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AIBU?

Share your dilemmas and get honest opinions from other Mumsnetters.

Original poster

To not see a problem with shared ownership?

89 replies

arithanaggerton · 03/06/2021 18:17

A relative of mine is looking to buy a 25% shared ownership property as her and her 2 young sons have been turfed out by private landlords twice in 3 years, once while she was pregnant. She's been forced to move areas before so she can have cheaper rent and is now renting in a not very desirable area. She recently got an inheritance and topped up with her own savings she has 10k. She has found that this is enough for a deposit on a 25% shared ownership flat, 2 bedrooms on a lovely new build estate. She's stuck with 25% due to only qualifying for a tiny mortgage.

She's upset because her mum is begging her not to go through with it, saying that being a new build it will lose value the second she moves in, and that it's just glorified renting. Her mum says it will have no investment value. My relative understands all of this, but she just wants to move away from her current area to this nice new build estate, and have the security of knowing she won't be turfed out. She doesn't want more kids and so plans to be there 15+ years, so doesn't really care about the investment value. She'd be paying a little bit less in rent+mortgage than she currently pays in rent. My relative says that whilst she knows she won't properly own it, shared ownership will suit her and her needs. The flat and estate are lovely, with a communal garden, park, good school nearby. She just wants a good environment and stability for her kids. If she rents she'll end up in another tatty terrace in a bad area.

I've been thinking about it a lot and what my relative says makes sense. You're essentially paying a fee (the deposit) for getting a new build and having the security of knowing you won't be kicked out. If that suits you and you're going into it with the right expectations, I don't see the problem. I certainly don't see it as a scam but many people do. I think shared ownership exists for people like my sister, of course if you can afford a full mortgage you'd go for that over shared ownership any day of the week but that doesn't mean shared ownership should go.

OP posts:
CharlotteRose90 · 03/06/2021 18:19

I think for a flat I’d do it for a house no way as
You forever need to ask permission. Can she afford the mortgage payment, the rent to the other owner and ground maintenance on the flat building and all other bills? If she can I’d go for it. A friend of mine is doing a 50% ownership and hopes to buy the rest in years to come.

WildWestWanda · 03/06/2021 18:21

It sounds like a really good idea given your friends circumstances

JayAlfredPrufrock · 03/06/2021 18:22

If it gives her security then I don’t see an issue.

Themostwonderfultimeoftheyear · 03/06/2021 18:24

We bought a new build shared ownership house (70%) share in 2017. It has been a lovely house and we have been able to stay put for 4 years rather than moving constantly when renting. We have now sold it for £60000 more than we bought it for and therefore can afford to buy a more expensive house without shared ownership. By far and away a brilliant decision for us as we would have really struggled to get on the housing ladder without it. We had a good HA who never ramped up rent or service charges and once staircased to 100% the property became freehold.

HippeePrincess · 03/06/2021 18:24

Shared ownership is a no brainier in this situation as it was in mine, they have their place it’s an affordable secure home and people need to stop seeing housing as an “investment” in my opinion.

HotChocolateLover · 03/06/2021 18:25

I’d personally never do it. Get your relative to look up a few documentaries on YouTube and she’ll soon see why it’s a bad idea. Better to save for longer and buy properly. Shared ownership is the next PPI scandal, you just wait and see.

Beseigedbykillersquirrels · 03/06/2021 18:25

I did shared ownership with my first house. I had 0 deposit so 100% mortgage, which suited me at the time, but I made very little profit in 10 years when I came to sell and it's not good value for money. My mortgage almost doubled on my second house, despite a good deposit and it is a few pounds cheaper than what I was paying in mortgage and rent on my 50/50 shared ownership. It is better than renting in that you have security and can usually buy a larger percentage if you wish later on, so you do have some capital. You're also responsible for the upkeep of it and boiler issues and the like.

OhYouDontSay · 03/06/2021 18:25

All I would say is with a flat make sure she's aware of everything else she may need to pay, service charges, ground rent etc... I work in this environment and unfortunately wouldn't touch a flat with a barge pole now due to seeing how often people have been shafted with 'extras' in the lease. But so long as your sister is fully aware of everything it sounds good for her

CandyLeBonBon · 03/06/2021 18:26

I have 40% shared ownership house and bought it for the exact reasons your relative has. Longer term security, and once all my kids are grown and gone, I will sell my share and downsize to a little flat using the equity from my paid off part of the mortgage, in about 10-15 years.

It's not a scam

Fruityfriday · 03/06/2021 18:27

I love the fact that I have security in mine. My 50% is paid off and the rent for the rest is less than £150 a month. If I lost my job I'd get hb and never lose my house.

Embracelife · 03/06/2021 18:27

Security for her and dc
No being chucked out
She is an adult she can decide

HmmmmmmInteresting · 03/06/2021 18:28

I'm one of the people that sees shared ownership as a bit of a scam, but from what you've described I think you're right and it would benefit your sister. I would just double check all the extra fees such as service charges.

thisisfineihavewine · 03/06/2021 18:29

My mum has just bought a shared ownership house for precisely this reason. It's also what I will be doing as soon as I have some sort of deposit together, as I have absolutely no chance on earth of saving enough for a full mortgage.

Original poster
arithanaggerton · 03/06/2021 18:31

Ah drat, I meant to leave out the fact that she was my sister in the post. That's why I referred to her as a relative but slipped up at the end.

Oh well, if she happens to be a MNer I'm sure she won't mind Grin

OP posts:
Viviennemary · 03/06/2021 18:34

Its a bonkers idea. You pay rent on the proportion you don't own You pay for the repairs. If the house goes up in value they gain. You need their permission to sell and need them to agree a price. Wouldn't touch it with a bargepole.

polkadotpixie · 03/06/2021 18:34

We bought a 40% shared ownership house in 2015 and sold our share before Xmas for £38K more than we paid for it. It was amazing for us and got us on the property ladder which we never would have afforded without

Blughbablugh · 03/06/2021 18:34

I don't know what shared ownership is like now but my first property was SO. It was a lovely brand new flat and suited us at the time when our wages were low and that was all we could afford. We lived there for 7 years and then when we were in better jobs and able to afford to buy a house which wasn't SO. It helped us get on the property ladder and we had little trouble selling it. We didn't make a profit, a bit if a loss but that's due to how the market fluctuated at the time and because we only had a share, the loss was minimal.

Orf1abc · 03/06/2021 18:35

Some SO schemes are very good value, mine was, the rent and service charge were roughly 70% of the equivalent share of a private rental. Mine was a house and I didn't need to ask permission for anything, that would only apply to structural changes like an extension. Some are poor value, hence the need to study each one on its merits.

I made a 100% profit when I sold, but obviously that will vary according to the state of the housing market.

The ability to claim housing benefit, should her circumstances change, is a real benefit to SO.

As her main concern is security, it sounds like a good idea for your relative. Her mum needs to stop being caught up on horror stories and judge on the individual facts, or just keep her nose out.

Northernsoullover · 03/06/2021 18:36

If I can get one (I'm registered, just waiting) I'm bloody doing it. I'm sick of renting. I can't even put a picture up or choose a carpet. But that's probably for the best as I'm at the whim of a landlord anyway. If he wants to sell up I will be having to move out and then finding somewhere with affordable rent will be an issue.

Chloemol · 03/06/2021 18:36

I think she is right to do this. For many shared ownership is the way into the market. Most will allow to to purchase more of the share as time goes on, some will allow you to but all the share at some point, others won’t. You are likely to make money the longer you stay there and in fact I don’t know anyone who hasn’t, even if it’s just a small amount

Her rationale makes sense

Viviennemary · 03/06/2021 18:36

I agree its the next big financial scandal waiting in the wings with folk ruing the day.

HmmmmmmInteresting · 03/06/2021 18:37

@Blughbablugh

I don't know what shared ownership is like now but my first property was SO. It was a lovely brand new flat and suited us at the time when our wages were low and that was all we could afford. We lived there for 7 years and then when we were in better jobs and able to afford to buy a house which wasn't SO. It helped us get on the property ladder and we had little trouble selling it. We didn't make a profit, a bit if a loss but that's due to how the market fluctuated at the time and because we only had a share, the loss was minimal.
How did it help you get on the ladder if you didn't make any profit on it?
Original poster
arithanaggerton · 03/06/2021 18:38

Yup, it's the security. I don't think anybody is buying 25% and 50% shared ownership flats with the idea that they'll sell it on for a massive profit in a few years.

Tbh, I see it as renting but you're paying a fee which is the deposit for not being kicked out, and getting to live on a new build estate. The estate my sister is looking at really is gorgeous, right next to the countryside with a great school. Compared to where she currently is, it's Beverly Hills. I hadn't thought about dodgy housing associations sneaking in fees though.

OP posts:
Whatsissname · 03/06/2021 18:40

The biggest issue I can see is will the "little bit less in rent + mortgage" cover service charges etc and property maintenance, as she will be 100% responsibile for repair costs that would otherwise be the responsibility of her landlord in a full rental.

If so, and she sees it as a long term thing, then I can see the benefit for her.

Plexie · 03/06/2021 18:43

I think they are good for many people, if it's the only way they can afford to 'buy'.

But be aware, as a PP said, that she will be liable for all repair costs and not just a portion equal to the share she owns (eg 25%).

Also, I think I heard on a radio programme that if you fall behind on the rent and the HA repossess the property, you don't get any equity that may have built up. You're literally out on your ear with nothing to show for it. Can anyone confirm if that's correct?