Shared Ownership Better Than Renting?

dbdragon

I'm currently looking at a one bed appartment. It's priced at £140000 with the buyer purchasing 50% of the property. Rent and service charge will be £220 a month and I have spoken to some mortgage advisors and they calculated that the mortgage would be about £425 a month. Therefore, the total cost would be £645 a month excluding council tax and bills. My current salary is £25000 p.a. which has just been recently been put up and I have £6000 in savings.

My situation is this: I have been renting in shared houses for the past 7 years and am getting quite fed up of it. I just want my own space now. I can't stand getting home from work every evening and seeing the place in a mess. I have not got on with some people I have lived with in the past. I currently live in a 3 bed house share (rent is £360) and have been looking to move out into a 1 bed or studio appartment. The rent for these is about £500-£600 a month in the area compared to paying £645 a month in a shared ownership scheme. The way I see it is that it would be better to go towards the shared ownership scheme as I'd rather pay a bit extra and own some property in return.

However, I am a bit worried that if the housing market continues to fall I would end up in negative equity and I am looking to find a bigger place in the future.

What would you guys advise? Should I move into a rented apartment or pay a little extra each month and buy a share of property on the shared ownership scheme?

I have already placed a £500 retainer on the apartment on the S.O. scheme.

Any advice would be greatly appreciated Thanks for reading.

wymondham

dbdragon wrote: »

However, I am a bit worried that if the housing market continues to fall I would end up in negative equity and I am looking to find a bigger place in the future.

You're right to be worried. Unless you have to buy now, I'd hold fire as you could gain much by waiting.... The apartment has probably already lost since you put your deposit down and I'm guessing you could do without losing thousands of pounds?

brit1234

Don't do shared ownership in a falling market what ever you do. Prices are crashing, no one can sell and it is even more difficult to sell a shared ownership property than a normal one due to the restrictions.

Save your money for a deposit, grin and bear renting 1 more year and you will save 10s of thousands.

A shared equity newbuild now could be the worst financial decision of your life.:exclamati

dbdragon

I don't have to buy now. I would just lose my £500 retainer if I decided not to. Also, another way I see it is that if I'm already paying £360 in rent a month then that's £4320 a year. So if the price of the apartment drops that much in a year it wouldn't have made much difference if I bought it in the first place. That would be equivalent to a drop of 3% in the house price.

wymondham

dbdragon wrote: »

I don't have to buy now. I would just lose my £500 retainer if I decided not to. Also, another way I see it is that if I'm already paying £360 in rent a month then that's £4320 a year. So if the price of the apartment drops that much in a year it would have made much difference if I bought it in the first place. That would be equivalent to a drop of 3% in the house price.

true, but 3% is a lower figure compared to what's been bounced around.... who knows what the true figure would be. Renting means you're free as and when the time is right to make the jump.

As it's a one bedroomed apartment you might want to move up eventually, even if you don't think so now. If it loses in value then you're hindering your future options. It's your choice obviously but it seems odd to consider buying something so expensive when it is now known to be losing in value...

PasturesNew

Get yourself a studio to rent by yourself for now. And save/wait.
Bills on a studio on top of rent will be £200-250/month.
Buy in a few years' time.

gabyjane

Hi we have one and like ive said lots of times on these threads is if you are planning on hanging around then who cares if the house prices fall..good for us as we can buy more cheaper! BUT if you are not planning on staying long then no you may end up in negative equity and have probs..personally ours has gained £40k in 6 months and i doubt it will lose all that again...even if it does we are back to square one so hey ho!! The main thing is our house is our house not an investment so not really fussed tbh.

dbdragon

I'd prob be looking for something else in around 5 years time. The main reason why I was looking at getting onto the S.O. scheme was because I've had enough living with other housemates and the monthly payment wasn't much more than renting a studio or 1 bed place anyway.

Sounds like I'm better off losing my £500 retainer and waiting for a while. I'll have a good think about this as I don't have to make any decisions yet.

cozlw

Similarly to GabyJane, im buying a shared ownership house and although iv read loads of posts similar to this, I think that if your planning to be there long term then it has to be better than paying out in rent.

Rent in my area is around £500 p/m for a flat, I am getting the house for £520p/m inc mortgage payments, so I cant really fault it. The valuation valued the house for more than I am buying for, so I feel pretty secure to go ahead and make an investment and some sort of attempt to start ridding those years on the mortgage. And, at that price, I can do a year SO and afford to save and buy the remainder of the house within a year if I choose to. Iv given it plenty of thought and Im still sure Im doing the right thing. Im not looking for a profit, just a roof over my head thats mine!