Would you buy a shared ownership property?

[Loveletters123]

We are in our forties and have always privately rented as we are low earners and property in our area is out of our reach because of our joint income. We currently rent a detached house but a shared ownership new build semi detached property has just been built that we are eligible for and could afford to buy. I’m torn because I’ve heard that shared ownership property is difficult to sell and also the fact that it’s a new build semi and the potential for noise depending on neighbour and party wall thickness etc. However our current rent is more than the mortgage and rent repayments would be and we would own 75% of a property but I just don’t want to be trapped if you see what I mean! It’s also a lot smaller than our current rental so we would have to sell approximately 50% of our furniture! Has anyone bought a shared ownership and had any problems with the scheme? Keep going round in circles about what to do for the best

We did for our first home and later staircased it. No issue at all. It got us on the ladder.

100% yes

Yes, if it was a choice between that or renting forever. We may end up doing the same, DH isn't keen but he really doesn't understand house prices and mortgages.

I did, a new build flat. It was amazing. We sold it easily to another eligible couple about ten years later. The lower cost meant by then we had paid off a chunk of our mortgage capital so we had a decent size deposit for buying sonewjere outright when we needed to move.

I would. Even if you do not staircase or make any money it would worth it for the security. Modern builds have decent insulation so noise should be ok. But you could check with the neighbors.

75% is a good share! I think the horror stories tend to be from people buying 25% and then struggling to staircase and then struggling to sell it on. I would do it in your circumstances, although is the property too small if you were to get ‘stuck’ unable to sell it?

Do it. I deal with shared ownership priories as a conveyancer solicitor. Most clients start off on 25-50%, so 75% is really good.

Unless there’s a locals only restriction on it, you could even buy the final 25% when you sell on if you can afford it and then sell it as a normal freehold.

*properties

Yes absolutely.

I bought 75% shared ownership flat a few years ago. It was the only way I could afford a decent place close to my job. I love overpaying the mortgage and watching my equity increase!

Read your lease about staircasing and tenancy. In my place, even if I staircase to 100% I won't be able to sublet it. Whoever inherits upon my death would have to either live here, or sell it (they couldn't just rent it out).

Also I've heard that for new builds the service charge can rise steeply, so maybe something to look into.

I think its a no brainer. Instead of your rent going to a landlord it will go into the 75% equity of your own home. It will tie you down to a certain extent, as you won't have the freedom to move as quickly, but it will also give you security.

It’s a great scheme op. I started in shared ownership. And you should be able to sell in easily too. Plenty of people need shared ownership to get into the ladder.

I did, in 2007 on a new build with Guiness Trust so things may have changed a bit now.

The 50% share plus the rent was still less than a mortgage on the whole thing would have been because I live in the south east. Keep an eye on what it says about the service charges as they started to increase them fairly rapidly.

As my first home I loved it, especially as there was someone else on my side to go in to battle with Barrett Homes on all the snagging!

The issues really came with getting out of it when I wanted to sell. They have a clause that says you have to give them ten weeks to offer to someone else on their books, but in reality they didn’t market the property at all, and I had found somewhere I wanted to move to and made an offer so it was nail biting times. They also stalled all the paperwork and at that time conveyancers weren’t so used to shared ownership so there were long delays.

By the way, regarding "trapped", this same fear held me back from purchasing. But really, let's say in the very worst case scenario you decide its not for you and you move after a few years. The money you paid towards your mortgage in that time built your equity, so very likely you'll have gained financially (not guaranteed but likely). Whereas had you paid rent for those same years, that's just 100% going to be a loss.

I'd rather shared equity that continuously rent. I would have every intention of staircasing otherwise I wouldn't bother and stay in the bigger house renting

Oh another thing… Guinness insist that you use their valuation when you wanted to sell, rather than market rate, which was higher in my case. So I made no money on my sale despite local prices having gone up a bit. I tried to challenge it but failed.

I would in a heartbeat. I'm a 100% owner of a flat and that's shared ownership really as it's held on a long lease with charges to a freeholder. So I don't own it really.

Be careful though. Don't buy a flat that could be caught in the cladding/fire safety scandal.

You should be fine with a house.

I have a shared ownership flat in London and it is a mixed blessing. I pay a much lower rent than I was renting on the open market (rent would be double what I pay now) and it has given me security over the years rather than having to move out every time a landlord wants to sell the property.

I tried to sell it last year and the housing association found two buyers easily but the sale collapsed because of the fire safety scandal and banks not wanting to lend on the flats without EWS1 certificates.

But I think this is more of a flat/leasehold issue than anything to do with shared-ownership per se.

Also make sure you have a long lease and no doubling ground rent.

Looking back I should have bought a shared ownership house rather than a flat. Good luck with your purchase!

A BF of a dd did and it’s worked fine for him.
Surely preferable to long term renting - at least you won’t have a landlord saying he’s going to sell, you’ve got to move.

@wingscrow shared ownership leases are in a standard form. Key things like the rent can’t be changed, so there’s no doubling ground rents.

Do check what the service charge is though. You’ll almost certainly be on an estate with communal areas that need paying for.

Echoing what @MinnieMountain says about service charges, they can be a huge chunk of your outgoings.

We are still in the PBPR we bought 20 years ago at 50%. We staircased to 100% after 5 years. We stayed because we can't afford a house in the area and it's nice and has good schools. We now have very good equity to put towards somewhere else when the time comes to move on.

My DH did. Started with 25% and staircased to 100% over 5 years (based of affordability as mortgage was lower than rent and mortgage combined).
When he sold he came away with a significant amount of equity to put down on a regular property.
No issues with the SO company.

@Fallulah yes that’s one thing that concerned me too as a new build semi on the open market just down from the SO one is selling for £80 over what the SO has been valued at so I was worried if we had to sell it we still wouldn’t have enough to buy a house on the open market. With regards to the staircasing we would love to purchase the other 25% in the future but there is a rural restriction in place that only lets you own up to 80% so not sure if we could buy any more, maybe just 5%. It’s good to hear that the soundproofing on new builds is good as this was a big concern too, I had thought they had quite thin walls compared to older houses. The responses seem to be very positive, thanks for all your input it’s really helped 🙂

£80k

Savills did a talk to us at work the other day about this.
S/O is valued at a slight discount, but that falls away once you own it at 100% and will be valued at open market rates.

shared ownership rules have also changed so u can now buy increasing shares at 1% without additional admin costs, and you can do this in cash if you like. makes it all a lot easier to staircase as and when you want to.

If there’s a rural restriction in place, you won’t be able to buy any more than the 80% and will have to sell back to the housing association.