To ask you about your experiences of shared ownership?

[FizzyPink]

I'm currently looking to buy my first property probably within the next year and will be buying solo. I've been set on the help to buy equity loan as it means a much smaller deposit is necessary but have had negative feedback from everyone I've spoken to about it.

Someone suggested a 2nd hand shared ownership property would be a better way to go and then to staircase to 100% in a few years time. This wouldn't be an issue as I receive twice yearly fairly large bonuses so wouldn't be needing to save up as it were.

I'd be really keen to hear about how shared ownership works in practice if anyone has any experience. For reference I'd be looking at South East London.

From what a friend who did this says.

They own X% and pay rent on Y%
all of the repairs and management fees (flat) are paid for by them and not split percentage wise.
As you buy more of a percentage the rent reduces.

The issues are
Can you buy the freehold or are you stuck with a leasehold?
Are you able to buy out the Percentage in its entirety?
If you are going to buy and sell the company that owns the other percentage obviously needs to be involved as you are not just selling your percentage but also getting the new part owners to replace you in the contract.

And just FYI property management fees can be an absolute ball ache and you are probably going to pay the same company that part owns your property (if you are in a flat).

Above is incorrect (I know a lot about shared ownership I used to work in the industry).

All maintenance of property is paid by you - you’re the homeowner (communal stuff paid by service charges etc). Stair casing is charged at the value of the property at the time - so if the value increases the amount you pay to “staircase out” will increase (and it’s a surveyors valuation that determines costs - not n estate agent, you pay for this valuation,

What I always say is that shared ownership is a good option only if you cannot get what you want on the open market. Buying outright is usually preferable but s/o is better than renting

I also agree with @MyKingdomForACaramel

I used to work with shared ownerships and I own one myself. It has been perfect for me. I had a low salary when I wanted to buy and shared ownership enabled me to buy a beautiful new build two bedroom property. I pay a mortgage on my share and rent on the other share I don't own but because the other owner is a not for profit housing association they don't make unnecessary charges (not that management companies are allowed to anyway!). The housing association leave me alone except to remind me to get my boiler serviced (lease requirement) and the whole property feels mine not partly theirs as renting does. I have found that my rent (includes insurance, service charge and ground rent in one payment) has gone down over the last two years saving me around £20-40 a month and my mortgage too as the property has increased in value so I get better rates on remortgage.

The other property I looked at the same time, which was an outright 100%, are now selling for the same amount as when I looked at buying 5 years ago. On my shared ownership I have more than doubled my original deposit. I am currently selling as I can now afford to move on and whilst I will miss my home I feel pleased to be helping someone else onto the ladder as it has now served its purpose for me. I honestly would go for it but just check the landlord/housing association are not for profit or similar. Most seem ok though and I'm South East but not London.

The process itself can be lengthy. My experience hasn't been the quickest as there is so much to get through and then look at from the solicitors point of view. But it is done to safeguard you.

I wish you all the best.

We almost went for it then pulled out last minute, about 8 years ago now. It was going to cost us about 2.5x rent alone and we just couldn’t afford it. I know 2 people who’ve done it and are now just privately renting.

I'm currently in a S/O property and for me it has worked brilliantly.

I went for a re-sale rather than a new build, and moved from paying extortionate rent on a 2 bed flat to a 3 bed semi that I'd never have been able to afford outright. Once we staircase to 100% the freehold transfers to me too. I've not been bothered by the HA at all since I moved in.

1. Check service charges out in detail...yes HAs are non-profit but some of the specific charges were extortionate.
2. Be aware of the legal fees associated with when you want to sell. You have to cover the HAs costs and they can choose whatever solicitors they like!

It is a definite stepping stone and I would recommend it, but with eyes open.

When you sell, you can normally either sell your % but have to give them first refusal to find a buyer within a certain time frame, or staircase and sell on the same day which means you sell 100% and the next owner isn’t SO.

I lived in shared ownership until recently and it worked really well for me and dp.

It was a resale, which meant the rent was lower than new builds, as the rent is linked to how much it is worth when built. There was a cap on how much the rent could go up by.

We lived there for over 10 years and through paying off some of the mortgage and price rises, we were able to sell and move to a house without shared ownership.

What shared ownership gives you over renting is security that you won't be evicted and the chance to build up equity. I agree with @MyKingdomForACaramel that it's preferable to renting, but if you can buy without shared ownership do so, as with shared ownership you are losing money on rent that you could be using towards a full mortgage.

I nearly did but couldn't afford the rent element.

Found a smaller flat to purchase on my own in the end which i could afford.

It didn't really feel like i was saving any money from renting

Apologies, I meant paid by you, not sure why I put "them".

Sorry

My daughter has done this very thing. On the whole it's worked well allowing her to get onto the housing ladder. She's now ready and has an income to buy outright using profit made in the current house as a larger deposit. Her service costs have only been £35 a year but that's probably because our area is not too expensive. Any maintenance on the house is down to you. A couple of downsides to the system. Firstly the mortgage rate is much higher than a standard mortgage so they will lend less and the rent has increased significantly each year so she now pays a lot more than if she owed a mortgage on the full amount. She couldn't get the mortgage because of her earnings but in terms of affordability she has managed fine. She would buy out the house and remember this is done at current market value rather than original price so may run away if housing market goes up with valuation and solicitors fees each time. However it's no longer the right area for her in terms of work. It's very slow going through the housing associations to resell. On the whole her house is great and it's been a positive experience.

I'm in SO. Have a lovely 3 bed town house semi. We were in the position we could try to negotiate an affordable price on a 2 bed new build with equity loan or a SO 3 bed at 50%. We were put off by equity loan because of the 5 year repayment. With mortgage payments we didn't know if it would be affordable and what if our circumstances change and we can't afford a full property mortgage plus loan repayments. I've started to see people struggle with equity loans.

SO offered a larger property for our budget, meaning it will be a suitable family home when we come to have DCs. The rent + mortgage is affordable and less than private rent on the same size (in fact were only paying £50 pcm more than our old 2 bed rental 1 village over). Rent does go up, our service charge is reasonable and broken down, we have a community of shared owners who are always challenging price rises in anything so the HA do break it down and justify it. We're with the main local HA. We feel secure and because we had a large deposit we got 85% ltv on our half so could go with lower interest rate providers. This means were making good progress on equity.

I would say SO is for people who have a good plan of how they will staircase or move. We are looking to move once we can afford and entire 4 bed property to make our family home. We have a rough plan and then the back up is staircasing to 100% of our 3 bed. If we stair case to 100% we get the freehold - VERY important.

My friend had trouble with hers as when she wanted to move she had to find a buyer who was able to buy the same percentage as her. Also the LA set the sale price rather than her.

Ours is SO, a lovely two bed new build, well it was new when we purchased.

We had it valued the other day by a RICS valuer as we are now staircasing to 100% and the value has increased by £40k. Meaning our share has made about £25k in equity.

We will have to sell in a few years but would rather sell on the open market, as resales can be tricky as the HA want to decide who gets to buy and they have to buy the same percentage, etc

All repairs are done by us, HA just charge us rent

We used to have a shared ownership but when we wanted to sell it the market prices had dropped hugely and we were left with a large negative equity. I know that this can happen with any purchase but it’s something to bear in mind.

We bought 25% of our SO house in 2018...we love it. We pay rent on the remaining 75%. You are responsible for your own repairs unless its a structural issue. Once you own 100% the leasehold is transferred to you...you must request this and a solicitor is required. You can staircase as many times as you like...minimum 10%. Our house is on a lovely development and are tender blind ....so look exactly the same as all the privately owned houses

I've lived in a shared ownership property for 12 years now. It's definitely better than private rental - my mortgage and rent combined is half the price of the private rental house next door.

I own 40%, haven't been able to afford to buy more, but I'm quite happy to keep it like that.

The HA don't do anything except send me statements and newsletters. I like it like that!

We have a new build SO property with a 70% share and a plan to staircase to 100% in 2-3 years at which point we get the freehold and can sell normally. We are with a great HA with no ground rent or surprise charges and they leave us alone. We couldn't have afforded to buy traditionally so would have been stuck renting. Going by a recent valuation we have around 25k in equity after just 2 years.

Absolute nightmare.

Wouldn’t only do if desperate.

It must depend on area, just did a quick calc on a 3 bed in my area (Suffolk), and it’s £1023 a month before service charges.

I shall be watching this thread with interest. I'm about to apply for a new build s/o in the Midlands. Just round the corner from us. Our position is single mother 16 year old son. Our current rent is £500 a month. From what I've researched so far I can get a slightly larger 2 bed. They're asking minimum 40% share. Then rent is Inc serv charges use approx £210. I am looking in very lucky position my parents are offering me the 4O%

Hi, i bought 50% share of my two bedrooms property in the 90s in west London with the intention of buying other shares later. Months after my purchase, prices in my area started increasing and to this day, although i have always worked, i never been in the position of buyng more shares. I spoke to the HA sales team to be told that if i wanted to sell my share, the price would have been below the market rate. So i have been stuck in this place. Although I refurbished completely to a very good standard, i can t move out, as the only place i could afford would be a studio on the outskirts of London. Mistakes from their part on the service charges have been an ongoing issue. Very often i ended up going to the CAB for them to solve the problem on my behalf. My advice to you is DON'T GO THERE!

Hi
My better half and I with our teenage sons bought a 3 bed end terrace SO in 2017 South East England. We bought 43% in a new build small HA owned estate. Service charge was £10 when we initially bought but now around £35. It's a massive end terrace townhouse with 3 x king size rooms. One advantage I hear is that SO houses are usually bigger than housing developers properties. Mortgage interest rates is not as competitive as buying 100% but it's not bad rates either!. With our SO the rent will always go up so that's the disadvantage for me IMO. So far we haven't staircased 'cos we noticed our neighbour sold her share within 2 months of it going on the market for a good price so we are planning to sell too. It is in a commercial area hence our decision not to staircase. Our HA allows staircasing to 100% once you have lived in the property for 1 year, meaning we can skip 10% minimum and just buy it all.

On the whole it is def better than renting and great for getting your foot on the housing ladder quickly if your savings is not great! However my advice is buy in a fairly good area.

Our challenge now is to find a new build house with living room, bedrooms sizes that match the size of our SO house when we decide to sell our SO and buy 100% next year without paying premium.

I bought 50% of a shared ownership flat in south London ten years ago. I think it really does depend on the housing association. The spec on the flat (we only got to see the show flat before we bought) was very poor and the service charge has trebled - now nearly £300 a month. The value hasn’t increased by much in ten years (probably £80:100k) but that’s my fault for getting just a one bedroom flat. I think the increase on a bigger or older flat would have been much more. I’m also worried about selling it on as the housing association seem to have a lot of control over the price , surveyors etc. I haven’t managed to staircase as I had hoped and , with the increase in service charge, I think I could have rented something with a much higher spec more cheaply in the same area. If you could buy outright that would obviously be preferable but I suppose it’s marginally better than just renting? Others outside of London seem to have had much more success reading the other comments- perhaps it’s down to the property/housing association.

Does anyone here with SO know what Sovereign homes and Aster are like? Or share their experiences with their HA?

Hi.
We are shared ownership. Unfortunately at the moment its not totally affordable ownership solution for following reasons:

1. Lease Extensions - please anyone on shared be very aware that your house value is determined on the Lease. Below 80 years plummeting value, youll need to pay for a extension, showing in essence Leasehold value is based on a piece of paper making the Ownership part very Questionable.

Leasehold in law is a tennancy (google).

Make sure cheaper then private renting to make it worth it.

Bad housing associations will charge 100% for everything even tho they profit as well. Be cautious of the h/a you enter with.

Lease extensions will cost 8-10k so make sure u have cash to preserve your property value. (This is why its totally unaffordable housing).

Leasehold is heavily in the news at present as a scam. Again google & see.

If it wasnt Leasehold and/or was legislated shared would be great.

Rents rise at RPI. This annoys me as the news will make out train fayres going up at RPI is wrong and isnt a true form inflation but ignores many s/o leases not only go up at rpi but rpi +1/2%