are that you dont actually "own" the 30% or whatever you are a stakeholder in, you just have an unpaid mortgage for it, for which you are 100% liable. In the meantime you are paying rent on the rest with many of the restrictions of being a tenant applying to the whole property. Its not unheard of for people in SO schemes to start to look at what theyre paying overall, the fact you have all the disadvantages of owning plus the disadvantages of renting, look at what they would be paying if they just had a mortgage for all of it, and conclude that it isnt worth the hassle, or uncertainty of how easy it will be to move in a falling market.

You have to do the sums yourself to work out if its worth it, but bear in mind that SO schemes were orignally engineered by the government to enable developers to charge first time buyers inflated prices for new-build properties that were completely unattainable for most first time buyers, and which would then be subsidised by the tax payer, under the guise of helping the people they were intentionally pricing out.

Whether you want to buy into this is (in a falling market) , of course up to you.

Excellent, thank you. I just wanted to clarify whether it's better to save and wait - which I think it is.

Thanks again.

lucasmum

I think that if in 5 yrs you would be in the position to buy a whole house then maybe you should wait.
We are in the process of buying a SO house but this is because it is in the village we would like our children to grow up in and we will never be in the position to buy a house otherwise. Also for us, renting would cost us £150-200 a month more if we were to move, which we would have had to do because our house is too small for our family.
Also the whole process has been very long and painful, I don't think anything has gone to plan. hope this helps.
Good luck in what you decide.

wymondham

I can't see what is good about shared ownership. It seems to allow people to purchase overpriced property (originally beyond their means without SO), whilst potentially causing problems further down the line when you sell etc..... I know people have got homes who otherwise would not have and these people will obviously be happy with this, but I don't think it should be entered into lightly.

Keep in mind that Shared Ownership came into being so new properties could continue to be sold at their inflated prices - they were not introduced to help the purchaser, although this is what you're led to believe!

If I could not afford to buy in the traditional manner, then I'd wait until I could, saving up as much as possible and reducing all debts in this period ready to be first in there when it all comes together.. hope this helps??

dmg24

wymondham wrote: »

I can't see what is good about shared ownership. It seems to allow people to purchase overpriced property (originally beyond their means), whilst potentially causing problems further down the line..... I know people have got homes who otherwise would not have and these people will obviously be happy with this, but I don't think it should be entered into lightly.

If I could not afford to buy in the traditional manner, then I'd wait until I could, saving up as much as possible and reducing all debts in this period ready to be first in there when it all comes together.. hope this helps??

Remember not all SO properties are new builds.

I saved around £200 a month in having a SO property as opposed to renting, and made a considerable amount upon resale (obviously the market was very different then!).

You need to evaluate each scheme, and each development, on a case by case basis. There are schemes of overpriced, otherwise unsellable properties that I would not touch, but equally there are others that would get you a foot on the housing ladder in an otherwise unattainable area.

wymondham

dmg24 wrote: »

Remember not all SO properties are new builds.

I saved around £200 a month in having a SO property as opposed to renting, and made a considerable amount upon resale (obviously the market was very different then!).

You need to evaluate each scheme, and each development, on a case by case basis. There are schemes of overpriced, otherwise unsellable properties that I would not touch, but equally there are others that would get you a foot on the housing ladder in an otherwise unattainable area.

True, but on the whole they seem to be new builds - pleased it worked well for you.

dmg24

wymondham wrote: »

True, but on the whole they seem to be new builds - pleased it worked well for you.

You can't really state that without figures to back up your statement.

The resales are less advertised, you would need to proactively look for them.

wymondham

dmg24 wrote: »

You can't really state that without figures to back up your statement.

The resales are less advertised, you would need to proactively look for them.

i dont see many properties advertised with SO that are not new builds, just an observation...

Richard_Webster

I think that we need to distinguish between:

1). a general problem with new builds on the one hand (which tends to be magnified for SO because HAs get stuck with agreeing high prices with the builder) and

2). the benefits of shared ownership in principle to help people get on the "ladder"..

Of course people going into shared ownership need warning that SO newly built or converted SO properties can be overvalued, but this isn't a fair criticism of SO as a concept.

wymondham

Richard_Webster wrote: »

I think that we need to distinguish between:

1). a general problem with new builds on the one hand (which tends to be magnified for SO because HAs get stuck with agreeing high prices with the builder) and

2). the benefits of shared ownership in principle to help people get on the "ladder"..

Of course people going into shared ownership need warning that SO newly built or converted SO properties can be overvalued, but this isn't a fair criticism of SO as a concept.

True, I have no problems with 2), but I think the bulk is 1). I don't personally know anyone who has got a SO property on anything other than a new build, I'm sure they are out there as previously posted, but don't seem to be main stream...