Shared ownership property? Worth to buy?

[LeilaLeilaLeila]

Hi,

Pros and Cons of having shared ownership property?

I will be pleased if you let me know your experiences? Thank you.

my aunt worked in real estate and told me to steer clear. You have to make monthly rental payments and are liable for the cost of any breakages.

I have a shared ownership property and I am so thankful for this scheme as I never would have been able to own my own home post-divorce.

I have purchased a 40% share and I can staircase up to 100% ownership (some schemes do not allow you to do this, so you have to check the small print). I can't buy more shares at the moment but will be in a position to do so in time. My share is growing in value in line with the market (which admittedly is slow at the moment) but I hope things will pick up again in a couple of years.

I pay rent on the 60% to the housing association along with service charges and buildings insurance so you have to factor all that in.

I pay to get the boiler serviced every 12 months which is about £60. . I had a problem with my front door (it had dropped) and that was fixed free of charge. Nothing else has gone wrong in the five years I have been here so haven't paid out for anything else.

One of the downsides I have heard from neighbours who have gone on to sell is that it takes the housing association forever to move things along their end and you have to be on the phone to them every single day telling them to get their arses into gear.

I love my flat and DS8 and I are very happy here so no plans to sell and move on yet. It's great to have the opportunity to get on the properly ladder and have the option to buy more shares but you don't have to if you don't want to.

@Newgolddream70 @ameliasmok thank you. So who owns the rest of the property?

I own 40% and the housing association owns 60% and charges me rent on that portion

@Newgolddream70 thanks for the info. I want to make sure about this; for example if the property value is £200k and I own only 25% and I paid 25k for that. For example in 5 years if I want to increase my share can I pay rest £175 and buy the whole property or do they do valuation each time?

It would have to be valued each time you staircased (purchased more shares).

Each one is different. My current shared ownership property is amazing value and allowed us to buy an amazing property.
I've seen newer ones where mortgage repayments plus rent came to a silly amount and you also had to pay ground rent each month which grew each year.
Always read the small print and ask the estate agent xx

here’s my experience with shared ownership.

bought a 25% share in a 3 bed flat in London when the full market value was £915k in 2017.

sold it in 2022 at a full market valuation of just over a million which meant that I made about £25k in appreciation on my 25% from what I had originally paid.

in terms of the pros:

• I could live in a part of town and part own my property for much less. I.e. there was no way I could the afford the full £915k to buy the flat outright so the shared ownership allowed me to live the lifestyle for less.
• Linked to the above, the rent on the remaining 75% is discounted so it’s definitely cheaper than if you were to rent a similar place on the open market
• if the property goes up in value, you do make a gain based on your share

in terms of the cons:

• Took forever to sell my place when I wanted to leave. To be precise, took easily 12 months to sell the place. This was a super nerve racking experience because first, the housing association had a stipulated time period for when they themselves advertise to find a buyer (3 months in my case). Once that period ends and they haven’t found a buyer, you can then advertise on the open market, but even if you get an offer, the potential buyer must meet the housing associations requirements of what a shared ownership owner can be (ie level of income, etc) which means finding a buyer was super challenging
• in retrospect, there is no way you’ll get a buyer who will want to buy the full 100% share because if a person had money to buy the full 100% share, there will always be better, newer properties in the market so your pool is forever restricted to other shared ownership owners which goes to the first con I’ve mentioned
• since the housing association owns the remaining share (in my case 75%), you are restricted in a lot of things and need their permission before doing things like subletting, changing the flooring, painting walls etc.
• whilst you can staircase up to 100%, be realistic if you’ll ever be able to afford the full 100% as on paper this stair casing sounds good, but in reality getting to the 100% may be unrealistic. This May mean you’re stuck in the property if you can’t find a seller and you can’t move out as you may not get permission to sublet to somebody else.
• most shared ownership properties are relatively new which may mean they fall under the whole cladding debacle so best check that’s not an issue as that’s a separate issue altogether
• lastly, service charges by the housing association can be overly expensive. I was paying over £250 a month, but seeing little benefit .

overall, I’m glad I did it as it allowed me to live in a place I couldn’t afford, but if i was ever asked to do it again, would never do it because I would hate to go through the whole stress of 12 months trying to find a suitable buyer.