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AIBU?

Share your dilemmas and get honest opinions from other Mumsnetters.

Original poster

To think part ownership is a con

55 replies

BumpowderSneezeonAndSnot · 15/01/2018 20:07

I'll start by saying I'm not a homeowner.

Surely something is only worth what someone is willing to and is able to pay. So if people are only able to pay for £140k of the £260k asking price surely the property is only worth £140k? But no! There is money to be scammed here...so let's make people pay rent on top of their mortgage even though they will never own that % of the property!

It smacks as one big con to me.

OP posts:
Tropicalfruitssquash · 15/01/2018 21:21

I am single and own half a shared ownership property. My rent and mortgage are ridiculously low. If I was renting I’d be paying at least an extra £500 per month or living in a shared house. My low payments mean I have plenty of money for other things. I love my house and do not mind spending money on maintenance - it’s my home! I could be here forever so it doesn’t bother me. I feel very very lucky.

Crazycatlady123 · 15/01/2018 21:32

My first home was shared ownership place in 2010. We were there just over 4 years and it enabled us to afford the deposit to put down buy a bigger place. The full market value was £185000 so for the 40% share was £74000 so only had to put down 10% deposit on that share. This was perfect for us as at that time, we wouldn’t have got on the property ladder any other way as you needed about 20% deposit at that time.

A thing to be mindful of is that you’re restricted on the lenders you can use for shared ownership (unless it has changed since) so the rates aren’t as competitive as you’d get for a regular mortgage.

Oh yes, dealing with A2 Dominion with service charges and other such lark, oh how fun that was (not). They were a nightmare when we came to sell it. Because there is another party in the selling process it can take so much longer. It took 7 months to finally move from the time we put it up for sale, 7 months of pure stress. It took so long we had to forego buying anywhere as we couldn’t give any seller any kind of timescale of completion (I shit you not).

HardAsSnails · 15/01/2018 21:57

Anti it's variable, some HAs are really crap.

AntiHop · 15/01/2018 22:12

a thing to be mindful of is that you’re restricted on the lenders you can use for shared ownership (unless it has changed since) so the rates aren’t as competitive as you’d get for a regular mortgage.

This isn't the case crazy. We're in shared ownership but we've got an excellent mortgage rate. Less than 2%. It's true that not all lenders will lend for shared ownership, but there's still plenty to choose from.

GETTINGLIKEMYMOTHER · 17/01/2018 10:56

I think it can work very well for some people. A dd's bf has one, admittedly bought quite a while ago - he is now in a position to buy the rest.

The great advantage over renting, especially if you have kids, IMO, is that you are not at the mercy of a LL who might suddenly decide he wants to sell, and give you the huge hassle and expense of moving. Also, presumably within reason, you can decorate and improve to your own taste.

Bungleboggs · 17/01/2018 11:20

I have a beautiful little house that cost me £140 per month! I’ve paid the mortgage on my share off so it enables me to work less hours. I don’t think it’s a scam

BombsAway · 17/01/2018 11:29

The help to buy homes round here are massively overpriced, e.g. a 50% share in a 3 bed semi (new build) is 80k but on the open market a 3 bed semi is about 110-120k.

They get sold because some people cannot afford a 110k house but can stretch to 80k for 50% of a house, but means they're being massively ripped off.

restingbemusedface · 17/01/2018 11:33

Hmm, not sure about the property only being worth what someone is able to pay?? Mine is worth over £400k but I could only afford half of that. Other people who own theirs outright in my block did pay £400k. So I get to live in a £400k flat with a smallish mortgage (had a large deposit) and a bit of rent and service charge on top.

It’s been great for me - it’s been an investment of my money that was used for the deposit and the flat has gone up in value, and I couldn’t have afforded anything else in the city I live in, let alone a 2 bed, 2 bath posh flat in a city centre. Yes there are unfair aspects of it, and it’s not exactly affordable housing, but it’s a private business and I wouldn’t really expect the developers not to make money from it.

MyGastIsFlabbered · 17/01/2018 12:33

It's the only option for me to get some security. I'm renting a 2 bedroom flat (for me plus 2 DCs) privately but with my divorce settlement we can buy a share of a 3 bedroom house. I can't get a mortgage so without shared ownership we'd either have to relocate up north or stay in rented accommodation forever.

lidoshuffle · 17/01/2018 12:46

SO may not be the cheapest option, but it is often the most accessible one to get that first step onto the property ladder. It's main advantage is the mortgage multiplier; people may be able to afford 3x salary on say, a 50% share which is £100,000, but they wouldn't get a mortgage for 100% @ £200,000. As their finances improve they can staircase up and buy a greater share.

It certainly isn't a con, but a practical solution in expensive parts of the country.

araiwa · 17/01/2018 12:48

It only seems a con because op has a fundamental misunderstanding of what shared ownership is

IrkThePurist · 17/01/2018 12:51

It works for some people. Its sad to see people fall into the trap of believing ownership is within everyone's reach. If people are driven into part ownership by bad renting conditions, why cant we fix the bad renting conditions?

ButIamrightright · 17/01/2018 12:55

I know someone who it worked for although that was 6 years ago. I think shared ownership/help to buy is a good alternative to renting for some people but I also think it used to prop up the housing market.

Rumpledfaceskin · 17/01/2018 13:07

Depends where/what it is. My mum has one and it’s great. Spacious, in a cheap area so the rent is affordable and it provides more security than renting as you can’t be evicted (unless of course you don’t pay mortgage). We’ve been looking at new builds nearer the city where my dh works and the rents on the part you don’t own are ridiculous. If you can afford them I can’t see how you can’t afford to buy outright and the property is massively overvalued to start with. So yes in some circumstance I think it’s a bit of a scam.

Rumpledfaceskin · 17/01/2018 13:12

So the ones we’ve looked at are about 120k for the 50%/40 share. Then the rent on top is nearly £500 per month so unless you have a whacking deposit how could anyone afford this? And if you do why wouldn’t you buy on open market? I just don’t get it, they have been on as shared ownerships for nearly 2 years now, unsurprisingly. It’s very annoying as it could have been an option for us to live near work.

lidoshuffle · 17/01/2018 13:17

Surely something is only worth what someone is willing to and is able to pay. So if people are only able to pay for £140k of the £260k asking price surely the property is only worth £140k?

I'll try this economic theory next time I want to buy a £100,000 diamond necklace, but can only afford/want to pay £100!

RedRobin87 · 17/01/2018 13:31

It worked for us. We have a lovely S/O house in an area we wouldn't have been able to afford and without S/O we would still be stuck in our HA flat.

We purchased the maximum available, put down a 5% deposit and we are now looking at purchasing the rest. Only downside is that our house has gone up in value from £165k to over £200k in four years - but that is how fast prices are rising in our area. At least we have our house and can chose when to buy the rest, as we couldn't have afforded to live here now.

In my opinion S/O only works if you intend to stay in the property long term and purchase the rest of the property. It doesn't really work short term due to the hassle of selling them on when you don't own it all. Saying that S/O goes really quickly around here due to the fact there aren't many.

hibbledibble · 17/01/2018 14:33

Op I think you are completely misunderstanding how shared ownership works. You buy x% and pay subsidised rent in the remaining %.

I had a shared ownership flat. I had a secure accomodation, unlike all my friends in private rented accomodatio who often had to move due to the landlord ending their tenancy. I also paid less than half total (rent plus mortgage and service charge) compared to a private let in the area. Plus my flat was a new build so a lot nicer than the usually grotty private rents. Plus I had appreciation in value.

In short yabu. In my experience those who dont 'like' shared ownership are those who cant afford to buy one, or aren't eligible to buy one, and it is sour grapes.

Oh and my flat sold in a day when I put it on the market!

Pleasedontdrawonyoursister · 17/01/2018 14:57

I am in shared ownership. The rent is GREATLY reduced. We could not get a mortgage for the full value of even a 1 bed flat down here (south east) so this was our only option of moving out. We pay much much less than private rental. If you do any improvements on the house then you benefit 100% of the ‘additional’ value you have added (as long as you make the HA aware first). In or scheme we can purchase more of the value in 10% chunks until we own the whole thing - I know not all schemes are the same. I haven’t seen a down side to be honest. We sold our first shared ownership house and we had over 20 interested parties within a month. I disagree they are difficult to resell.

MrsDoyleFallingOutTheWindow · 18/01/2018 22:43

I don't think it's sour grapes for people who can't afford it to say it's a rip - for them, it is. If you're on the cusp of home ownership, it's probably great. If you could never get anywhere near it, it's just another impossible task but more annoying because those homes are nominally at least aimed at you.

Cheeseislife · 18/01/2018 22:57

Help to buy has absolutely been found to have inflated house prices beyond standard amounts, and that scheme is definitely a con.
Shared ownership seems less so in comparison.

NeverTwerkNaked · 18/01/2018 23:08

I think you are right in the sense that all these measures (especially help to buy) are really there to prop up a housing market that is grossly out of kilter with wages. It suits the elite to prop it up with schemes like this rather than do something more radical

safariboot · 19/01/2018 00:44

There is no such thing as part ownership.

In Richardson v Midland Heart a 'part owner' had paid around £29,000 for her share,and later got into rent arrears. The court found that Richardson was a tenant with a 99-year tenancy, who could be evicted just as any other assured tenant can be. She was evicted and had no right to her £29,000 back though Midland Heart repaid it (minus the rent arrears) anyway.

(I believe she fell into rent arrears because she fled the property fearing violence

www.theguardian.com/housing-network/2013/sep/03/hidden-dangers-shared-ownership

www.theguardian.com/housing-network/2016/sep/15/shared-ownership-risks-affordable-housing-rent

SilverOnToast · 19/01/2018 02:10

A lot of things were really unfair and annoying about our shared ownership experience, and I don’t think it’s a long term solution. However it was vastly more affordable than a private rental in the area, and we made around £50,000 in the three years we lived there.

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