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AIBU?

Share your dilemmas and get honest opinions from other Mumsnetters.

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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:

RainyDay2020 · 03/06/2021 18:45

We bought a shared ownership flat with 50% share and out “pros” list was similar reasons to your relative.
There we’re astronomical rises in the amount of service charge we had to pay, parking charges, block and ground maintenance and other random stuff.
When we wanted to see we had to give first refusal to someone else who wanted to get it on shared ownership basis which meant we got less than market value for it.
Whole thing was a nightmare to be honest.
Friends bought in early 2010’s and now can’t sell or do anything with theirs due to illegal cladding identified after Grenfell - which residents are being asked to pay £££ towards getting rid of.
I’m rambling now but it’s a subject that still makes me very angry!!
The experiences vary hugely depending on area and Housing Association so your relative needs to do LOTS of research first.

stillcrazyafterall · 03/06/2021 18:45

@HotChocolateLover

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.

This. And you can be turfed out, and potentially lose your deposit. Personally I wouldn't touch it with a barge pole- but I am talking from the privilege of owning my own house. Desperation would possibly make me feel differently.

RainyDay2020 · 03/06/2021 18:46

Damn autocorrect- that should say..
When we wanted to SELL we had to give first refusal to someone else who wanted to get it on shared ownership basis which meant we got less than market value for it.

Vikingintraining · 03/06/2021 18:48

Shared ownership flat owner here. If you compare shared ownership to "regular" home ownership then of course if doesn't seem great. But for many it's the best and only way to become a home owner. I only bought a 25% share but it definitely doesn't feel like glorified renting, it feels completely like my home. My monthly outgoings are less than when I rented and I love the feeling of security and coming home to my own place. In the situation you describe it sounds a perfect way to have her own home, she should go for it!

Imapotato · 03/06/2021 18:56

As someone who has lived in shared ownership houses for the last 16 years, there’s nothing wrong with shared ownership. It sounds ideal for your relatives circumstances.

We ended up going for it as we were young parents and just unable to save for a deposit whilst renting. We got a 100% mortgage and brought a 30% share in a little house. We lived there for 9 years and then had enough equity to get a 50% share in a good sized house. We now earn more abs next year will will buy the remaining 50% and the free hold will be transferred into our names.

It’s worked out really well for us and hopefully it will for your relative too. So much better than the minefield of private renting.

SwimBaby · 03/06/2021 18:57

I think it’s a good fit for your DS. It will give her a secure home.

Original poster

arithanaggerton · 03/06/2021 18:58

It definitely has it's cons but I think it all depends on how you personally feel after you've weighed it up against the cons of private renting.

She hasn't got a cat in hell's chance of getting a council house.

OP posts:

LordOfTheOnionRings · 03/06/2021 18:59

We bought a 50% shared ownership home. We never rented but would have struggled buying something at 100% value in our area which is really expensive. We have been in the house a few years.

Saz12 · 03/06/2021 19:02

In your sisters case, what would happen if she needed / wanted to move? In a rental, if you hate the neighbours, or get a brilliant job somewhere else, then you can just go. To loose £10k of savings & inheritance (partly in purchase costs now, then selling costs, partly in repairs to part of property you don’t own, also taking full risk from a fall in value) would really hurt!

I’d be v cateful in checking the contract over (fees, rights to sell, permissions, check all costs - insurance, etc), but I totally get why it stacks up.

CandyLeBonBon · 03/06/2021 19:03

@Vikingintraining

Exactly. It seems the people commenting on here negatively have never done it so probably don't know the ins and outs?

Imapotato · 03/06/2021 19:06

@arithanaggerton

It definitely has it's cons but I think it all depends on how you personally feel after you've weighed it up against the cons of private renting.

She hasn't got a cat in hell's chance of getting a council house.

Unless whoever owns the other 50% of your house has terrible terms, it will always be better than private renting.

My house is mine. I can do what I like with it. No one can sell it from under my nose and make me homeless and whenever I want to buy the rest I can and then the freehold will also be mine. Frankly I can’t see how it can even be compared to the downsides of private renting.

PaulGallico · 03/06/2021 19:06

I bought shared ownership in 1986 and had a very good experience. As that was over 30 years ago I really cannot see how it is going to be the next financial scandal. It might not work for everyone. I should imagine some providers are better than others but for me it got me on the property ladder.

SwimBaby · 03/06/2021 19:09

It sounds like the perfect home for your DSis, is there any other way she could get such a home? Probably not.

Mrsmadevans · 03/06/2021 19:10

My Dd2 has bought a 65% new build Charity Welsh Govt scheme shared equity house. She doesn't pay anything in rent just her mortgage, it's freehold, if she wants to move she can after 3 years. It seemed a no brainer to us tbh. If she moves she gets the equity on 65% . The house is absolutely perfect for her and a partner and a child if necessary , she can put on an extension , a loft conversion, a conservatory , just needs to write to the Charity for their say so. We
(& she) are so happy she has this chance of a home for life. She could never have afforded o otherwise.

CandyLeBonBon · 03/06/2021 19:12

@Mrsmadevans

My Dd2 has bought a 65% new build Charity Welsh Govt scheme shared equity house. She doesn't pay anything in rent just her mortgage, it's freehold, if she wants to move she can after 3 years. It seemed a no brainer to us tbh. If she moves she gets the equity on 65% . The house is absolutely perfect for her and a partner and a child if necessary , she can put on an extension , a loft conversion, a conservatory , just needs to write to the Charity for their say so. We (& she) are so happy she has this chance of a home for life. She could never have afforded o otherwise.

That sounds like an AMAZING scheme. Lucky DD!

Xyzzzzz · 03/06/2021 19:15

I did it with 50% ownership and bought the rest out after 3 years.

With any new build you rarely get what you paid for it when you come to sell as you pay for the new build tag.

Smorgasbored0000 · 03/06/2021 19:16

Avoid at all costs.But if she insists on going ahead, at the very least she needs to peruse all the documents very carefully to see what other fees and charges she may be forced to pay.

Mrsmadevans · 03/06/2021 19:16

Ahh thank you @CandyLeBonBon we thought so too, also l asked them about her buying the remaining 35% and the lady from the Charity said why would you want to do that it's hers to live in until the day she dies.
I suppose it's a bit like Student Loans , why would you pay it when after 30 years it's Kaput anyway unless you are a high earner . Win Win !

Original poster

arithanaggerton · 03/06/2021 19:22

She probably could afford to buy a fixer upper terrace in the less desirable parts of our city where they can go for as low as 50k. But part of the reason she wants to do shared ownership is to get out of the bad inner city areas and into this new build estate because of the great local school and the fact it's semi-rural with lots of greenery.

OP posts:

mam0918 · 03/06/2021 19:22

What the hell are people doing to get constantly turfed out of rental properties multiple times per year?

Me and all my friends privately rent and no one has been turfed out of anywhere, while people do upgrade or move for work non have been thrown out and certainly non rented for less than a few years, I have lived in mine for 10 straight years.

CandyLeBonBon · 03/06/2021 19:26

@mam0918

What the hell are people doing to get constantly turfed out of rental properties multiple times per year?

I know of several people who have been told the landlords want to sell up at the moment.

PinkPlantCase · 03/06/2021 19:27

Is your sister completely sure that there aren’t similar sized properties in the area that are older but cost the same as the shared ownership new build?

For the security aspect it makes sense it’s just financially she’ll be so much worse off than if she didn’t have to pay rent and mortgage, and I don’t mean from a long term investment POV it’s on a monthly basis.

Shared ownership schemes today are very different to what they were 20/30 years ago.

applespearslemons · 03/06/2021 19:45

Yes. Would do it

Especially for a house rather than a flat

I think the flats often come with ridiculous maintenance fees

Gwenhwyfar · 03/06/2021 19:49

@mam0918

What the hell are people doing to get constantly turfed out of rental properties multiple times per year?

I presume it must vary by area. I've also rented for long periods, ending up with a cheap rent because it hasn't been put up, or only in line with inflation. I've also been able to do simple things like put photos up and even paint if I wanted to and it wasn't a dark colour.

Kollamoolitumarellipawkyrollo · 03/06/2021 19:52

I ought a SO flat 15 years ago. I owned 75% and the HA 25%. I didn’t pay any rent on the 25% I didn’t own.

However, they didn’t make it easy to move. Because the HA has charitable status, they couldn’t be seen to be making money on the properties so even if someone was willing to pay a certain price for a property, if their valuers said it wasn’t worth that, the offer couldn’t be accepted. I sold for £5k under what I paid. I had to foot all of that 5k and not 75% of it.

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