To be confused how people can afford shared ownership

[beary77]

Can someone share their experience of shared ownership? How much do you pay in total monthly? It’s a good way to get on the property ladder but how do you deal with the increased mortgage rates? As you are paying for both rent & mortgage?

In my case, the mortgage is very small because I only purchased 25% of my property, the rent is also lower because I'm only paying rent on the other 70% (paid 5% deposit up front). All in all, I probably pay the same amount in total as if I was renting an equivalent property, except of course I have the benefit that I'm the homeowner. The property has gone up in value so the hope is to sell and make profit.
Shared ownership is far from perfect but it was the only hope I (and many others) had of getting onto the property ladder. I could never have saved up a deposit large enough to buy a full-value property. So for that reason alone I recommend it.

Because many of them will be getting some form of benefit top up and the rent part is paid for them, just leaving them to cover the mortgage.

I'm not sure why the pp thinks it is likely that shared ownership purchasers would be more likely to have benefit top ups. In my

development, most people are fully employed. We had to show proof that we could afford it even if prices went up (just as a regular buyer would).

Our mortgage used to be more than our rent but the rent has increased at a faster pace.

The two costs together add up to about the same amount as renting or buying outright would cost.

Given the choice, we'd have bought outright but circumstances did not allow us to do this. It's not an ideal scheme but it enabled us to stay near family and jobs.

I'm not convinced of this!

People buy shared ownership because for some saving for a deposit whilst privately renting just seems impossible. Therefore why not do shared ownership, at least you have security in your home and maybe the value will increase and you can sell and buy one that is completely yours.

I think they're a huge rip off but can understand the attraction

Whenever Ive looked at them, out of interest, the amount paid for mortgage, then rent, then service charge is really high, I dont know how or why its considered 'affordable' housing, another Tory con in my view

Then when you come to sell it, you have a limited pool of potential buyers and I think some landlords have a say over who buys it.

I didn't know this was possible, but a woman posted a thread recently and this was her plan to pay off the rent element.

We had a shared ownership property many years ago. The rent + mortgage was similar to what we had been paying in rent previously. The main benefit was the security it gave us. We could stay (and decorate as we pleased) until we decided to sell.

The two people I know who have shared ownership bought the share outright with their divorce settlement, they then use a combination of wages and uc for the rent portion. If they had simply rented they would have lost their uc (which part pays for childcare) due to having more than £16k

Housing benefit can be used to pay towards the rental part, however they won’t take this into account for the affordability calculator, so it would be quite hard to pass the affordability test if you were eligible for it.

Such a passive aggressive response 😂like, where did you get this from? Absolutely full on judgement and referring to zero facts.

I'm in a shared ownership flat, we own 40%. We had to pay £18k total deposit. We wouldn't be considered if we couldn't pass the affordability checks, just like private renting I guess. So no, benefits recipients we are not.

ANYWAY! we pay around the same total price as we would for private rent, plus the flat is in good condition, great soundproofing, protection from landlords turfing you out, lovely lights windows, great neighbours- all professionals. I bloody love our shared ownership flat.

Mumsnet always slag them off for some reason (snobbery or just ignorance, who knows). Tbh with the cost of living, shared ownership is just going to become more popular!

I don't think any of the families in our development were receiving housing benefit. You had to have a relatively high income to be able to afford them!

They are rarely a good investment yet sold as such. You are literally bound by the selling price of the other parties agreement.

Unlikely. In London you have to earn at least 45k to qualify

I did some research on it and saw how much the rent would go up in 25yr and it horrified me so I have decided to move areas and own 100%

You wouldn't do it if you could buy on the open market.

It's usually new builds too, which is good in that you get a brand new home but bad in that they are usually a bit overpriced.

A lot of them are flats too, usually with service charges that can go up way beyond inflation.

Better to go for one where a housing association is running the scheme, than one where a developer is running it.

Better to get a site/block that is not 100% shared ownership properties. Tend to hold their value better if it is a normal block of flats with say 25% shared ownership flats.

You can sell on the open market 100% share. Effectively,on the day of sale the solicitor will buy out the shared ownership operator and then immediately do the 100% open market sale to the buyer. Of course you need permission from the shared ownership. I did it myself.

Plumlife in Manchester/Lancashire/Cheshire is who I used and it was ok. As I say though, you wouldn't do it if you could buy outright.

People slag them off but until you've experienced the insecurity of private renting in this day and age then I don't think you can understand.

I did consider it but was lucky enough to be able to scrape a deposit together for a fixer upper and slowly do it up. If I couldn't have done that then I may have gone down that road.

People talk of investments in monetary terms but a secure home is worth its weight in gold.

I don’t have a mortgage on mine. Bought 30% with money I had. Pay rent on the 70% I don’t own, it’s housing association so very reasonable rent compared to private rents locally. No service charge. Nice modern house, low bills.

(If I was on a really low income I think I would be able to get UC to help with rent. Although not applicable atm, I find that reassuring.)

Haha! No.

We bought shared ownership over 20 years ago and then staircased to the full property. Shared ownership is all housing association where I live so the part that is rent is social housing level rent so not the same as sky high private rent. When we initially bought the half rent was lower than the 6% mortgage and while the mortgage came down with rates so it was lower than the rent l, the rent was based on the LHA rate for the property of that size and the combined total was always less than private rent in my area. Mortgage rates are similar to when we bought but private rent is worse than ever. I imagine even getting part of the property at social housing rent rate might be a saving for people unless they are already in social housing?

I did it years ago. It worked very well for me - I bought 70%, the HA owned 30%. Their share covered the deposit. I didn't pay rent on the 30% - the view of the HA at the time was that they would get their money back (and a nice profit) when I sold the house or bought them out.

Downsides was that for some reason I couldn't get permission from the HA to build an extension and I suppose there was a risk that if house prices had dropped massively, below their initial investment, I'd owe them money if I sold at a loss. But I was never going to do that because I wouldn't have been able to pay my own mortgage back so risks were tiny for me.

It was really helpful not having to find the deposit money. I sold at a healthy profit (I made over 50k, so HA did okay out of it too). I think the rent payments are a piss take because the small print frees the HA of any responsibility for maintenance costs - that's fine if they aren't taking rent money but not if they are!

Re selling, I had to give the HA first refusal (this saved me a ton of money on estate agents fees), but could set the price according to EA valuation.

I bought 50% 8 years ago and staircased to 100% 4 years ago, it was more than doable and much cheaper than renting. I had a big deposit and I think the bigger the share you can start with, the better. However. I was extraordinarily lucky with interest rates and never paid more than 1.6%. If I were buying now I'd still afford it but I'd have much less disposable income. Also even though I dont pay rent the service charge is a bastard, mine has basically doubled in 8 years, and my housing association is on the cheaper side - there was a story in BBC news last week about somewhere charging £4000 a year! Ludicrous.

I've never claimed benefits.

From the Facebook group I’m in, this appears to be the case. Universal credit pays for the rent and all or part of the service charge. Additionally people in the group usually have a large chunk of money from a divorce and purchase a small % therefore they have a small mortgage. In London/ SE the overall prices of the SO property are anything but affordable so stair casing up to 100% appears impossible! I think those who don’t have the service charge paid by benefits also struggle with the increasing cost. I remember a BBC panorama documentary where the charge went up to £1000s per month. More recently I saw a cheaper SO option however all utilities where with pre arranged providers meaning that even if you found a cheaper supplier you would be unable to change suppliers. I think in the beginning SO was a good idea especially if you were purchasing a house in expensive parts of the country, but with everything increasing it’s less attractive buts it’s more secure than private renting.

Such a prickly response, did I hit a nerve? Apologies if so 😉 Maybe you should check your own facts and some of the other responses on this thread. I am talking about the shared ownership offered by housing associations. Yours may be a different type of shared ownership. This is why I said "many" not "all". The affordability in these cases requires gross household income of less than a certain amount. I am basing this on someone I know who got divorced and couldn't afford to buy their own place outright. They absolutely get the rent and charges paid for by universal credit. They took out a small mortgage as well and yes work part-time. As for people saying most on their developments work full-time, they may well do. You are aware that many working families get benefit top ups due to low wages?