How are part-buy-part-rent schemes helpful?

[Bimwit]

I have virtually no experience of home ownership, when single i rented and when married it was solely his property and i had nothing to do with it. Now divorced i am starting from rock bottom. I may finally have got my hands on a decent part time job with good prospects, so my aim is to prove myself, climb, save and buy a property.

I have spotted a house (just browsing for what i could likely get on certain budgets) on a part buy part rent scheme. MSE explains this as if you are buying 25% of a 200k house, you are taking a 45k mortgage (need 10% 5k deposit plus stamp duty fees etc) and you will then rent the 75%.

What is the benefit of this? As far as i can see the benefit of bustin ass to get a deposit saved and tying yourself to a mortgage for Xyrs is so i could pay the same monthly amount for a 3bed newbuild as i would for a onebed flat renting. This scheme seems the worst of all worlds? Tieddown and got to get deposit and fees, but still paying 75% rent a month on top of mortgage...and only owning a share at the end of it? What is that share actually worth in the real world?

Aibu to be wary of this ....

Yanbu to be wary. How old are you? Are you young enough to take on a full mortgage over 35 years for example?

The benefit is you get secure tenancy and can’t be kicked out at the behest of a landlord selling up. You can decorate as you like etc.

Beware of inescapable maintenance fees too.

Honestly I'd rather have a hovel to myself than an apparently ok new build shared-ownership. They're overpriced compared to the local market generally so the equity you get won't be worth what you pay for it.

I'm 32 so hopefully young enough however i need time to be promoted and save deposit....is it all over already? :(

As a shared owner, you have a lot more rights than a private renter. The house is yours, they can't decide to sell it. You can decorate. If it's a house, you can normally have pets. And it's a three bedroom house for the same price as you can rent a one bed flat (if I understand your correctly?)

When you come to move, if the house has gone up in value, you get 25% of the equity. Or if you stay put, you can buy more shares if you want to and the rent will decrease.

I can't see why you think renting a one bed flat would be a better option. Am I missing something?

Its the price of renting the 75% plus the mortgage every month - i dont thinking renting a 1bed is better, but punting for a normal mortgage might be? Your point about the pets is a good one though, i have a dog and renting with him has been difficult even though hes small and well behaved!

A normal mortgage would definitely be better if you can afford it. Part rent part buy is meant for people who can't afford to buy a property on the open market. I would start by going to speak to an independent mortgage adviser for some free advice. Find out how much you can afford to borrow on your salary, how much deposit you need and how much you'll need for solicitors fees, etc. Then you can have a look around to see what's available on your price range. (I used to be an estate agent!)

I'm always shocked by how inflated their management fees are. In outer zones in London, such as Croydon, you can see 1 bed apartments online, no garden, no lift, no lobby, no gym, no parking and zero communal facilities, with a £160 per month management/maintenace fee. What are they managing, light bulbs and cleaning of the staircase?