To be starting to consider shared ownership in London?(14 Posts)
If it was anywhere else, I'd not be interested - and I'm really only starting to think of it as an option now. Maybe it's a really daft idea though.
On the face of it, it makes buying in a nice part of London a possibility though - there's a new development round the corner from me. 1 beds will be priced at approximately £600k - so assuming you could drum up the deposit, arrange a mortgage for about £200k, and get a subsidised rent on the rest, you could potentially be able to have an apartment in London for the same or slightly less than renting outright in the same area.
The other bit of me thinks WTAF it's still a pretty hefty mortgage realistically and then you still have to pay rent! Ludicrous!
All a bit hypothetical for me as I'm sure there will be people champing at the bit to buy these who are on some sort of priority list, but it did get me wondering about a few years down the line and whether it's something I should look into more thoroughly.
What are MNers opinions on shared ownership in London? Can it be a smart investment? (Asking particularly in regard to London as it's so common here for rents to outstrip mortgages) Or is shared ownership always a bit of a con?
One thing (of many!) to be aware of is that many SO leases will have a clause in them saying that when you sell the HA that has the freehold is entitled to a certain percentage of the total sale price, regardless of whether you own 25% or 90% of the property. That can really eat into any gains you'd make from property price increases, although if you're buying with the intention of living there long-term rather than as an investment that might not matter too much. Obviously if you can staircase to own 100% before you sell then you avoid that.
Also, some HAs have a terrible reputation for things like communal repairs and anti-social behaviour. Make sure you do your research about the HA you're looking at.
Will try to add a few more thoughts later on.
I really would not buy shared ownership of a 600k one bed. I live in London and would suggest looking at other, cheaper areas so you would have less rent on top of the mortgage. 600k is a ridiculous amount to spend.
I agree with Sallygoroundthemoon 600k is a lot to spend on a 1 bed. I think you should be aiming for 2 at that kind of price. Where are you looking?
Even in Islington you can get a (small) two bed shared ownership for that sort of money Like this one. I think two beds are also more desirable when you want to sell on.
Depending on what borough you are in some have a scheme where if you have lived there for a certain amount of years and are under a certain age they can provide assistance. It has been a number of years since I looked into that though so not sure.
I wouldn't go for a shared ownership property as you can get stung when trying to sell it and with the rent.
I'm sure that you could easily get a 1 bed flat for half the amount that you were thinking about spending elsewhere in the capital.
Thank you for your comments.
Just to clarify, the whole apartment is £600k so buying a share starts from £180k.
Not spending £600k to part own.
It's a bit rich if there's a clause saying the HA gets % on the total sale price though! This is the kind of reason that I've always thought shared ownership was a bad deal before.
I'm a SO in London and I would definitely warn you against it.
I've benefited from the huge rise in prices but it's been absolute hell dealing with the Housing Association. We are treated like we are council tenants but must pay all the costs of an owner.
Our lovely new-ish building has gone to total shit in less than 10 years because of a TOTAL lack of maintenance. We pay for a full time cleaner but he's never there. Complained, with logs and date-stamped photos of mess that sits there for MONTHS and HA could care less.
Because they just pass on service charges to us they don't bother to control them at all. We now pay more than double for WORSE service. It took YEARS to get regular accounts off of them and even now they refuse to break them down for us.
The harsh truth is that there is very little you can do. We've gone to our MP, the lease tribunal, shelter, housing ombudsman, and the media. The Housing Association know EXACTLY what they can get away with though, so do the bare minimum.
Re-selling is a pain in the arse. You have to use their choice of agent and pay extra fees, including a percentage of the selling price (!) for the privilege of getting away from them.
Okay, I could obviously keep going... but in short: please don't do it.
On a more positive note, my friends have had great luck with Help To Buy. That might be something to consider?
I instinctively wince at the idea but one of my friends did it and it worked out brilliantly for her (though this was mostly because she bought it alone but then her and her partner staircased it up to 100% together). She did it because she just didn't want to live anywhere that she could afford to outright buy: she wanted to live centrally, to be able to walk to work, etc. I think for her it was really 'keep renting or shared ownership' not 'shared ownership or buy in zone 4'. Under those circumstances it does make sense. It's not what I'd do (I live somewhere rubbish but cheap - my three bed house cost a lot less than her two bed flat!), but I don't think it's mad to consider it.
I think you do have to do some serious research beforehand, though. Not all shared ownership is the same by any means.
Not only is reselling a pita but prices in "social housing" blocks are lower than identical "fully owned" blocks (my brother is in shared ownership and it's probably worth 50k less on about 400 than next door block). Plus he's having nightmares with management co...
Personally I wouldn't if you have another option :-(
What tigerdick said. I live in a SO conversion and dealing with the housing association is a nightmare. You pay all the costs that you would if you owned the whole flat, but you have none of the autonomy. My HA acts as though I'm a bottomless pit of money. It fails to enforce insurance policies, leaves small repairs so that they become big ones and defaults to billing the leaseholders for everything. I wouldn't advise anyone to go for SO. Look further out of London and buy outright is my advice.
Don't do it. HAs treat you like shit, we had rats in the cavity walls of our flats (everyone owned the flats on share schemes), and even we though we all paid £100 in service charge they did not give a wank about the rats, and actually made the problems worse. I was so glad to move out from there!
From very bitter experience - don't do it.
The HA were a nightmare on every aspect of repairs and issues with the apartment.
When we came to sell we had to do it through them and didn't get market value.
They put the service charge up by a huge amount after the first year and we (us and neighbours) had to take them to a tribunal to get our money back.
Are we allowed to name? I'm currently with Notting Hill and they are f-ing awful. Avoid at all costs.
My main problem is one set of neighbours out of a block of six flats. Also the costs here are ridiculous. I keep thinking I will be brave and set up a reeidents association to hold the nasty housing officer to account...
The development we are on seems to be going to rack and ruin and I am really worried we won't be able to sell this place.
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