To not see a problem with shared ownership?

[arithanaggerton]

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.

@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.

Sorry but you have to substantiate that kind of scare mongering.

I did shared ownership and it has been great. Use a reputable housing association. My block won new build of the year awards in the UK. I bought 45% of a property worth 220k 6 years ago. I staircased to 70% and the property is now worth 275k. With a new build they are often underpriced because they are valued then it takes ages to complete the build, this meant the prices jump quickly, after 2 years it was worth 250k.

Downsides are the maintenance charge, but it includes building insurance and boiler repair, plus all grounds, internal works etc.

Rent does increase but maybe 5-10 pounds a year.

Don't buy south facing, its a bloody sauna.

Also if you fail to pay the rent you can be evicted and the property repossessed after a few months so financial stability is a must.

The other option is Help to Buy, where you get a government loan to help with the deposit. The difference between the two schemes, in my opinion, is that you can afford a bigger property on shared ownership, because you aren't buying it all. This has plusses and minusses, in the short term its great, but you are then stuck as you can't get comparable on the open market without downsizing- but many people on open market find they have to move further out for larger property.

So the location of the shared ownership flat is key. Could you afford open market nearby in say 5 years? If you 100% want to stay in the area I'd be more inclined to go with help 2 buy. Eventually after 5 years you start to resent paying the rent.

There is a shitload of scaremongering on this thread, probably similar to the stuff your mum has swallowed OP.

Sure there have been issues, so make sure the paperwork is very carefully checked. Tbh I think a new build shared ownership place now will have fewer issues as there's been publicity around the problematic places.

I bought my (new build) flat on shared ownership at 50%. After two years it had gone up in value and I got a promotion, so I remortgaged and staircased to 100%. I would never have managed it otherwise. My brother bought his first flat at 30% shared ownership, sold it on still at shared ownership making enough to have a deposit to buy a house (in a different area). It's life changing.

I think as long as people go in with their eyes open and see it as a mid way thing between renting and buying, rather than actually being a homeowner then for someone like your sister it's a good idea for all the reason you mentioned. Good luck to her :)

@mam0918

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.

I worked in homeless prevention for many years. Landlords have a million and one reasons for terminating tenancies, but ime the most common ones are wanting to sell up, wanting to let the property to a friend or family member or wanting to renovate so they can get a higher rent.

Some reasons are ludicrous though. One landlord served notice on a tenant after finding out they had gone on to benefits because the were ill (he didn't want "their sort" living in one of his properties ) and another because he didn't like them parking their car on the drive - he wanted it left empty so he could park there.

One lovely family had had to move 3 times in 4 years, not through any fault of their own. They got a beautiful HA new build on a private estate in the end, they were really lucky.

I think you need to go into it with your eyes open. Particularly on charges and fees. I paid £75 a month on my HA flat which all went into a sinking fund for repairs, buildings insurance etc. I had to replace windows, boiler and doors. HA were responsible for roof, external works, grounds, building insurance. They were very slow and disorganised about the maintenance, but it was transparent and affordable, and didn’t increase unaffordably. This was in the 1990s and I think current developments are more expensive on the fees. I think the rationale of having security, good schools, better area for children all make sense. I bought outright from someone who had previously staircased in a not nice area, but I didn’t want to do shared ownership if I could avoid it.

It's how I got on to the property ladder. I was a single 25 year old in a frontline keyworker role, living on the outskirts of London. I wouldn't have had a hope in hell otherwise. It was a brave New I've bed flat on an expensive development of very large detached houses, they got around the affordable housing b percentage by offering keyworker shared ownership. I bought 40% never staircased and sold five years later making 35000 profit on my share, my rent, mortgage and service charge were less than the going private rent for the area. No problem selling, one open morning 5/6 asking price offers straight away. You need to read and understand the terms and conditions but it can be excellent security if you can't get a full mortgage on your own.

SO is there for people who need affordable housing. My mum is also really suspicious, but I think that comes from a place of privilege - I'm sure everyone would prefer to buy a house outright but it's not always possible. It isn't a scam, it's there to make housing accessible for those who otherwise couldn't afford to buy. The system is regulated, the rules are clear. Your relative can staircase up (buy a bigger share) as and when she is able. I know a lot of people who have done SO (in London because it's so bloody expensive), and they were all very happy with the experience.

I think those people saying it is a bonkers idea are in the lucky position of not having had a rented house sold under them. I rented for many years, the last two years with the flat for sale, and was in constant fear that my children and I would end up homeless. It was a truly dreadful time. In your sister’s situation I would not hesitate to get the extra security a stable home will bring, with of course very careful research into the developer and terms.

Reading these experiences it seems that the variation is down to the HA you enter into the SO with. Our experience overall was a good one. Bought into property at 70%, sold at £12K more than we paid for it so we did increase our equity (split 70/30 with HA). HA kept our service & rent costs fairly low during the 7 years we lived there, though needed a lot of nagging to do anything to warrant the service fees.

One of the downsides was staircasing, which we didn’t seriously think about when we bought the property. If we wanted to increase our share we had to get the property re-evaluated and staircase up to the value of the property at that point. Then, after a few years, one of the main issues for us (which hadn’t been a problem when we bought it), was that we could only ever staircase to 90% so couldn’t ever have owned the properly outright.

mistyskiesafterrain

Sorry but you have to substantiate that kind of scare mongering.

4amwitchinghour

There is a shitload of scaremongering on this thread, probably similar to the stuff your mum has swallowed OP.

CandyLeBonBon

What if you just want to know you have a safe place to live?

I know the above comments weren't directed at me but here you go...a half hour investigation into it. SO doesn't guarantee you somewhere safe to live. Not for those caught with expensive repairs. Also many SOs are caught up in the cladding scandal - despite owning percentage of their property.

www.bbc.co.uk/programmes/m000pk2b

www.theguardian.com/housing-network/2016/sep/15/shared-ownership-risks-affordable-housing-rent

www.fromthemurkydepths.co.uk/2020/11/26/shaun-baileys-flagship-housing-policy-the-shared-ownership-scam/

propertyindustryeye.com/panorama-investigates-the-governments-shared-ownership-scheme/

www.leaseholdknowledge.com/shared-ownership-is-not-ownership-its-the-pay-day-loan-of-housing-and-most-regret-having-done-it-london-assembly-told/

None of the scenarios pointed out by @stevalnamechanger or @beeswaxseawax apply to my situation.

Curious but how do they not apply candylebonbon?