Aibu shared ownership stories

[MummyAlltam]

Am on here for foot fall but also aibu?..

To want to buy a shred ownership property as my first time buy as it all sounds so reasonable. I've only had one acquaintance do one and she ended up owing money when her relationship broke down and they needed a quick sell below what they bought it for.

Please tell me someone has had or is having a good experience of this process. Also if anyone has " staircased" to eventually have a 100% ownership or does it cut off at 75%.

Thanks

You need a plan. How will this help you? Will you be able to afford more in the future to buy the rest of the share (at whatever the market rate is at that point?) or can you cash in your share and move to full ownership in a cheaper area?

I work with this, and it’s very frustrating to hear the number of people bad mouthing the scheme because somehow a 40% share of a 1 bed flat didn’t turn into funds to purchase 100% of a 3 bed house - they just don’t understand

My sister bought a shared ownership property in London (emergency services worker). She staircased to 100% as soon as she could and then sold for significant profit and bought a house.

I bought on shared ownership in the late 90s (aged 19). It was a council scheme and I bought 70% of the house with them giving the rest. There was no rent to pay on the 30% When I sold the council got 30% of the sale price. I walked away with £60k profit. :)

From our own experience -

• Is it a new build flat? All new builds will have some degree of depreciation, as you are the first owner. It's often possible to get better value on a SO resale.

• If you buy a resale check the length of the lease. Lower than 80 years a is a short lease and will cost you money to extend it (as we have painfully discovered). Check the process for renewing your lease with your HA as there is no statutory process for SO. Most HAs mirror the legislation for "normal" leaseholders though.

• Get a conveyancer who properly understands and ideally is an expert in SO - we had poor advice about our short lease and it will leave us out of pocket circa £30k .

• What will happen if your circumstances change? It can be more difficult to sell a SO property as the pool of buyers is smaller and you have restrictions on valuation and sale. It's a good idea to fully think through if you have enough room to have a kid, or what would happen if you went down to one wage.

• If you intend stair casing what happens if house prices radically change? Our area doubled in price and now we will never be able to staircase fully (another cause of the lease problem).

• Who is the shared owner? If they are a Housing Association, are they a good one? You need to do your research as there have been a couple of horror stories (saying that most HAs are good).

• What is the service charge like? What exactly does it include? Are there caps on the rent and service charge and what are these, e.g. RPI plus a percentage?

• Who is responsible for what maintenance?

Saying all of that we have lived for many years in a beautiful home that we would never have afforded to buy. We have kids that we would never have been able to have shoehorned into a one bed or studio flat. We have security of tenure which is priceless. It's just a shame London house price craziness got us. Good luck.

I'm in a shared ownership - wouldn't have been my first choice but it is literally the only way we could get a mortgage.

Only downside for me thusfar is the constant increase in rent/service charge every yera by a considerable amount and there is nothing I can do about it, other than that it's all good.

I'm looking into shared ownership too. Going to view a property this weekend actually.

We did it, it worked really well for us in that it gave us a secure home of our own that we could treat how we wanted. We lived there for 10 years, staircases to 100%, sold it and have now bought something else. We were on a low income and it was infinitely preferable to renting and paying someone else’s mortgage for them or waiting forever for a grotty council flat.

We didn’t make any money, the only people that did were midland heart who owned the rest of it. You can’t go in to it thinking it’ll make you money like another house might but if you want a secure home then I’d absolutely recommend it.

We did it and would thoroughly recommend it. We bought 50% and then staircased to 100% after 5 years. We sold our 2 bed flat and bought a 3 bed house.

I've done it before and would recommend it to people on the following proviso's:

• be certain as to what you can staircase to. I was advised 100%, which was inaccurate as it turned out to be 80%. Challenging this after the purchased took a year and was very time consuming

• not all shared ownership properties are created equally. I was lucky mine had an excellent view which made it v.easy to sell. Others in the same block overlooked a brick wall and 5 years later still can't sell on

• don't buy if you're thinking of having kids/moving house in next few years. They can be hard to sell on and you may end up stuck in a 1 bed flat with a baby and a job in a different city nearly me

• don't go with the sites preferred solicitor. You'll get better independent advice from someone else refer to first point

• don't buy somewhere shit for the sake of having a mortgage. It's not worth it.

My cousin did this and it has been great for her. She and her DH were on a low income so this was the only way they could get out of private rented accommodation and into somewhere secure. Some years later her DH left her but by then the mortgage /'rent had dropped in real terms so she is able to manage on her own income and still have money left for the odd meal out or treat for the DC. She may never increase her share of the home but she has security.

This an excellent resource from an independent and impartial source

www.lease-advice.org/advice-guide/shared-ownership-leases/

Its worth noting that whilst you may own 100% of the leasehold you arent likely to be able to purchase the freehold. As a leaseholder you can be required to pay service charges in perpetuity, especially if it is a flat.

I've read stories in the press where the service/maintenance charges have been punitively high and in areas where prices have risen a lot and wages haven't kept pace, people have never been able to staircase and the rent on the rented proportion has gone through the roof as well.

They can be a good option for people who are on benefits long-term but get an inheritance or a divorce settlement though. They can use the lump sum to buy a share of a property and get housing benefit for the rest, and don't lose their benefit income because they've got cash in the bank. The bedroom tax doesn't apply to shared ownership, either, and it avoids any issues regarding intentional deprivation of capital, and means they're no longer at the mercy of private landlords.

Service charges are regulated, and fairly heavily in fair of the resident. You have a fair amount of power there, you just need to exercise it.

The rents you have no control over but HAs will, as a rule, behave respectfully in regards to increases. It’s currently 2.5-3% increase PA and I wouldn’t expect that to change

It enabled us to get on the property ladder instead of having to rent.

But it was a nightmare to sell (3years!)

@Sprinklesinmyelbow. There's actually no cap on service charges. The landlord can seek to recover all reasonable costs related to provision of services to the leaseholder. Particularly in blocks of flats that can be really quite high and include audit fees etc, plus a total percentage management charge on top.

As an aside, HA rents are currently subject to a year or year 1% rent reduction so they are more regulated that stated above.

It worked really well for us. We didn't staircase, but sold at 40% ownership.

It sold very easily and we made a great profit on it, which funded a sizeable deposit on a normal sale.

But we were lucky in many ways. It was a gorgeous flat in a very desirable part of London, we sold at a great time (Jan 2016). They're not always easy to sell on.

I am in shared ownership. We could have bought a house in an are further away but we didn't want to live there. So SO has allowed us to buy in an area that we want. We will staircase eventually once we've got some savings. But it's fine at the moment. The price of the mortgage and rent is a lot lower than what the total rent would have been

“WantingMuchMore

@Sprinklesinmyelbow. There's actually no cap on service charges. The landlord can seek to recover all reasonable costs related to provision of services to the leaseholder. Particularly in blocks of flats that can be really quite high and include audit fees etc, plus a total percentage management charge on top.”

Absolutely there is no cap, because service charges can be whatever the developer wants to provide and the residents want to pay for. BUT you can only be charged for the services provided to you, you are entitled to value for money and a huge number of other protections all of which are enforceable by tribunal and I’ve been taken to quite a few the residents power and entitlement is fairly strong.

Going to look at one today. It already looks perfect for us and is in a brilliant location - middle of nowhere, have to drive everywhere, only one pub in the village and miles from any schools (no kids and don’t plan to) so hoping there’s not too many applicants as only a couple available!