Buying first home as shared ownership pros and cons, help!

[ChirpyPeachTraybake]

Hi I have a question about a shared ownership house that I may be moving into with my husband and 1 year old. The only problem is it's quite bit small and I'm not sure about some things on the lease like the length and how the rent rises are calculated
Here's my pros and cons list for the house, what would you do if it was you?

Pros

• It's the perfect area, near outstanding schools for my 1 year old
• The street is very family friendly, kids and good community
• good parking
• it's cheaper than what I pay now in rent
• shared ownership, foot on the housing ladder we wouldn't get otherwise
• 3 bedrooms, up from 2
• near some people I know in a city without my family
• attic and large shed for storage
• would feel like a secure family home, could have another baby which we want.

Cons

• the bedrooms are quite small, the downstairs doesn't have much space, no utility room only a small kitchen and small lounge
• The previous owner hasn't taken care of the house, broken window, holes in wall, bathroom needs entirely replacing
• it's shared ownership, we will be at the mercy of a housing association, can't make changes without their permission. Etc
• rent rises are yearly and based on RPI, newer new builds scrapped this as its unfair to tenants, anxious about buying into this
• lease length is 112 years left, we would move in 10 years time, but we would HAVE to move since the lease length will look unattractive the longer we wait
• when we move its unlikely we will be able to get a house in the same area
• shared ownership so I'm not sure if we will build much equity in 10 years time as the deposit will be small and the housing association will take 60%

I think I could make do with the smaller house, if I knew it would be secure in terms of the rent rises and lease length

What would you do?

I wouldn't buy a shared ownership at all.

Is this similar to the equity loan companies?

Personally I wouldn’t do it, especially if you are thinking you’d need to sell it and it’s not your forever home, you already think it’s too small so it may be that you move in and quickly decide it doesn’t work for you. It’s more complicated to sell a Shared Ownership property anyway and on top of that lots of people won’t buy a Shared Ownership property so you could well find that if you move in and then really struggle to sell it so you’re stuck there. There is a few Shared Ownership properties on our estate (newbuild) and 2 of them have been on the market for over a year now with no offers or sales, both of those are in a similar position to you in that they settled for the house really even though they were never 100% happy with it, now they want to move but are stuck.

If it is currently shared ownership is there no obligation on the occupant to make good damage? Will all maintenance costs be down to you? Are you able to increase your % over time?

I'm not sure what an equity loan company is, this is all very new to me!

@Mrsttcno1 thank you that's such a helpful response. It's good to hear about other people in shared ownership properties and their experiences. I do worry about it not being saleable, if I'm questioning it now then surely others will question it when we come to sell.

I'm just so tempted by the area. We won't have a chance of buying a place of our own outright, we live in Bristol so it's likely we will be entirely priced out of the city in a couple of years. It makes me worry about what kind of security I can provide my daughter and when ill get to have a second baby that I've always dreamed of.

Thank you for your replies

@LIZS yes 100% maintenence costs are down to the tenant unless it's structural issues. I think to increase %over time is beyond our affordability, also it makes it tricky for someone to buy in the future if we increase say to 75%, the buying pool would reduce massively
The current tenant mentioned speaking to the housing association about the repairs so I doubt it
Thank you

We had an equity loan 14 years ago and we are having a right hassle with it but I'm not sure it is the same as shared ownership?

Don't forget too, that when it will be time to sell, HA will be in charge of it and you will be able to sell to someone, accepted by HA and not on open market.
Still, it's better than renting!

If it was a house you loved and it was your forever home then I’d think differently, but if you already feel it’s not perfect/too small then I really wouldn’t because you could find yourself stuck in it for a long time. For reference one of the ones for sale on our estate has now been reduced 3 times, it’s always in the windows of the estate agent so it’s not a case of nobody knows about it, but there’s just no interest. The other one they have reduced once but if they reduced further they’d be losing money.

It’s also not a case of the area just not selling as we’ve had 4 houses sell on the estate in the last 2ish months, 1 of them is actually the exact same house type as the SO ones and all 4 of those were up on the market and sold in less than 2 weeks!

I’m in a new build shared ownership after my landlord served notice . I have found the whole process a positive one , I appreciate this my vary between HA . I have the option to staircase to 100% which I plan to do when my current mortgage rate expires so I would be able to sell if needed without the HA involvement. If I decided to sell prior to that the HA have to advertise it first and if it fails to sell within a few months it can then go to the open market . I live in a great area and there have been no issues with other shared ownership properties selling so don’t see this as an issue , you sound like you may be in a similar type area ? Good schools etc

Those very much depends on the HA. When we bought a SO property, the previous owners had to ask to sell it but they could choose the agents and sold to whomever they liked (us!) We staircased to 100% eventually, they gave us an excellent deal on the remaining proportion.

We did have to ask permission for new kitchen/bathroom/ conservatory but there was never an issue, they always said yes. Rent went up a few pounds a month every year but it was never crazy money. We would never have got on housing ladder in the south without SO, I'm so glad we used it.

@ChirpyPeachTraybake don't you have to pay rent on the remaining share??? Seems expensive if that is how it works x

You do, but it would actually work out as £200 a month cheaper for us!

@ChirpyPeachTraybake fair enough 🙏❤️

❤️😊

Ours you can sell on the open market with housing association you do not have to sell as part ownership you just sell and pay the housing association the percentage they own. The bad thing is if you want to buy more shares it is at the market value in my situation we own 60% but as it was 25 years ago the property was worth £100,000 now it is worth £450,000 there is no way we will ever be able to afford to buy the other 40% we might have money in it but we would never be able to buy anything else either so are stuck where we are.

Check if you can sell on the open market. My granddaughter has just exchanged contracts on one and she will be able to; she just has to advertise it as shared ownership for 5 weeks and then it can revert to a 'regular' sale with whatever agreed percentage being split between her and the HA on completion. Her mortgage and rent combined are LESS than she is paying currently just in rent alone (dead money) plus she will have security of tenancy which she doesn't have currently. Hope this helps.