Share your shared ownership experiences

yogaqueen · 27 May 2015 at 3:19PM

Ha, I am a newbie to Forum as well, thought this is an opportunity to share our personal shared ownership experience to a wider audience. I bought 50 percent of my flat in London about 5 years ago and staircased to 100 percent last year. The value of my flat has gone up way faster than my wage so that I probably wouldn't even quality to apply for the same flat with my current salary.

Like most of the things, there are pros and cons to shared ownership, do your calculation before committing to the scheme. It seems to work more to the owners' benefit in areas such as London where rent is much higher. The rent does go up every year by the housing association (so does property value), so it's better to staircase sooner rather than later. Then it leads to another consideration - how much can you afford in the first place? A lot of people might fall into the trap of SO and stretch their finance too much to buy a property that they probably wouldn't be able to afford in any circumstances, then get trapped forever as staircasing to full ownership might never be possible. When I was looking to buy, I was torn between decisions whether to go for a more expensive flat in better location with 25% or a cheaper one where I can afford at least 50%. If I had chosen the former, I'd be stuck with the same share with no prospect of staircasing in near future unless I won a lottery. This is because the less share you own, the more rent you pay, at the time when mortgage rate is far lower than rent, you save much less than those who own more share. It's a vicious circle, as simple as that.

It costs quite a lot to staircase as well. So forget about what they told you to staircase bit by bit (10%) when you have money. It costs at least £300 to have your property valued each time and let alone the cost of solicitors, who will charge you full fees even though you are only buying a fraction.

The other downside of SO is that you can't let out your property until you own it outright. It's worth bearing that in mind as it reduces your flexibility of moving around.

santarina · 27 May 2015 at 3:27PM

2.5 years into my journey as a shared ownership tenant, I have worked out there are good and bad sides of it, just like everything else. But it is definitely worth pursuing.

For a regular salary I am on I will never be able to own anything decent in Central London. I found this SO property on Rightmove when I was on the verge of giving up owning a place I can call home in zone 1. It was the best solution ever. I bought 30% with mortgage the first year, and staircased another 30% the second year. Now I have a one bed room I feel comfortably at home in a super conveniently located area, its like dream come through. Instead of spending all money into rent, it feels good to be paying into mortage which means it will eventually be mine when the mortgage term finishes. Although it is true that when there is problem in the flat with boiler or other facilities it is not down to the landlord who u still paying rent to, but its all your responsibility to get them fixed. If I could I will like to own this place outright one day. Like many other users have mentioned, not all bank loan to SO property. Its worth bearing in mind that each time you staircase, u will have to pay out of pocket the valuation fees and solicitor fees, when usually u just have to do it once for normal ownership property.

I would say everyone's situation is different you need to do what is best for your interest. I am paying a lot mortgage + rent + maintenance but the location is important to me so it still work out cheaper than if I just rent a one bedroom in my area (£1600pm min).

jaynebrat · 27 May 2015 at 4:07PM

I bought a flat at 40% SO 3 years ago, it was the only way I could get on the housing ladder. Yes the rent increases every year, but overall I was still paying less for my rent+mortgage than I would pay to rent a similar property in this area.

My plan was to staircase but I never got round to doing it, so cant comment on that. When I told the HA that I was planning on selling the place, they allowed it to be purchased as a 100% ownership sale. It took 5 months to sell.

The selling process took a little longer than expected (around 5 months) but the one thing I would say to be wary of is that the HA will take their % of the market value of the property when its sold, so if you sell it for less than the valuation then you will lose money. Say the ownership is 50/50, its valued at £100k but you accept an offer for 90k, the HA will still take their £50k, leaving you with only £40k.

ThriftyMummySam · 27 May 2015 at 4:24PM

Picking up on the end of the above post it turned out to be The only positive thing about our sale was that our flat was valued at 90,000 and we had already accepted an offer off 95,000 so the housing agency only took their half of its value 45,000. If it wasn't for that we would have lost every penny we invested in it over a 7 year period!

countessv · 27 May 2015 at 6:18PM

I've joined after the link in news letter. There was so little information online when I bought mine in 2013. I wish I had seen something like this. My neighbour in my street are mostly retired people who bought their on retirement and pay their rent out their pension. it was their way to downsize. My solicitor fees were £600 for the initial purchase. Then £450 for the staircasing including the home report to value. it pays to secure a set price and use same solicitors who know the leases and title deeds already

lilychapman · 27 May 2015 at 6:27PM

Our daughter was working in London after uni and had a nightmare time renting and sharing shoddy, dangerous houses and even became homeless for a while despite having a good but not well paid job. We helped her get started with a shared ownership flat and it has been amazing. The combined rent and mortgage was far less than had she been renting and as it was newly built the insulation meant low heating charges. In almost four years she had over £100000 in equity which enabled her to move on.
The snags- you pay for improvements which the association also benefits from-( I guess this could work both ways)
It was tricky getting a valuation to staircase and when selling the association has its procedures and picks it's buyers who comply with their criteria. Once that's happened there is no estate agent to deal with so buyer and vendor are in direct negotiation which can be problematic.
These drawbacks are so trivial considering the benefits gained.

tedzwedz · 27 May 2015 at 6:57PM

Please could users state WHERE they are based.

Opinions of value after 7 years are irrelevant if one cannot see what part of the country and how aggressive that part has risen has been!

Ronaldo_Mconaldo · 27 May 2015 at 7:26PM

countessv wrote: »

We love our shared ownership. There has been some teething problems with the housing company who owns the rest of the house and their finance department. But nothing that would ever put me off recommending this. I bought 25% of a 2 bed house when I was a single parent and working in an expensive area that I couldn't have afforded otherwise to get my kids into a school with fantastic results. I first tried santander for the mortgage, I was left in tears and almost lost the sale of the house ( they later compensated me a measly £75 for their errors) . Step up hbos. As I have been a long standing customer they whisked me into a room, sorted it all out with only £6k deposit and saved the sale by completing everything in 7 days. I inherited a little sum a year later and bought another 25% of the house as a cash purchase. We currently own half the house with a mortgage of £110 per month which is now out of its fixed interest rate so we over pay and hope clear in 5 year. The rent and service charge costs are £163 per month. About the same as the interest on buying the rest of the house. But until I finish my degree and go full time I cannot afford repayment and interest ( about £400). I got married after buying and house is staying in my name For the moment. I cannot deny we have huge ararguments with the sharing owner over who does what. but we simply couldn't afford this area without this. Rent on 2 bed in this area is £600 a month minimum. rising to £800 easy. Our current mortgage and rent total is £273. It's a no brainier.

So you're half renting and half interest-only mortgage? I'm not surprised you think it's so good as you're not paying off a mortgage. It's all rent for you and you own nothing.

andyuk01 · 27 May 2015 at 7:32PM

My experience was pretty positive

Unlike most people i took the time to read things like the lease & shared ownership agreement which clearly highlighted things like how the rent is calculated and how it would change

Purchased 55% share of a £250k flat, staircased to 100% on a revised valuation of £305k 2 years later

Bank valued it at £305k, housing association at £280k so staircased without needing to put any more money as just crept under the 80% overall LTV mark

Massive flat, perfect location, secure parking, low bills (heating very rarely used) service charge has gone down each year so far

Pipz · 27 May 2015 at 7:52PM

I bought 50% of a 1 bed flat in London back in 2013, the scheme enabled me to be able to buy. I've no real issues with the experience thus far, just have to keep an eye on the service charge and hold the HA to account if something seems up.

Rent has increased annually by c2.5%, service charge has gone up and come down in recent years.

The only issue I foresee is the increase in property value when I come to purchase the remaining 50%. As they've been rising fast in London, I might not be able to raise a mortgage for the final share if my wage remains the same. At worst I reckon this would mean sitting tight and paying the rent for a few years whilst I build a second deposit to purchase the remaining 50%.

Could do it in smaller stages, but then legal and valuation fees start to bite- however those losses could be offset if the value continues to rise, decisions, decisions!

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