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  • FIRST POST
    • mmlady12
    • By mmlady12 6th Aug 18, 5:47 PM
    • 18Posts
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    mmlady12
    Catch 22- Shared ownership- confused millenial ! Rejected by HA for earning to much but below 90,000
    • #1
    • 6th Aug 18, 5:47 PM
    Catch 22- Shared ownership- confused millenial ! Rejected by HA for earning to much but below 90,000 6th Aug 18 at 5:47 PM
    Hi


    I am a 26 year old who is on GBP 48,000 a year and my take home is around GBP 2500 a month (after tax and a salary sacrifice for shares scheme at work)


    I am trying to get onto the property ladder and saw a decent 2 bedroom in north London for GBP 270,000. The local housing association were selling a 60% share for GBP 162,000 and rent on the 40% was around GBP 250, service charge around GBP 91. Today I was told I was priority number 3 because the other two applicants had a less annual income and were considered a priority because of this due to the local housing association policy.


    How is this fair? I feel like these government schemes are a catch 22- especially for young professionals who are doctors/lawyers/accountants. We earn too much to be considered by local associations but meet the minimum annual threshold set by the association (in this case it was GBP38,000) ...


    the association also have a financial assessment that priority 1 candidate has to do before being accepted by the housing association... the main requirement is that 45% or more of net income should not be spent on rent/mortgage and service charge and that a mortgage can only be given for 3.5 of ones salary.


    That means that.. if a candidate was on 40,000 a year..and after tax they had 2300 a month.. only 45% of that 2300 could be used as rent/mortgage/service charge.. which is 1035 which just about covers the mortgage/rent and SC calculations I did below..


    When I did my calculation the below calculations I did on the share to buy calculator regarding mortgage monthly quotes.


    E.g for a mortgage of 162,000 the 60% share association are offering.. and with a 20,000 deposit the mortgage, rent and service charge will be:


    1. Mortgage 670 a month- 2 year fixed 2.19% interest
    2. Rent- 250
    3.Service Charge -90
    Total= 1010 a month


    So in order to meet the threshold that no more than 45% of ones net income should not be spent on rent/mortgage and service charge..one needs to be earning 2244 or more a month.(1010/45%=2244)


    2244 a month after tax is around 39,000 a year.


    however a salary of 39,000 to 40,000 multiplied by 3.5 get you a mortgage of only 120,000 which is less than the 162,000 60% share being sold? So how will that work? Candidate 1 who has priority would if on 38,000 would only be able to get a mortgage of 133k..unless i guess they have a deposit of 162-133k= 29k


    So basically I have been penalized for studying and earning to much


    any advice on next steps.. as I do not want to invest time in viewing housing association flats for them to tell me i earn to much.. could help to buy be an option? The issue I have with Help to buy is new builds on average go for 450,000 for a 2-3 bed in north London- totally out of my budget!


    Please help!
    Signed confused millennial!!
    Last edited by mmlady12; 06-08-2018 at 6:03 PM.
Page 1
    • sal_III
    • By sal_III 6th Aug 18, 5:58 PM
    • 651 Posts
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    sal_III
    • #2
    • 6th Aug 18, 5:58 PM
    • #2
    • 6th Aug 18, 5:58 PM
    The shared ownership scheme is aimed at low income people. So the fact that the HA is giving priority to the lowest income applicants is perfectly normal.

    In your calculations you used 45% of net, when according to you the requirement is 45% of gross:
    main requirement is that 45% or more of gross income should not be spent on rent/mortgage and service charge and that a mortgage can only be given for 3.5 of ones salary.
    Maybe look at a different HA with different rules, or more expensive property where your 48k will make you one of the lowest income applicants.
    • csgohan4
    • By csgohan4 6th Aug 18, 6:09 PM
    • 5,029 Posts
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    csgohan4
    • #3
    • 6th Aug 18, 6:09 PM
    • #3
    • 6th Aug 18, 6:09 PM
    Shared ownership is not for everyone. Some won't allow staircasing to 100%, you have 100% of the maintenance costs even if you own less
    "It is prudent when shopping for something important, not to limit yourself to Pound land/Estate Agents"
    • mmlady12
    • By mmlady12 6th Aug 18, 6:10 PM
    • 18 Posts
    • 1 Thanks
    mmlady12
    • #4
    • 6th Aug 18, 6:10 PM
    • #4
    • 6th Aug 18, 6:10 PM
    Hi.


    Thanks.. I have updated that now.


    Yes but the candidate would still need a salary of 162,000 divided by 3.5 to get a mortgage...so that's a salary of around 46,000 to even get a mortgage of 162k..


    Thanks for the suggestion of looking for higher priced properties, where i would be classed as a low earner.. but issue with these new builds in London is i wont be able to afford..as all of my net income will go onto mortgage/rent..


    I see how it is fairer to give the lower earner a priority i guess..but in order to get a mortgage of 162,000 one would need as calculated above a salary of 46,000 a year.. that's not really a low earner is it.....


    Many pitfalls..nothing is ever simple/straight forward isit! There are some flats I have seen.. were the minimum threshold income is even more than 48,000 so that prices me out of those too...
    • PasturesNew
    • By PasturesNew 6th Aug 18, 6:12 PM
    • 64,549 Posts
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    PasturesNew
    • #5
    • 6th Aug 18, 6:12 PM
    • #5
    • 6th Aug 18, 6:12 PM
    You seem to be looking at it from your 1 salary position; maybe successful candidates are couples with 2 salaries, so they can meet the criteria more easily.
    • mmlady12
    • By mmlady12 6th Aug 18, 6:13 PM
    • 18 Posts
    • 1 Thanks
    mmlady12
    • #6
    • 6th Aug 18, 6:13 PM
    • #6
    • 6th Aug 18, 6:13 PM
    yes I know that.. but what are young people suppose to do then.. I earn to much too little to get a 100% mortgage straight out.. and do not have bank of mum and dad to top up by 20,000 savings for deposit.


    but i earn too much to be given priority in this HA case.... as a family that earns less and might potentially struggle with rent/mortgage is given priority.
    • mmlady12
    • By mmlady12 6th Aug 18, 6:15 PM
    • 18 Posts
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    mmlady12
    • #7
    • 6th Aug 18, 6:15 PM
    • #7
    • 6th Aug 18, 6:15 PM
    yes perhaps.. although I asked the 3rd party company facilitating this shared ownership offer to purchase and they said the difference between me and candidate 1 and 2 is that they earn a lower annual income. They did not say anything about them being a couple and having two incomes.


    Priority is given if you live in the borough, have children or you are giving up a council house to buy the shared ownership property.


    The only difference between me and the other candidates is income.
    • PasturesNew
    • By PasturesNew 6th Aug 18, 6:17 PM
    • 64,549 Posts
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    PasturesNew
    • #8
    • 6th Aug 18, 6:17 PM
    • #8
    • 6th Aug 18, 6:17 PM
    ... that they earn a lower annual income. They did not say anything about them being a couple and having two incomes....
    Originally posted by mmlady12
    They might earn just a tiny bit less than you - they never said how much. Maybe they're "just" (*chuckles*) on 47k.
    • sal_III
    • By sal_III 6th Aug 18, 6:23 PM
    • 651 Posts
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    sal_III
    • #9
    • 6th Aug 18, 6:23 PM
    • #9
    • 6th Aug 18, 6:23 PM
    Well the 2 other applicants that are ahead of you are lower than your 48k, and fall into your calculation of 46k, so see no problem. Not to mention that they might have higher deposit and looking for lower mortgage.

    Thanks for the suggestion of looking for higher priced properties, where i would be classed as a low earner.. but issue with these new builds in London is i wont be able to afford..as all of my net income will go onto mortgage/rent..
    Your take home pay is 2.5k, the mortgage + rent + service charge on slightly more expensive property will hardly cost you that much. No need for over-dramatising.

    You manage to earn 48k at 26, that must have taken some effort. Apply the same in finding the right scheme and property for you, instead of complaining how unfair life is.
    • mmlady12
    • By mmlady12 6th Aug 18, 6:24 PM
    • 18 Posts
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    mmlady12
    sigh!


    I guess so.. I added that i was expecting A 2000 bonus this year.. but this is not confirmed.. i thought the higher the annual salary the better.. i guess that's only in terms of a mortgage not in selection criteria!


    maybe i should have removed the bonus..
    • sal_III
    • By sal_III 6th Aug 18, 6:30 PM
    • 651 Posts
    • 663 Thanks
    sal_III
    yes I know that.. but what are young people suppose to do then.. I earn to much too little to get a 100% mortgage straight out.. and do not have bank of mum and dad to top up by 20,000 savings for deposit.


    but i earn too much to be given priority in this HA case.... as a family that earns less and might potentially struggle with rent/mortgage is given priority.
    Originally posted by mmlady12
    You can save ~20k, take a 200k mortgage and buy a 1-2 bed flat?
    Or you can find a partner and buy something bigger together
    Or you can find a different shared ownership property
    Or you can buy outside London

    Losing 1 SO property to someone in bigger need than you is hardly the end of the world...
    • mmlady12
    • By mmlady12 6th Aug 18, 6:43 PM
    • 18 Posts
    • 1 Thanks
    mmlady12
    Sigh


    I am not being a drama queen about the situation or complaining at how unfair life is. I am just a bit annoyed and was complaining that I fall into a grey area of millennials who have worked super hard to get to a good stage and earn a good amount a year.. but certain schemes are not accessible to me .. despite shared ownership eligibility criteria being 90,000 on the government website.


    and yes the other candidates probably earn 46,000 - 48,000 making them eligible


    HTB is an option..but when I did the calculations.. I would be spending around 1800-1900


    e.g on average new 2 beds in north London go for 450,000.


    1. I try to by 80% that's 360,000
    2. Equity loan 90,000
    3. Mortgage 337,500 (after deposit has been removed)
    4. on a 4.8% interest that's around 1900 a month
    leaving me with 600 on bills/council tax and other expenditure. which I might be able to manage just about


    It is hard for young single people.. I am not trying to be a spoilt millennial.but a lot of my peers are struggling.. these schemes wither work if you are a low earner or you have a partner and have a joint income..


    I have none of those at the moment.. single as hell!!!
    Last edited by mmlady12; 06-08-2018 at 7:04 PM.
    • mmlady12
    • By mmlady12 6th Aug 18, 6:48 PM
    • 18 Posts
    • 1 Thanks
    mmlady12
    yes i think i will take your advice... thanks for your suggestions


    i need to look outside of London..because it will be much easier to find a 2 bedroom for 220k.. its just I don't want to have to travel for ages into work and pay more for travel... its give and take isn't it... sigh.. I can't win can I...


    I will also continue looking at other shared ownership properties.


    I have seen a one bedroom house for 305,000 and the equity being sold is also 60% so 183,000 but i think it is Overpriced for one bedroom in north London


    I just need too move out of mum and dads house soon......relationship is a ticking time bomb and want to leave before it explodes...
    • lookstraightahead
    • By lookstraightahead 6th Aug 18, 7:05 PM
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    lookstraightahead
    Try being ......

    A divorcee
    A single parent
    A victim of the housing crash
    Paying 15% interest on your mortgage in the 80s
    Self employed
    No first time buyer incentives

    I could go on. Some people are all of these. I'm really sorry but as an ex Londoner what I see is someone who had choices. Move out a bit and commute. You sound like you're doing well, don't blame the government for the slight inconvenience.
    • lookstraightahead
    • By lookstraightahead 6th Aug 18, 7:07 PM
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    lookstraightahead
    And ... you actually do have parents who are supporting you. Lots don't.
    • Klr005
    • By Klr005 6th Aug 18, 7:10 PM
    • 22 Posts
    • 11 Thanks
    Klr005
    Sigh


    I am not being a drama queen about the situation or complaining at how unfair life is. I am just a bit annoyed and was complaining that I fall into a grey area of millennials who have worked super hard to get to a good stage and earn a good amount a year.. but certain schemes are not accessible to me .. despite shared ownership eligibility criteria being 90,000 on the government website.
    Originally posted by mmlady12
    You don't fall into a grey area. The scheme is accessible to you. You already said you've been accepted by the HA for SO, you're just not 1st in line for this particular property.

    Be patient and stop complaing that there are others deemed more in need than you. People are in queues for homes all around the country.
    Perhaps the problem with milennials is their sense of entitlement?
    • mmlady12
    • By mmlady12 6th Aug 18, 7:12 PM
    • 18 Posts
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    mmlady12
    point taken.


    I will continue my search and broaden the search as London is too expensive.
    • mmlady12
    • By mmlady12 6th Aug 18, 7:19 PM
    • 18 Posts
    • 1 Thanks
    mmlady12
    but how is someone who earns less than me more in need? since that is the only difference between the 1st/2nd and 3rd on the priority list.. what the HA is basically telling me is i earn to much relative to the others who applied.. that's what i thought was unfair..but i understand now after thinking about it that they might think i would be able to afford to rent somewere more so than someone who is on a lower salary.. which makes sense and is a fair statement.


    they were given priority because they have a lower annual income..that did not seem fair to me not as they could have bank of mum and dad given then a deposit of 50,000 to put on the flat.. but i kind of get it now.. as other people have pointed out


    I don't feel entitled.. i just wanted to hear other peoples views on the situation I was in and get opinions and advice.
    • mmlady12
    • By mmlady12 6th Aug 18, 7:26 PM
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    mmlady12
    but i appreciate the comments and advice. I am not a spoilt or entitled young person.. just trying to get onto the property ladder sooner rather than later.


    x
    Last edited by mmlady12; 06-08-2018 at 7:32 PM.
    • lookstraightahead
    • By lookstraightahead 6th Aug 18, 7:27 PM
    • 458 Posts
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    lookstraightahead
    There are also people who can't live with their parents as well, so be thankful for what you do have, and the good things that have helped you get to where you are today (including your own hard work). I couldn't afford to live in London either when I worked there. I had a 2 hour commute each way. I left my flat at 6am and often got home at 10pm when I worked in the city. During the IRA bomb scares even later. Wish I could still walk the 2 miles to the station as quickly ha ha! I remember dropping my stiletto into the line getting on the train. That was an interesting journey across London.
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