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?

@BeenThereSeenIt 'I am talking about the shared ownership offered by housing associations.'

Who else offers shares ownership other than housing associations? A few councils. Majority are housing associations.

I know many people who do shared ownership incl me and no one gets top ups or benefits. Most on salaries jobs with incomes of £65k+, some on much more.

Anyone on such a low income they're getting benefits are unlikely to qualify to pay both rent and get a mortgage.

Op I pay £940 rent and service charge and £550 mortgage. A bit cheaper than renting the equivalent but more secure.

@Nomechange1 The criteria to qualify is "Household income required less than £80,000 (£90,000 in London)." So maybe one earner on £65k-£80k but not a couple.
Anyone on such a low income they're getting benefits are unlikely to qualify to pay both rent and get a mortgage.
This is wrong. The rent element of universal credit will help pay the rent, that's why many people claiming UC who are working or have some equity to put into a house (i.e. divorcee) but not in council housing will choose shared ownership over private renting. It offers more stability and they can buy it with a small deposit. Same as a person not claiming benefits who can't afford a normal size deposit. UC will cover £940 rent in a lot of areas depending on your needs/circumstances. This is why some people would prefer to try and stretch to afford to buy a house not on shared ownership. The shared ownership houses/flats in my area that I have seen also tend not to increase in % value as much as normal house prices when they are sold, so not a great investment. But it may be different where you are.

I brought a shared ownership property as a then single parent, because I could not get a big enough mortgage on just my salary on other properties in the area. It was a 50% shared ownership and I'm not sure about other areas that posters mentioned but it was much cheaper than privately renting.
A housing association owned 50% of the property which I paid rent to. And I paid my mortgage on the other 50%. I put a 15% deposit down.
I lived there for almost 4 years, sold with no issues whatsoever and made 30k profit. Would recommend to anyone.

In my case the other percent is owned by a housing association so the rent is cheaper than standard rent. It works out a lot cheaper than normal renting or a normal mortgage on the same sized property down here. I personally think it's brilliant and the only way to get a nice house unless you have bucket loads of cash.
@BeenThereSeenIt you would not pass the affordability checks if you claim benefits even if the other percent is owned by housing association. Are you sure your friends income wasn't higher when she first moved in?

Technically benefits would pay the rent percent but not the mortgage. But you wouldn't be able to move into one whilst claiming benefits because you wouldn't pass the affordability check. So maybe the person you know is on a lower income now then when they initially moved in?

@Leah5678 The affordibility check includes "Additional income from other sources" which will include universal credit, working tax credits, guaranteed child maintenance, disability etc. All of which could mean the applicant passes affordibility. I should imagine anyone solely on benefits won't qualify as they won't be able to get a mortgage, unless they can pay that bit outright from divorce proceeds.

Well I'm assuming she was getting some hefty child maintenance because I've quite literally been there and seen that with shared ownership and you have to have a relatively high income (not by Mumsnet standards because 100k is Apparently poor on this site haha) to pass the affordability checks. If your income is low enough to get universal credit then it's not high enough to pass the checks.

I think our household income needed to be between 70k and 90k when we bought ours.

@Leah5678 If your income is low enough to get universal credit then it's not high enough to pass the checks.
Earned income yes, but as I mentioned above they take other sources of income into account including certain benefit income, maintenance and any deposit you can put down. It will also depend on the value of the property you are purchasing. A cheaper property will clearly require lower household income.

Exactly this

I brought 40% of my 3 bedroom £265,000 house in the Midlands.
5k deposit, 103k (ish) mortgage.
£500 for my mortgage monthly
£385 for rent & servce charge so £885 in total.

3 bedrooms to rent in my aread would be £1,200+ pcm.

Mortgage is a 5 year fixed (risky i know but preferred having a certain payment each month)

We have only just lived there a year so no interest changes in my rent YET, so we will see.

No benefits in my household either - neither are any of the neighbours i know. Its purely from a deposit situation, we were privately renting before (very lucky our landlord was amazing and gave us very cheap rent which enabled us to save a little bit) but we would never have been able to buy a property int he next 5 years atleast if it wasnt for shared ownership.

The reason you could not get consent to extend is obvious, ie the building did not belong to you, 100%

I didn't know you could do this until a friend who bought a shared ownership property had a (genuine) change of circumstances which meant she could only work limited hours. She then used her income to pay the mortgage element, and most of the rent element was covered by benefits.

But if she had been renting it probably would have cost more in benefits and/or thrown added pressure on housing lists, so overall it still seems a better solution for everyone.

Where i worked in London - most HA developments were on benefits and some of the worst tenants I'd me, vs cocuil renting. In the same borough, they insited all new developments has so-called 10% adorable housing. Often the other property would be fully owned by the people that lived there and on other developments, it was part-buy mixed with a majority of rentals

It is not typical but I had the misfortune to meet a handful of tenants over the years who were kicked out of council property for various reasons and the new homes they got into were often trashed quite quickly - I'm sure the majority of HA renters are good people but my experience of HA developments sticks in my mind

Not the question you asked, I know but have a look at the First Homes scheme. In my area (East of England), this is becoming a very popular product for affordable homeownership.

"The reason you could not get consent to extend is obvious, ie the building did not belong to you, 100%"

Well I owned 70% @DistinguishedSocialCommentator! If it was a business I'd be the majority shareholder. So not 'obvious' imo - a home improvement which adds value makes sense for a HA as a business, since it presumably increases the value of their share too. It's not like I was asking them to help fund it.

Ok, thanks for posting at me and I hope this also helps the posters I quoted.

It is indeed obvious for those that have every owned a property.

FYI - we have never lived in rented or part rented property

FYI - when it is part rented like the poster I responded to, the minority owner in the case of the poster still have a full hold, say over what goes and what does not and that is a fact, fact backed up by their refusal to allow an extension

HTH

It is 60% owned by a HA, and it is in a section where other HA homes are (some affordable housing, some shared ownership)

the shared ownership housing is on the front with affordable rent round the back (easiest way to describe). With full paying properties opposite, so is quite a mix.

I have no idea if the houses behind me are claiming benefits (I’m going to assume so as i think there are certain criteria to able to apply for a HA home but may very well be wrong) but none of my neighbours are.

My cousin has one on 30% ownership. She is a single mum, works full time, but low wage. Family were able to club together to gift a deposit portion. They did this because she was struggling through a series of poor rental properties with damp etc, which was terrible for the kids. Now she has a brand new 3 bed house + garden in a council HA complex. UC does cover the rental portion (at reasonable council rent) though they were not allowed to assume this for affordability checks. What she now pays for monthly mortgage is magnitudes less than rent in the low quality flats she was in previously - that UC covered (so a win all round?). Not a day goes by that she doesn't thank her lucky stars that SO exists!

I bought 30% of a SO flat in the mid 2000s. I eventually bought the remaining 70%, sold it and used the £200k equity to buy a house. It worked out well for me, a nice flat in a modern building that I wouldn’t have been able to afford on the open market in a million years. However the Housing Association was an absolute nightmare and they almost derailed my sale. The flat was in a gentrified part of East London, hence the rise in value, but there was a huge amount of anti-social behaviour in the area and in the end I couldn’t wait to leave.

I don’t know how people afford it nowadays though. In the area I bought in, a 1 bed SO flat is now around £600k so even if you purchased just 25% you’d be looking at a sizeable mortgage plus rent and the Service Charges are now sky high. To put it in perspective, my 2 bed flat was £180k in 2006 which back then I thought was an eye watering sum😂

There is a lot of snobbery on MN towards Shared Ownership and any kind of socially housed tenant.

Well your original comment claimed "many" of them are getting the rent portion paid by benefits which is bs btw. You wouldn't pass the affordability checks. I can believe someone had a decrease in income AFTER moving into their home and had to apply for benefits but it's not going to be "many".

The affordability checks are really in depth btw. I know because I've done this what experience of shared ownership do you have other than assumptions? Just curious

What I've never understood about them is: if you can afford to pay all that rent on top, is an equally large mortgage not available, so you own a place outright?

Normal mortgage on a property worth the same price would be about 500 pound more a month where I am. You'd need a higher deposit too

Getting a large enough deposit together is normally the obstacle there.