Shared ownership as an option for the ‘squeezed middle’

[lousong]

We’re in our 20s trying to start out
For some reason shared ownership works out as cheaper than buying on the open market but we’ve been warned against it because of the fact you’d be buying a leasehold property
Our wages are likely to go up in the future but not anytime soon. Some lovely shared ownership 3 bedroom houses have come up locally. The area is convenient, family orientated and safe, and house prices are rising in this area quite fast (so would likely gain equity). We are going to struggle to purchase outright - we would meet repayments but it would be very tight and to the limit of the stress test. We would be paying about 500-550 mortgage a month and 250 rent. Could it be worth it to gain equity? It’s unlikely to be a house we could stay in forever, but a place for the next 5-10 years. We have secure employment but I am trying to think for the future in terms of taking maternity leave possibly in the future and dealing with reduced income, we wouldn’t be able to pause an 100% mortgage but we could potentially get help with the rent element of a shared ownership.

YABU - avoid
YANBU - worth it

A house!

I think they are a great option too in some divorce situations- as quite a lot of people have enough to buy out the 'share' at 25 to 50% and only end up with the rent element and sometimes service charge and it can mean remaining in a reasonable sized place in an area that suits. Having had one before I'm very open minded.

I think it can be a good idea. You need to check the pros and cons with the housing association concerned. I did it and only staircases once and bought the remaining 35%. I now have the freehold and, apart from the mortgage, have nothing else to pay. The HA no longer has any say in anything I do with my home.

I am buying a3 bed in a popular Surrey village walkable to mainline train station after divorce. There is no way whatsoever I could buy here without shared ownership. Prices are 550+ . Without shared ownership I would have to move my children away from their dad, school, friends, my friends etc. there are six plots on a medium size estate. They are exactly the same spec as everyone else's and not clustered in a ghetto. FYI I earn 50k so some of the snobby "low income" neighbour posts here are inaccurate!!

Look at the new model it is significantly better than the old. I will have 999 year lease plus freehold if I manage to staircase. You can sell at your % purchased or 100%etc.

I suppose works well only if you cannot afford a real ownership and because the houses are nice and so on, you just pay to live there

I live in a shared ownership flat in Zone 2 London - we could not afford to buy a whole place and we would have been forced out of the area a long time ago if we were renting privately. It is not new but is good quality and well insulated (we basically don't use the heating). Rent has gone up over five years and service charge feels like a rip off, but absolutely nowhere near private rent.

I know many many people who have bought SO in London and no one has had an issue selling - at least, that is mainly with 25% share - I think there will always be people who can't afford open market but want to get on the ladder and have some security.

I'm not sure it will make much of a profit if and when we do sell, but it has been a great and affordable place to live in an area we love. That's worth a lot!

Oh, and also, some HAs allow you to rent it out for a year or maybe more, on negotiation. As long as you don't want it to turn it into Air B&B and they are reasonable, I have known people do that to move abroad for a set amount of time.

My Mum was in shared ownership and it was awful.

Despite being a tenant and paying rent on 50% and an additional service and maintenance change, all repairs and maintenance were down to her. The extra service change covered nothing. They could stipulate that things be done a certain way because they owned half of the property, but didn't pay a penny towards it.

The rent increased but huge amounts each year until eventually she could no longer afford it. It took a good while to sell, she had to pay the full costs of the sale plus extra fees to the housing association. She came away with a just couple of grand at the end despite the house value being a good chunk more than when she bought it and of course paying the mortgage for years.

Not something I'd ever consider personally.

It's worked out well for us so far! Bought in a beautiful little village at 40% and have built up a nice chunk of equity as the area has increased in value. When current mortgage deal is up, planning to sell and use the equity toward buying a fully owned house.

I think the trick is to view it as a stepping stone/have an exit strategy. Also I would only buy SO from a housing association,not directly from the builders or a private scheme. Housing Associations are less likely to ramp up the rent hugely!

@lousong in a house. It's our forever home. We knew we would never move. We love the area but also couldn't afford anything here.