Risks of buying shared ownership house???

[Lightdraft]

Welcome everyone. My first post after long term lurking...

Me n my DH were looking to buy a house in 2015 but were soon priced out of the market that has grown 50% since 2012. We could not compete with BTL investors and after bidding our last money on 17 different properties we simply could not bear it anymore and gave up. Fast forward to 2017, I found a shared ownership 3 bed house (50%) in our preferred location and our application was accepted. We are going to view the property tonight.

I must admit... such a sudden turn of events got me thinking and I started reading about SO options. Our town has virtually no SO properties for sale (this has been the third SO property in the last 3 years, other 2 were small flats). I read horror stories about SO service charges on flats especially in London and could not stop thinking about possible pitfalls of buying SO house.

Will I ever be able to acquire freehold after staircasing to 100%? What if we couldn't decorate the way we want? What if my 6yo DD beloved pet cannot be kept there? Is it worth buying now with inflated prices which can well start falling as few can afford buying in a current market?

We are renting our 3 bed home from a private landlord for £875 a month excl bills. This is well below a current average of £1100 pcm I had to pay elsewhere. I have a gut feeling that he will hike the rent in February with a new contract. On the other hand SO house will cost us £518 pcm including mortgage, rent and £5 service charges. Seems like no brainer. With current rent which can always be substantially higher I will be £4300 better of renting 50% share from HA. This can be used to pay off mortgage. I am factoring in a potential negative equity of at least 10 to 20% as the market seems to be in a horrendous bubble but if I continue renting it will be dead money. I am planning to use the rent difference to repay the mortgage faster.

What do u think is the best option for us? What could possibly go wrong? Please share your wisdom as I am completely green in SO topic n know no one who could advise

We are on our way to buying SO.
You need to ask if you can staircase and buy the remaining portion of the house. We are buying 50% and after a year we can buy the remaining 50%.
As far as I’m aware you can do what you like to the house, all repairs you need to pay for etc. So basically it’s your house.
We could not afford to buy the house we want on our wages but we can afford it as SO. So it’s a no brainier for us.

You can decorate any way you want. However, how will you be able to staircase? Are you expecting a significant pay rise?

A thing to bear in mind is that every time you staircase, you pay based on the price at that time. For example, you buy a house worth 300k and your share is 150k. After a few years, you want to buy the rest. It’s now valued at 400k so the remaining 50% will cost you 200k. Unless your income has doubled, you won’t be able to afford it.

You also need to factor in that SO interest rates are higher and the rent is money down the drain. Financially, it’s only a good option if it’s a choice between renting and SO. If you can afford a smaller property outright, then I’d go with that.

I did it 15 years ago, bought 25%, then another 25%, then the remaining 50%. Had no problems while renting and found it very easy to sell 5 years later on the open market. I was on a very low salary (8k) and it was my only way onto the housing ladder. I'd recommend it to anyone.