To sell my home and buy a shared ownership one??

[ohnoohnoohnoohno]

I'm a single parent to 2 DC aged 10y & 8y. After my divorce I bought a small semi detached for us. However whilst I haven't got in arrears I'm accumulating debt and struggling to keep afloat.

AIBU to sell this home and buy a shared ownership? I can use the equity from my house sale to clear debts and put down a good deposit. I'd own approx 35% off the new house (which would be bigger). I'd have no mortgage and universal credit will pay the rent element. I work but in a low paid NHS job. I would have more disposable income and could save to buy more of the property in the future.

Does it sound too good to be true??

I would not do it , there is a lot of problems with service charges and resell .

Thanks for the update OP. It sounds like it was the right choice for you. Is it all going ahead then? Exciting. We have very similar circumstances.

@Knackeredmommy i too plan on downsizing in the future. The difference is if I plough on with my mortgage I might be able to help the DC out when they are older. I too would be surprised if I had trouble selling SO on. In fact the property I had spotted is now sold.

i wonder if the new legislation resolves some of the issues promoting negative feedback. Sounds like the service charge is something to check thoroughly.

@Trickymaths same, I have 9 yrs of my mortgage left, by then my kids will be late 20's, I plan on downsizing and giving them some money to help them set themselves up, I'll be eligible for pension lump sum too, so should be ok.

Go for it. It sounds like a much more sensible option for your and your children.
My only concern would.be having to get to a stage where you are SSTC before applying, what will you do if the shared ownership housing has all sold by then? Or your application is rejected? What would your back up plan be?

I'm SSTC on my current house and have reserved my new SO house. It's all going ahead with solicitors/contracts etc

I have a local connection so there was no problem securing a 4 bed. I'm putting in a sizeable cash deposit that not everyone can afford so I think that helped! Also this was the only way for me to upsize in the area as it's pricey!

Ref service charges. Yes they go up but UC will cover the increase (yes I've double checked).

The 1% staircasing was introduced last year. Definitely a great way to get more equity.

I will probably downsize in the future as well but for the next 10y my children will have a lovely home.

I honestly can't see the downsides as the moment. Yes re sale may be tricky but housing is in huge demand where I live so I hope it won't be an issue. Also there are very few 4 bed detached SO around making it more desirable. The ones released on this development were reserved in weeks and the developer has said they could have sold them 10 times over.

@ohnoohnoohnoohno
Are you sure about the service charges being covered by UC?
It was on the news last week where the service charge went up this year from £4000 to £16000 on a shared ownership property.
I would avoid shared ownership like the plague.

Yes, cash deposit helps. We tried to get a 3 bedroom as I have 2 children (girl and boy). Instead we were given a 2 bed whilst a couple with an 18 year old son got the larger house. They had a large cash deposit whereas we didn’t sadly. Other people weren’t even successful as they go so quickly.

Good luck for your move, hopefully it’s plain sailing as moves are stressful enough.

Service charge is covered by UC but be aware of other services within the charge that are not covered.

The monthly breakdown for mine is as follows from 1st April 24 - 31st March 2023.
3rd party service charge £ 3.29
Building insurance £ 9.21
Management fee £ .36
Sinking fund £ 2.70
Total £15.56
So, the only part covered by UC is £3.29.

Sounds exciting OP.

i just has a quick read of what @CheapThrillsMeanNothing referred to and it does sound concerning. Can’t believe the rent increases are regulated but not service charges. Given they are meant to be affordable homes.

I guess in other properties - that are not SO - the residents could change the managing agents if they wanted to. Is that the difference?

We originally purchased our house under SO but we purchased all of it (staircased to full ownership) about five years later.

Most people don't ever staircase to full ownership, they just sell them again as SO - and around here they go very quickly.

The only downside I would say - which we didn't experience but neighbours who are still SO currently are - is that some elements of it, like the rent and service charge can shoot up ridiculously quickly - some of our neighbours have seen their rent increase for this year by 40% which seems crazy.

Our SO neighbours also had their leaseholds sold to another company - so when we all purchased them as SO, it was via a housing association - but since then, they sold them to another company which seem to be when the increases started getting higher. Luckily, we staircased before any of that happened so we never experienced huge increases.

Something to be aware of though, that service charges and rent can go up quite fast - plus the obvious that you are responsible for absolutely everything irregardless of what % you own - and also remember if you want to do anything other than decorating - so anything structural, new bathroom/kitchen, built in wardrobes etc - some require you to ask for permission to do so - and they charge you a fee to get the permission

@ohnoohnoohnoohno that's very good news- it's easy to poo poo it as not the best option if you have other options!! If you don't it gives you security that private renting can't give you and a decent home- if you know the downsides then you are going into it fully aware. ! Resales also are very dependent on 'where you are- in our area for instance they go very easily . May not be the case if you are in an area where it's easy to get housing quite cheaply without using SO.

I did this. It’s been great for me. Like you I am a single parent and could not afford to buy on the open market. And I didn’t want my daughter to grow up moving from private rental to private rental on the whims of landlords. I love my house. I can’t see why it wouldn’t sell on as the SO properties in this area all get snapped up too. I’m not increasing my share though, if you do you lose the support you get paying rent and I imagine it would be harder to sell. It’s led to a lovely, settled stress free few years for me and my daughter.