Buying a shared ownership property

[Dragula333]

My partner and I have been to view a 25% shared ownership 2 bed property. We are first time buyers.
The deposit is £1500 for 5%, we have most of it but won’t have the rest until I get paid in just under 2 weeks’ time.

The agency have just asked me to email this through. It’s frustrating as we will have the money in 13 days, I know it’s a silly question maybe but what are odds of us still being able to apply?

My 2nd question is does anyone have experience of shared ownership, particularly a small share one like the one we’re interested in? Thanks

Are you sure that rent is monthly? £75 per week sounds a lot more like 75% of a weekly rent to me.

I just double checked and it’s definitely £75 per month

£75 a month rent for 75% of the property.
What is the mortgage for the 25% that you’re buying?

You said £1500 for 5%, but if that’s 5% of the entire property, then the entire property is £30K. Which seems… unlikely. And I live near Hull, so…!

I don’t understand your figures.

@Dragula333

I just double checked and it’s definitely £75 per month

Holy Moly! I can see why you're keen!

The 5% deposit is 5% of the 25% share which is 30,500 apologies if it wasn’t very clear

Lease far too low....you wont get a loan on it, rent sounds too cheap...walk away now....lots of unsold shared flats near me...been empty for over 2 years...high service charges also...these go up...do some proper research on this property...the figs dont make sense !

OK, that makes sense on the deposit, thank you 👍🏻

I’m still gobsmacked that the rental on 75% of a £120K+ 2bed (so not in the absolute worst area) would be £75 a month though. Like gobsmacked enough to risk patronising you by suggesting you triple check not double check! Are you including some kind of housing benefit deduction? Is it some kind of special scheme in your area? I can’t get my head around £75 a month rent. I’d be so suspicious at what I was being locked into, for a landlord to almost rent their part for free.

Sorry if I sound naive again but why are they advertising it with such a short lease if they know it won’t get a mortgage ?

I agree these figures just don't make sense!

Though the lease is a big issue and no lender will actually lend on it as well.

@Dragula333

Sorry if I sound naive again but why are they advertising it with such a short lease if they know it won’t get a mortgage ?

Because not everyone needs a mortgage - they may be borrowing from family. Some mortgage companies would even lend less than £30K.

Yeah it’s a shame. It was too good to be true I guess, ah well

Don't touch the house...shared ownership has alot of negative s and if 62 years you might not get a mortgage....avoid!

@Dragula333

Yeah it’s a shame. It was too good to be true I guess, ah well

It’s not always a problem to extend a lease. Like I said, I did one easily. But if it’s easy, then most sellers will do so before going on the market.

How did you find out the rental amount?

I’ve actually just been on rightmove in case I’m out of touch - choosing lower priced areas like Hull, Carlisle, Wolverhampton, Bradford. Only one 2 bed was under £325 and that was still £300.

Where did you find this property? Have you viewed it?

Sorry, you did say you’d viewed it.

I bought a shared equity property which worked out great. But it was 70% that I owned and 30% was owned by the scheme. So when you came to sell I got 70% of equity.

But my lease was 199 years long and it was brand new flat.

I made quite a good profit when I sold it 4 years later and used this to get on property ladder.

I would look for shared equity rather than shared ownership maybe.

SO itself, in my opinion, is a great way to get a foot on the ladder. My first flat was SO and I would never have been able to afford to buy otherwise. The equity I made on it allowed me to have a non-SO property after that. I think there’s a certain snobbery around it, which I think is a shame as I only have praise for the scheme

The short lease though is a problem

Wouldn't touch it with a barge pole.. and I speak from experience. I tried to buy a shared ownership flat at the beginning of the year and it was an absolute nightmare from start to finish. I not only had to go through the entire mortgage process, which was stressful enough, but also apply via the housing association too. Endless amounts of paperwork. Service charges increase every year but It would have been my responsibility to pay for all the maintenance and repairs. I pulled out after 6 weeks. It was re-listed on rightmove the same day and has still not sold.

I've recently withdrawn from a second purchase, 3 months down the line. A flat, non shared ownership this time but the freeholder was absent along with the managing agent and no maintenance or repairs had been carried out on the block for over 10 years. My solicitor didn't find this out until the 11th week. I briefly spoke with some of the neighbours who told me not to bother. They've struggled to sell their properties for years and the people who managed to did so at a reduced price. My lender said that it's probably unmortgageable anyway. I'm fine now, but was absolutely gutted when I had to let it go. All that time and money down the drain but I know I made the right decision by walking away. It'll be somebody else's headache now.

I completely understand how you feel though. I'm desperate to get on the property ladder too but sometimes these properties are cheap for a reason. I've given up on the flats and leasehold properties in particular. There are just far too many problems that can occur later down the line and make them unsellable. I'm now looking at terraced houses instead and just continuing to save unless one comes up that's in my budget. Good luck OP, your time will come