To buy a house I will only own 30% of or am I being conned?

[30percent]

Would you/have any of you bought a house where you only own a certain percentage and have to pay rent on the rest? But it works out cheaper than normal renting/ normal mortgage. Other 70% owned by clarion (can anyone vouch for clarion being trustworthy?).

The house is lovely, its seeming like the only viable option for a decent sized home because rent around here and house prices have got crazy expensive in the last five year and the council waiting list is about ten years long.
Any experience or advice would be greatly appreciated.

Shared ownership? It's pretty common now isn't it

Shared ownership. Very common, very normal and a great way to get on the properyy ladder. Only really ideal though If you intend to own long term as you can then realise the value and buy further shares.

I have heard some of these shared ownership homes have become something of a trap. The rent and service charges increase annually and people get stuck unable to sell and unable to afford the combined mortgage and rent.

Some also have a clause that you can never own 100% of the home.

Some shared ownership schemes work well, but do your homework.

This is Martin Lewis’s guide to shared ownership: https://www.moneysavingexpert.com/mortgages/shared-ownership-scheme/

We had our first home as shared ownership 18 years ago. Just meant when we sell we only got that % of the profit but it was enough to use as a deposit for something bigger. Worked really well for us at the time.

With shared ownership you're normally responsible for 100% of repairs.

Also Clarion are a nightmare to deal with. I would avoid them

Quite common now but it may be hard to sell on.

Shared ownership is a tried and tested way to get in the property ladder.

However researching the provider is a good call. Are Clarion a Housing Association or property developers? Google Clarion Shared Ownership reviews etc.

And the point about rising ground rent / service costs is a good one, you need protection against that. Also re-sale T&C.

I had one and I wouldn't do it again
But I can also see how it's a good option for some people.

The reasons I would not recommend it, but bear in mind the T & C's of each scheme will be different so check it out first.

We were responsible for all repairs, when we only owned 25% of the property. The flat desperately needed new windows as they leaked and handles were broken but it wasn't worth investing thousands in a property we didn't fully own and would never see a return on that. Same with boiler and kitchen, there was zero point in upgrading it.

The communal charges were getting out of hand, they increased every year and we'd constantly be getting extra bills for this, that and the other. I couldn't see what we were getting for that money, except grass cutting.

It was much much harder to sell, as we could only sell to people who were eligible for shared ownership and screened by the housing association.

It ended up being quite expensive rent + mortgage + fees & charges was way more than a full mortgage on a similar property would have been.

When we went onto buy our first house we realised we were not eligible for any of the government first time buyer offers, I suppose this was our fault but we didn't feel like the shared ownership should not have counted as we couldn't get FTB help with that either.

You've got to do your homework to check what the rent increases are per year. My mum has been in hers now nearly 20 years and has gradually bought more shares as she has been able to afford to. She's now on 100% with a very tiny mortgage which she'll pay off just before she's eligible for retirement and state pension. My husband owned one as his first property and all the HA did was complain. We had letters about my car being parked on a verge out of the way but yet people who were blocking access for emergency vehicles parking on blind corners weren't getting anything. Then letters about putting washing on airers under our ground floor window about them being trip hazards (they weren't on a shared path). It was ridiculous and felt like we were being constantly spied on. We sacrificed everything we had for two years in that place to save enough that we could put a deposit down on a tiny house just to get out.

Shared ownership is an absolute con and more fool you if you proceed.

It's weighted in favour of the Freeholder by your having to pay 100% of the maintenance charges despite you in only owning 30 or 40a% or whatever percentage you bought at.

The freeholder can't lose, the buyer takes on the whole risk.

It's a scheme along with 'help to buy' that has helped to inflate and keep house prices high especially in densely populated cities.

Builders win. Freeholders win. Buyers lose..

If you bought at 30% and in ten years time your salary and savings increased and you wanted to buy the remaining 70% rather than continuing to pay rent on the 70% they revalue the house and you would have to pay 70% of that value not the original value.

It's a tick box exercise to give the green light to builders so they can carry on getting building permission as they have allocated some houses for 'affordable housing'!

It's a CON.

Assume you mean shared ownership, I'd avoid if you can. The rent and service charges can skyrocket with no warning. And can be hard to sell on. And you have to pay 100% of your own repairs even though you don't own 100% of the property.

It's not a con, it's a business Of course they're not doing it out of the goodness of their hearts.

@WYorkshireRose it's a con for the buyer.

'Shared ownership schemes used by homebuyers struggling to get on the property ladder have been described by a housing charity as 'dubious'.
Sebastian O'Kelly, of the charity Leasehold Knowledge Partnership, described shared ownership as 'complicated' and said buyers couldn't always rely on the process.'

Thanks for the advice guys! Having to pay 100% of repairs despite only owning 30% of the house is definitely a worry

I did it, and I’d do it again. There are downsides but if the alternative is private renting then I found the trade off to be worth it. Service charges are a risk and I’d avoid any big tower block with fancy services. I lived in a basic four storey block and our service charges were reasonable. The rents are regulated so they can’t sky rocket without warning, but rises will be steep if inflation is high. I don’t understand some of the criticisms tbh, of course if you want to increase your share you’ll be paying today’s prices. The key is to educate yourself.

Do your homework on the development and the housing association who you will be renting off but they can work out well.

I think it's unlikely that you'd ladder up to 100% ownership but if its in a desirable area it may be easy to sell on. There's a couple of developments in my city in really expensive areas and when they come up for sale are snapped up.

What are the restrictions on selling it in the future or buying more of it yourself?

in theory it is a good plan but the management companies vary wildly.

when my SIL came to sell hers she was advised that she wasn’t allowed to put it on the market as they were already selling a couple.

she ended up having to buy all of it to allow her to sell.

Family member has bought into one. Stuck as can only sell back to the housing association and the housing association has been taken over by a larger one with worse reputation. Valuation for sell back is same as 5 years ago despite being in a city where prices have risen significantly.

Hell would freeze over before I would buy into a shared ownership property. Sorry @30percent Only own a bit of it, have to pay rent on the rest, rent and service charges can - and WILL shoot up in big increments, and often you are responsible for repairs and maintenance, and good luck when you try to sell it!

I agree with a pp, it's a bit of a con, and nothing about it benefits the tenant/ partial homeowner. I have known sooooo many people do it and bitterly regret it.

You need to work out what you can afford to buy every few years so you own more and more of the property

My friend has a 30% shared house with a housing association.
She has been there 7years her rent and service charge on the % she doesn't own is now at £700 a month. This goes up yearly and is now more than her mortgage.

She will never be able to afford to purchase more shares and cannot find a buyer because the monthly charges are huge.

Sadly unless it's a very rare shared ownership where association owns a percentage but doesn't charge rent on amount you don't own - they do exist but i think people hold onto them! then I'd walk away from it and get somewhere smaller on a full mortgage and work your way up 👍🏻

can anyone vouch for clarion being trustworthy

If I were you, I wouldn't touch Clarion with a barge pole!

I'm in SH and they're my landlord. Last April they incorrectly billed me a service charge I didn't owe (£1500). It's taken an entire year to sort out.

I've had to get a solicitor involved when I needed a major repair. That took 3 years total to sort out. Then they had to pay me compensation and didn't. Another year to sort out that.

They are whacking my rent up at an alarming rate so can only imagine they will do the same with shared ownership tenants. Probably more so as there is at least a limit on how much they can put my rent up, but I'm not sure that applies to shared ownership and service charges can be astronomical.

We looked into this with ds2. They were over priced for the % share compared to other properties and the rent/ services charges plus the mortgage worked out more expensive than a mortgage for a more expensive property owned outright would have been.
Eg mortgage for £125k at 5.1% interest £700 per month- freehold
Mortgage for £60k at 5.1%, 40% share, mortgage £335pm, rent £275pm, service charge £115pm

The first is classed as unaffordable, the latter would be affordable apparently, despite being more expensive and leaving him open to additional costs.

He is still living at home and saving like crazy to buy a 100% freehold.

It's a con where I live. Paying a mortgage plus rent and responsible for ALL the repairs on a badly built house.

I have no experience myself of part ownership but like others above have read property articles saying that it is not advisable to buy property this way - do your own research.