To think shared home ownership sounds dodgy?(39 Posts)
We rent a council house ATM but Looking to buy our own home. we can only afford the repayments on about 90k, tops
We live in an area houses are "cheap" <hollow laugh> however all that's available under 100k is either absolute shitholes or lovely shiny new builds for 50-75% shared ownership
But Aibu to think this shared ownership thing sounds dodgy as fuck? Like what happens at the end of your mortgage when you still owe half the value of the house? Do you just get kicked out? Plus they seem overpriced
Once you finish your mortgage then you continue paying the rent for the part you don't own.
It seems like you have misunderstood the concept of shared ownership. It is a home for life, you don't get kicked out!
Depending on the scheme, you usually pay subsidised rent on the share you don't own. Some schemes give you free rent for a number of years.
Put simply yabu. Read the t&cs before making a decision, but don't overlook the opportunity to own your own home based on your misunderstanding.
In some cases you don't even pay rent on the un owned part.
Shared ownership is a great way to afford the unaffordable.
My first house was shared ownership - I owned 70% and the housing assoc paid 30% which meant I didn't need a deposit. I paid no rent on the housing assoc share and this would have continued even if I'd paid off the whole mortgage and lived in the house forever.
When I sold the house I had to give back 30% to the HA. Both sides made a nice profit and I sold to a couple who were also buying a share rather than the whole house.
Some schemes can be more expensive than just buying the house but mine was great.
I work in Home Ownership and if you are going to go it then read the lease and understand what you are getting into. Many people don't. If there is a service charge then it is only going to go in one direction- which may make the property hard to sell in the future.
I have a shared ownership and have for last 8 years.
There are affordable housing schemes with housing associations (which I have) and some with builders.
You own (mortgage) a proportion (mine is 50%) and rent the other half.
It's not always a cheap option. My property is worth £125k and my rent is £181 a month. My mortgage is small because I entered the agreement with equity from previous property.
It's a good idea to check out the staircasing agreement - that's the option to buy a greater share of the property - usually after being in the property for a year.
I pay no building insurance as it's in the rent but I pay the excess on any claim on that insurance.
Selling is the biggest issue with shared ownership - they can be difficult to sell, there have been issues with negative equity, with housing association the buyer has to meet the criteria of the housing assoc and only advertise through them for 6 weeks before going on the open market.
The right to rent the property out is rarely given, even in very genuine exceptional circumstances.
I have an ongoing but minor legal issue with my property which though I own only half the property I have the whole responsibility.
I don't have any regrets but if I could afford to buy the HA out I would but I could not afforded a house without the scheme.
Go in with your eyes open and weigh up each scheme
I work in the property industry (lawyer) and my view is that new builds are overpriced, at least in our area. Identical properties (in same street in some instances) sell for 20% less a few years down the line
You normally buy half (with a mortgage) and the other half is owned by a housing association or similar. This is a more complicated form of property ownership and therefore there are more risks, and I have seen issues on resale
On the other hand, if its the only way you're going to be able to buy, and you like the property and area, then the risks are probably worth taking. But do get a decent solicitor (not mortgage company's /developer's own) to explain all the documentation and implications
By the absolute shithole instead and spend the money you would have spent on renting 50% of the shared ownership property on doing up the shithole.
I agree with Dayshiftdoris in that you need to go into it with an open mind.
We've just sold a shared ownership property and, although to HA was a total pita to deal with when it came to selling, we eventually completed and made just shy of £70,000! This was on a property we were in for 7 years and only owned 35% of. We've been extremely lucky with the market but, on the whole, it can be a brilliant way to get on the property ladder.
I could only get on the housing ladder 20 years ago by buying 40% of a shared owned flat (in London). I bought the remaining 60% about 4 years later and now own a property worth about 7 times the purchase price.
It's my second pension now.
Worth considering as your situation will change over the years and at least it allows you to get started.
I've wondered about how people move up the property ladder with shared ownership. If you own 50% of a 2 bed flat but want to move on to a 3 bed house, you are on the backfoot compared to those who have 100% of their 2 bed flat and have only had half if the capital growth to put towards the new house. It must be quite hard to move from the shared ownership market to full ownership.
Do you have much security and a low rent by having a council house? That doesn't seem to be something to give up lightly.
People I know who have done it have staircased to 100% ownership first...
There is also money to be made on shared ownership like any other property. My property, unlike others in area, has not lost any value
We've been in our shared ownership for 3 years, and are now selling, we're right on the cusp of buying a little two up two down house (non-shared).
I've been quite shocked by all the hidden fees when selling. However, it's been good to get on the ladder in a gradual way and is a pretty low repayment in contrast to a full mortgage payment.
Do lots of research beforehand, basically.
Oh also just a word of warning - our flat hasn't increased in value by a single penny in 3 years. And we are in the south east...
I know friends who have used shared ownership and it has worked well for them, although it has its pitfalls.
But if you're currently in council housing it is a big risk to buy really. If you lose your job, you can get HB to cover the rent, but it's not as easy to get help with mortgage repayments. Have you considered buying your current council house? In some areas you can get a discount of £77k.
Have you considered the shit holes? worst house in the best street etc?
My BIL has one and has a 25% share still after 15 years.
He has no idea, when the rent went up he refused to pay the extra at first as he has a 'Why should I' attitude.
At the end of the day he will never own this house and be stuck in a house with paper thin walls. The stupid thing is he could have taken out a mortgage at the same time and brought a nice semi in a nice area in the next town with solid walls that he would now be half way thru owning outright.
We have been DIYSO (do it yourself shared ownership) for 15 years. We were going to staircase (buy the other 75%) when our endowment matured...but after buying for £56,500 the house is now worth £200,000 (South west and house prices shot up within a year) so unless we get a £150,000 mortgage the house will never be ours...but you know that's ok...we were desperate at the time, (eviction, redundancy) and it was a lifeline..
We own 25% of the house and now have paid off the small mortgage so our rent is £200...A small amount which we can afford...when we retire...no pension...the rent will hopefully be paid by social...We have to let the HA market it for 6 weeks if we decide to sell...We have a fully repairing lease so fences, boiler, new windows, kitchen have all been paid for by us..(whilst next door have had it all done for them)...but again that is ok...we have kept a detailed account of what we have spent and been told that this will be taken into account when we sell..
We would not have chosen to do this...we were gazumped on a similar house and would have owned it outright by now...but still...this is ok...we have had a lovely house for 15 years...it is our house for life..or till we decide to move...
We have been very happy here after years of uncertainty and it has been lovely to know that we are secure....Haven't ever considered selling yet so can't answer about what will happen in the future...
I bought a shared ownership outright (well, my half) when I was 24. The alternative was to keep renting as I literally couldn't afford anything else without a mortgage which I wasn't willing to commit myself to.
Best decision I've ever made, I'm mortgage free and when I die it goes on to DD etc, the fact it's shared ownership doesn't really affect me at all but will of course make it a little more difficult to sell as people are understandably wary.
What difference do service charges make?
You can also see a SO property as a more temporary way of building up a deposit for a house you own outright. I know someone who built up 60k in 7 years that way and then moved into the 'open' market.
FYI it is actually far easier to find a buyer for a shared ownership property than the open market. Selling via the housing association can have its pitfalls, but people out there are desperate to buy shared ownership homes.
I started in a shared ownership property. It was a foot on the ladder but if my earning potential hadn't increased we would have been stuck there. You don't make enough money to upgrade if your circumstances are the same. Many of my neighbours are still there.
When it works you can sell quickly and it's quite easy and straightforward, but it can also be a bit of a trap.
They are not selling here - I know people with SO who have taken 2 years to sell.
My neighbour is currently selling - they are 6 months in (now on open market) and HA have turned down two buyers as they don't meet their criteria.
It might be easy to sell some SO in some areas but this HA is renowned for making life difficult when you want to sell
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