To be confused how people can afford shared ownership

I think our household income needed to be between 70k and 90k when we bought ours.

Well I'm assuming she was getting some hefty child maintenance because I've quite literally been there and seen that with shared ownership and you have to have a relatively high income (not by Mumsnet standards because 100k is Apparently poor on this site haha) to pass the affordability checks. If your income is low enough to get universal credit then it's not high enough to pass the checks.

@Leah5678 The affordibility check includes "Additional income from other sources" which will include universal credit, working tax credits, guaranteed child maintenance, disability etc. All of which could mean the applicant passes affordibility. I should imagine anyone solely on benefits won't qualify as they won't be able to get a mortgage, unless they can pay that bit outright from divorce proceeds.

Technically benefits would pay the rent percent but not the mortgage. But you wouldn't be able to move into one whilst claiming benefits because you wouldn't pass the affordability check. So maybe the person you know is on a lower income now then when they initially moved in?

In my case the other percent is owned by a housing association so the rent is cheaper than standard rent. It works out a lot cheaper than normal renting or a normal mortgage on the same sized property down here. I personally think it's brilliant and the only way to get a nice house unless you have bucket loads of cash.
@BeenThereSeenIt you would not pass the affordability checks if you claim benefits even if the other percent is owned by housing association. Are you sure your friends income wasn't higher when she first moved in?

I brought a shared ownership property as a then single parent, because I could not get a big enough mortgage on just my salary on other properties in the area. It was a 50% shared ownership and I'm not sure about other areas that posters mentioned but it was much cheaper than privately renting.
A housing association owned 50% of the property which I paid rent to. And I paid my mortgage on the other 50%. I put a 15% deposit down.
I lived there for almost 4 years, sold with no issues whatsoever and made 30k profit. Would recommend to anyone.

@Nomechange1 The criteria to qualify is "Household income required less than £80,000 (£90,000 in London)." So maybe one earner on £65k-£80k but not a couple.
Anyone on such a low income they're getting benefits are unlikely to qualify to pay both rent and get a mortgage.
This is wrong. The rent element of universal credit will help pay the rent, that's why many people claiming UC who are working or have some equity to put into a house (i.e. divorcee) but not in council housing will choose shared ownership over private renting. It offers more stability and they can buy it with a small deposit. Same as a person not claiming benefits who can't afford a normal size deposit. UC will cover £940 rent in a lot of areas depending on your needs/circumstances. This is why some people would prefer to try and stretch to afford to buy a house not on shared ownership. The shared ownership houses/flats in my area that I have seen also tend not to increase in % value as much as normal house prices when they are sold, so not a great investment. But it may be different where you are.

@BeenThereSeenIt 'I am talking about the shared ownership offered by housing associations.'

Who else offers shares ownership other than housing associations? A few councils. Majority are housing associations.

I know many people who do shared ownership incl me and no one gets top ups or benefits. Most on salaries jobs with incomes of £65k+, some on much more.

Anyone on such a low income they're getting benefits are unlikely to qualify to pay both rent and get a mortgage.

Op I pay £940 rent and service charge and £550 mortgage. A bit cheaper than renting the equivalent but more secure.

Such a prickly response, did I hit a nerve? Apologies if so 😉 Maybe you should check your own facts and some of the other responses on this thread. I am talking about the shared ownership offered by housing associations. Yours may be a different type of shared ownership. This is why I said "many" not "all". The affordability in these cases requires gross household income of less than a certain amount. I am basing this on someone I know who got divorced and couldn't afford to buy their own place outright. They absolutely get the rent and charges paid for by universal credit. They took out a small mortgage as well and yes work part-time. As for people saying most on their developments work full-time, they may well do. You are aware that many working families get benefit top ups due to low wages?

From the Facebook group I’m in, this appears to be the case. Universal credit pays for the rent and all or part of the service charge. Additionally people in the group usually have a large chunk of money from a divorce and purchase a small % therefore they have a small mortgage. In London/ SE the overall prices of the SO property are anything but affordable so stair casing up to 100% appears impossible! I think those who don’t have the service charge paid by benefits also struggle with the increasing cost. I remember a BBC panorama documentary where the charge went up to £1000s per month. More recently I saw a cheaper SO option however all utilities where with pre arranged providers meaning that even if you found a cheaper supplier you would be unable to change suppliers. I think in the beginning SO was a good idea especially if you were purchasing a house in expensive parts of the country, but with everything increasing it’s less attractive buts it’s more secure than private renting.

I bought 50% 8 years ago and staircased to 100% 4 years ago, it was more than doable and much cheaper than renting. I had a big deposit and I think the bigger the share you can start with, the better. However. I was extraordinarily lucky with interest rates and never paid more than 1.6%. If I were buying now I'd still afford it but I'd have much less disposable income. Also even though I dont pay rent the service charge is a bastard, mine has basically doubled in 8 years, and my housing association is on the cheaper side - there was a story in BBC news last week about somewhere charging £4000 a year! Ludicrous.

I've never claimed benefits.

Re selling, I had to give the HA first refusal (this saved me a ton of money on estate agents fees), but could set the price according to EA valuation.

I did it years ago. It worked very well for me - I bought 70%, the HA owned 30%. Their share covered the deposit. I didn't pay rent on the 30% - the view of the HA at the time was that they would get their money back (and a nice profit) when I sold the house or bought them out.

Downsides was that for some reason I couldn't get permission from the HA to build an extension and I suppose there was a risk that if house prices had dropped massively, below their initial investment, I'd owe them money if I sold at a loss. But I was never going to do that because I wouldn't have been able to pay my own mortgage back so risks were tiny for me.

It was really helpful not having to find the deposit money. I sold at a healthy profit (I made over 50k, so HA did okay out of it too). I think the rent payments are a piss take because the small print frees the HA of any responsibility for maintenance costs - that's fine if they aren't taking rent money but not if they are!

We bought shared ownership over 20 years ago and then staircased to the full property. Shared ownership is all housing association where I live so the part that is rent is social housing level rent so not the same as sky high private rent. When we initially bought the half rent was lower than the 6% mortgage and while the mortgage came down with rates so it was lower than the rent l, the rent was based on the LHA rate for the property of that size and the combined total was always less than private rent in my area. Mortgage rates are similar to when we bought but private rent is worse than ever. I imagine even getting part of the property at social housing rent rate might be a saving for people unless they are already in social housing?

Haha! No.

I don’t have a mortgage on mine. Bought 30% with money I had. Pay rent on the 70% I don’t own, it’s housing association so very reasonable rent compared to private rents locally. No service charge. Nice modern house, low bills.

(If I was on a really low income I think I would be able to get UC to help with rent. Although not applicable atm, I find that reassuring.)

People slag them off but until you've experienced the insecurity of private renting in this day and age then I don't think you can understand.

I did consider it but was lucky enough to be able to scrape a deposit together for a fixer upper and slowly do it up. If I couldn't have done that then I may have gone down that road.

People talk of investments in monetary terms but a secure home is worth its weight in gold.

You wouldn't do it if you could buy on the open market.

It's usually new builds too, which is good in that you get a brand new home but bad in that they are usually a bit overpriced.

A lot of them are flats too, usually with service charges that can go up way beyond inflation.

Better to go for one where a housing association is running the scheme, than one where a developer is running it.

Better to get a site/block that is not 100% shared ownership properties. Tend to hold their value better if it is a normal block of flats with say 25% shared ownership flats.

You can sell on the open market 100% share. Effectively,on the day of sale the solicitor will buy out the shared ownership operator and then immediately do the 100% open market sale to the buyer. Of course you need permission from the shared ownership. I did it myself.

Plumlife in Manchester/Lancashire/Cheshire is who I used and it was ok. As I say though, you wouldn't do it if you could buy outright.

I did some research on it and saw how much the rent would go up in 25yr and it horrified me so I have decided to move areas and own 100%

Unlikely. In London you have to earn at least 45k to qualify

They are rarely a good investment yet sold as such. You are literally bound by the selling price of the other parties agreement.

I don't think any of the families in our development were receiving housing benefit. You had to have a relatively high income to be able to afford them!

Such a passive aggressive response 😂like, where did you get this from? Absolutely full on judgement and referring to zero facts.

I'm in a shared ownership flat, we own 40%. We had to pay £18k total deposit. We wouldn't be considered if we couldn't pass the affordability checks, just like private renting I guess. So no, benefits recipients we are not.

ANYWAY! we pay around the same total price as we would for private rent, plus the flat is in good condition, great soundproofing, protection from landlords turfing you out, lovely lights windows, great neighbours- all professionals. I bloody love our shared ownership flat.

Mumsnet always slag them off for some reason (snobbery or just ignorance, who knows). Tbh with the cost of living, shared ownership is just going to become more popular!

Housing benefit can be used to pay towards the rental part, however they won’t take this into account for the affordability calculator, so it would be quite hard to pass the affordability test if you were eligible for it.

The two people I know who have shared ownership bought the share outright with their divorce settlement, they then use a combination of wages and uc for the rent portion. If they had simply rented they would have lost their uc (which part pays for childcare) due to having more than £16k