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AIBU?

Share your dilemmas and get honest opinions from other Mumsnetters.

To consider shared ownership?

35 replies

YouHaveAnArse · 16/05/2023 15:30

DH and I have been renting a flat in London for about ten years now. Our rent is cheap, our landlady (manages it directly) is decent and is likely to let us stay next year too, but the horror stories about the rental market in London are worrying me a lot. There is a flat in our building up for rent for 50% more per month than we pay. As it is, I already find myself panicking a lot about what if the rent goes up and we have to move, what if we can't afford it, what happens next, can we plan anything more than a year in advance etc. - autism and anxiety are brilliant, huh? - but things seem to be getting worse. I don't want to engage in rounds of interviews or estate agent bidding wars to have a place to live. We are in our 40s and I don't have time for any of that bullshit. And at some point, our landlady will sell/put the rent up to a point we can't manage, and we will have to deal with it. I've been dealing with some financial and medical stuff for the past few years, and this is now coming into an end and things are looking more likely in terms of getting a place of our own in the next year or so, but still feels impossible given the way things have been save a massive property crash.

Buying outright in London with our salaries/savings looks unlikely. So we have the choice of carrying on renting, considering moving out of London (I'm open to this, and have colleagues who commute in from other cities, but I'm concerned about the costs and unreliability of trains etc. over time) or shared ownership. When I look into the latter, I worry that a) the costs of rent and service charges will still be unpredictable b) the process for increasing our share looks like a massive pain c) it's still leasehold (though realistically anywhere we can afford would be the same) which seems like a massive scam d) the flats seem wildly overpriced at market value, even if the flats that would be in the same price range to buy outright all seem to be aimed at cash buyers/investors only because of lease extensions and such.

On the other hand, if we are childfree and are looking to buy as a place for us to have a stable home to live in medium to long term and not as some kind of investment vehicle, would it not give us that, thinking of it as more of a long term secure rental? And also that it would prevent DH being separated from friends, starting again elsewhere etc. Is it worth considering or, given the choice, would you look at moving to eg. a seaside town nearish to London, or a different city with a view to a once a week commute? I feel I need some kind of realistic plan to work towards to stop me worrying so much!

(We both do quite specific jobs, for the purposes of weighing up the options let's assume that and our places of employment will not change long term; trying to be practical and NOT anxious about this by looking at the situation as it is, and trying not to be annoyed that two professionals in their 40s can only realistically afford 1/4 to 1/3 of a small flat in Croydon and if that's the case then what about people who do real jobs etc)

OP posts:
girlfriend44 · 16/05/2023 21:05

Interesting post. I've never understood shared ownership, who pays when things need doing?
Are they easy to sell?

catchthedog · 16/05/2023 21:16

it's considered your property so you pay for all repairs like normal.

SammySays · 16/05/2023 21:28

its obviously a different market now but we bought shared ownership on a 2 bed flat in London around 13yrs ago. It was the best thing we ever did. We bought a 30% share for £60k at the time and got a 95% mortgage so only put £3k down as a deposit. We had previously rented privately for a year and to this day we have not as much monthly on housing as we did renting privately 13 years ago. Having said that, the rent went up each month and the service charges jumped dramatically. I had murders with the HA going through the service charges which grew yr on yr and when challenging was able to reduce the cost quite a bit. They are unable to increase the rent by large amounts in yr (they are capped) so they seem to try to get money back in other ways.

we sold our share 6 yrs ago and used the equity we had gained in rising value as a deposit on a house which we now own outright. Selling was unbelievably easy- we sold our 30% share for £c155 so values jumped massively during this time. We had 2 offers on the first day of viewings (conducted by myself) which were arranged via the shared ownership portal and so we sold without any estate agent fees. It is a different market now but that was our experience. Towards the end we were very frustrated with increasing costs from the HA but it was the best thing we ever did in terms of finances and getting on the property ladder.

RedToothBrush · 16/05/2023 21:38

It depends on the scheme you are on. Pretty much every shared ownership scheme is different so read the small print.

We had a shared ownership property. We owned 50% and paid rent on the second half.

When we first bought the rent was small, but it went up every year in line with inflation. It eventually got to the point where our rent plus mortgage was higher than if we had a mortgage on 100% of the property. We eventually managed to get the money together to staircase and buy the rest of the property (not easy) as we were concerned by how much the rent was increasing annually. We couldn't have stayed shared ownership indefinitely. We would have otherwise had to move on as it would have become prohibitively expensive. Our neighbour had to switch to an interest only mortgage.

This is separate from service charges which I've heard some pretty awful stories about. (We had a service charge too but ours was not to bad. I'm led to believe that other people on the same estate who bought later had a different scheme and this was problematic. However I also think the government have legislated in this area to stop some of the issues with service charges since).

I think shared ownership does work for some. But I also think it's problematic in some respects too. And you do need to be mindful if you have rent linked to inflation.

Do your research and if you do proceed get a solicitor with experience in shared ownership. They are likely to be slightly more expensive but they are worth the extra cost from my experience of neighbours who really didn't fully understand what they were buying.

RedToothBrush · 16/05/2023 21:40

blablabla123 · 16/05/2023 18:12

Please avoid A2dominion/Ballymore - they doubled our service charge to £500 monthly and keeps increasing every six months and we cannot do anything about it...
Also beware when you sell you pay a 1% fee of the TOTAL value of the flat rather than the part you own.
Flip side is a great looking flat which would cost double to rent.

Not true.

Our scheme did not have a 1% clause in it.
.
As I say, check your small print. All schemes are different.

dancefornow · 06/06/2023 18:09

Did you go for it OP?

morekidsthanhands · 06/06/2023 18:41

Not in London (quite near Bury actually as it goes Grin) but wanted to give our experience incase anyone is searching the topic.
We did shared ownership 2 years ago, a 35% share in a 250k 4 bed new build.
Prior to that we private rented for 10 years. We did it more for stability than desire to own/pass on the house etc. It's worked out really well for us. House is lovely and modern, loads bigger than our old place and in a lovely street of families similarly aged to us it's great.
The rental market in our town has gone crazy since covid. Our old house was 550pcm rent (had gone up from 450 a few months before we moved). When we left it was listed for 750pcm and has recently gone back on the market for 900pcm. We pay roughly 750 between rent and mortgage etc so it's worked out really well. And the main thing is we aren't worried about being chucked out on a whim, are able to have pets and decorate as we like etc. We plan to staircase gradually if we can. But I'm not too worried if we can't.
All in all if you are considering it I would go for it. Without it we would have likely been unable to afford to save a deposit big enough- especially with prices rising all the time.

dancefornow · 06/06/2023 18:52

morekidsthanhands · 06/06/2023 18:41

Not in London (quite near Bury actually as it goes Grin) but wanted to give our experience incase anyone is searching the topic.
We did shared ownership 2 years ago, a 35% share in a 250k 4 bed new build.
Prior to that we private rented for 10 years. We did it more for stability than desire to own/pass on the house etc. It's worked out really well for us. House is lovely and modern, loads bigger than our old place and in a lovely street of families similarly aged to us it's great.
The rental market in our town has gone crazy since covid. Our old house was 550pcm rent (had gone up from 450 a few months before we moved). When we left it was listed for 750pcm and has recently gone back on the market for 900pcm. We pay roughly 750 between rent and mortgage etc so it's worked out really well. And the main thing is we aren't worried about being chucked out on a whim, are able to have pets and decorate as we like etc. We plan to staircase gradually if we can. But I'm not too worried if we can't.
All in all if you are considering it I would go for it. Without it we would have likely been unable to afford to save a deposit big enough- especially with prices rising all the time.

That sounds fantastic, wow. So good that you’ve managed to get a 4 bed too and I think living on a street with other families that are at similar stages is so nice too. Do you really pay just 750 altogether? I am so shocked if that’s all you pay. We’re looking at a 3 bed share is 50% (118k) and they have estimated rent and service charge to be 300 and mortgage to be 600, so 900£ a month!

morekidsthanhands · 06/06/2023 19:16

@dancefornow yes it really is! It's great. Especially compared to mortgages for a similar size property. Probably won't be so jammy when the 5 year fix is up though!
Having similar stage families on the street has been great too. I'm not very social really but the kids all play out together on the street which is great.

morekidsthanhands · 06/06/2023 19:18

Sorry I should also say that ours will be cheaper as we have a smaller share. Our rent portion is only a little bigger than our mortgage amount monthly for 30% more share.

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