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AIBU?

Share your dilemmas and get honest opinions from other Mumsnetters.

Original poster

To be scared of shared ownership?

63 replies

Neverender · 01/09/2019 18:51

Seems like an incredible opportunity to get on the ladder. Many people have warned me but they're not specific about their worries, more, "Well, you don't completely own it."

If you have a mortgage then you don't completely own it anyway?! 🤷‍♀️

Can any of you lovely people advise as to why it might be/is a scam and not a good idea?

Thank you!

OP posts:
Original poster
Neverender · 01/09/2019 19:49

Bump. In case anyone can advise...

OP posts:
ColaFreezePop · 01/09/2019 19:58

People aren't being specific because very few people have investigated it properly.

Investigate:

  1. How do you sell on your property if you want to move, and,
  2. How often both the rent and service charges increase. Plus what happens if you cannot afford them.

While all leasehold properties have service charges that increase (though mine are actually lower than 5 years ago) and it is up to the buyer to investigate this, with shared ownership you have the additional whammy of the rent increasing as well. Plus unlike shared ownership properties with leasehold properties there are no restrictions on how you put them on the market.

ColaFreezePop · 01/09/2019 19:59

Btw you are better posting on money saving expert than MN for things like this.

LifeIsToughMate · 01/09/2019 20:00

It’s fine. I’m in shared ownership. Honestly I feel so lucky.

But yes mortgaging the whole thing does get you rights.

Shared ownership however does get you on the ladder and gives you access to flats you wouldn’t be able to own outright.

I recommend

Pinkflipflop85 · 01/09/2019 20:01

Spend some time reading all the nightmares people have had with SO properties. We bought ours 10 years ago as it was the only possible way to afford to live where we are but I wish we hadn't.
To start there are so many silly rules on the covenant of what we can and can't do in the house or garden. The rent increases by silly amounts every year....and don't even get me started on the extortion that is service charges.
Our neighbours have tried twice over the years to sell and move but have been unable to.

Pinkflipflop85 · 01/09/2019 20:02

Plus, ours is a new build and it is crap.

Irishgene · 01/09/2019 20:04

I did it to get on the ladder, sold it after 3 years and bought dream home as made money it (obvs still mortgaged but mine and not 50-50)!

Irishgene · 01/09/2019 20:08

It was difficult when it came to the paperwork to sell as there's 3 solicitors involved.. that bit was horrendous but mainly down to our solicitor taking ages to do tiny tasks!

LewisFan · 01/09/2019 20:10

I think it's a complete rip off - I've been looking to get on the ladder too, but even 25% plus the rest in rent means its entirely out of reach.

You'd own whatever % of the home but have 100% responsibility for upkeep and repairs, which also doesn't strike me as fair seeing as the "landlord" gets off even though you're renting....

EmrysAtticus · 01/09/2019 20:12

We are with a great HA and have no issues with service charges or massive increases in rents etc. Not do we need permission to do stuff to the house. We intend to staircase to 100% before moving to make that aspect simpler. Best decision we ever made but make sure you are with a good HA.

EmrysAtticus · 01/09/2019 20:12

Oh we own 70% too, try and get the biggest share you can afford.

ThisIsMeOrIsIt · 01/09/2019 20:13

I had a SO flat for nearly 6 years. The rent/service charge increased from around £500 a month in total to about £800 a month in total in that time. Yes, some draconian rules about the use of communal areas and balconies (no washing to be out on the balcony even on an airer - ridiculous) and getting the housing people to do anything was a stress. But we sold fairly easily and I made around £60k profit and now own a non-SO house.

So it can work. Tbh maybe I got lucky as I hadn't really researched SO before I went for the flat and I know some people say to steer clear, but fortunately didn't have any issues.

Pinkflipflop85 · 01/09/2019 20:41

I think people have had more luck with flats/apartments than with houses.

munchbunch12 · 01/09/2019 21:13

Hi OP, me and DH were in SO with a HA for our first flat. It was fine, no problems at all, and because it went up in value whilst we were there we 'made' about £20k on the 50% we bought which went towards a deposit when we went to get a mortgage for our 'own' house. Also, as PP have said, you can increase the proportion you own and end up owning it outright eventually. Don't be scared of SO!

LadyofDispleasure · 01/09/2019 21:29

We bought a SO flat in London, sold for a profit big enough to give us a decent deposit for our current house (outside London). It definitely worked for us so it's worth looking into it (but be aware of potential pitfalls, like rising service charges etc).

nowifi · 01/09/2019 21:38

We are in SO as was the only way to get a place, agree with the service charges they put it up every year for no good reason. I don't think it will be a problem to sell as this house sold really quickly the last time when we bought it. Would much prefer to own outright though!

DishingOutDone · 01/09/2019 21:50

I want to do this but I would use cash for my share and then pay the rent on the remainder. it does seem to depend on who you go with (housing association/developer).

One thing I am confused about there is so much SO property on the market what happens when everyone is selling in 5 years time, does that mean the market will be flooded with SO? The attraction for me itsto get a brand new house, but after someone has lived there for a while maybe not so attractive to buy SO secondhand? Interesting, but in any case it may be the only way for me.

aflorek · 01/09/2019 21:50

Surely I would prefer to own a house outright (for service charges reason) but in area when I lie I would be able to get on the ladder without so. And we pay much less than while renting. I feel secure. It is much better in that sense than renting.

Shalom23 · 01/09/2019 22:15

I did it and over 12 years staircased to 100 percent mortgage. It was expensive at the beginning but only way I could get a property. I sold and got 150k profit so was amazing for me.
I would advise trying to get to 90 percent mortgage then the HA is responsible for selling it and will do so very quickly. Good luck.

AJPTaylor · 02/09/2019 06:15

It absolutely depends on exactly what the offer is though and your circs.
E.g. friend in 50s, never been able to get on property ladder, has run out of time to pay off a mortgage at an affordable rate. Inherited 50k. Bought a 40 per cent stake in a shared ownership place. Rent is much lower than she would pay, no service charge and, most importantly, security of tenure. If any of us live long enough to get a pension the rent will qualify for help ( in theory)
A colleague did a shared ownership for 10 years. With the increase in value her share she was able to put a decent deposit on a non shared ownership. But she spent her mid 20s to mid thirties in a nice house, building some equity and again, no landlord. She also got a lodger at various points that more or less covered the rent part.

transformandriseup · 02/09/2019 06:36

It is a way to get onto the property ladder and I wouldn’t say stay away entirely as we got onto the property ladder with Help to Buy which is a form of shared ownership.

It is not a scam but beware of the service charges you may have to pay which are charged on many new build houses. Our estate charges around £300 per year but a friend on a Barrett estate pays £600. If you are in a flat it may be a lot more.

To sum up, it’s great if you don’t have the income for a full price home, but the mortgage plus rent plus services charges mean you are may be paying a sum greater than if you were paying off the mortgage at 100%.

Mummyoflittledragon · 02/09/2019 06:47

I haven’t used this. It didn’t exist when Dh and I first bought. House prices are likely to fall with Brexit. Especially in the event of no deal. So something to think about and maybe wait 6 months to see the state of the country. It isn’t a scam though. But don’t expect to make a profit like a lot of posters have.

ThistlyPerf · 02/09/2019 06:56

I had a bad experience and as a result would recommend staying away from shared ownership, however different factors (HA, local area etc) may affect people’s experience.

I bought a new build SO - so was probably overpriced to begin with - and lost money when it came to selling it, as it was undervalued by the HO. It would have cost me money to challenge the valuation. Thankfully I didn’t have a problem selling - 17 notes of interest on the first day because obviously they were getting a bargain beautiful flat but it has left me quite bitter about the whole thing.

I now have a Help to Buy property which I would recommend as you have much more autonomy.

transformandriseup · 02/09/2019 07:15

Also you may want to consider if you ever find you cannot sell it you may not be able to sublet it either and landlord insurance wont be valid. We found this out when we couldn’t sell our home.

NotQuiteUsual · 02/09/2019 07:25

I've found a lot of the time with SO, when I've looked at what mortgage providers will offer, it works out we're just able to afford a similar sized house with normal ownership. But they are usually the bottom end of the market and need work. Whereas you're getting a new build with SO usually.

The people who seem struggle with SO are the ones really stretching themselves to afford it in the first place. Once the rent and service charge start increasing it makes it near impossible to save to staircase.