Come and talk to me about buying shared ownership properties.

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What's the catch?

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READ THE SMALL PRINT!!!

We bought out the second half of our shared property last year.

Shared ownership is a bit of a minefield, and if I'm honest I'm glad we are out of it now. But at the time it was the only way we could afford to buy. It served us well and I do think it has merits but there are a bunch of pitfuls you should be aware of. Don't let it put you off. Just be aware of them.

First thing: Someone is going to tell you about their scheme as if all schemes are like it. Thats the number one problem. They are all so different.

1. Get a good solicitor - preferably one with experience in shared ownership or is capable being thorough to go through the T&Cs etc properly and to back you up if there are problems. Ours was a godsend and worth the extra money. There may be restriction on what you can do with the property and you may be liable for certain things and not others unlike a fully owned property.
2. Getting a mortgage can be more difficult and timeconsuming. There are less open to you and in our experience a lot of sellers aren't very familiar with the packages so lack product knowledge. In particular we had a lot of problems with staircasing when we bought out the second half of our property as it wasn't something they had dealt with before and didn't have experience.
3. Service charges. Just how much are they and how easily can your landlord raise them? There are cases, where landlords have raised them significantly and you are at the mercy of having to pay them.
4. Who runs the Shared Ownership Scheme. Is the scheme run by a not for profit Housing Association or is it run for profit. Personally I wouldn't touch any run for profit private ones with a barge pole as these are the ones that have had issues over service charges.
5. Rent. Is there one?
6. You can't sub-let a shared ownership property. This means if you want to move you HAVE to sell the property. You don't have the option to rent it out. This has caused a lot of problems for people who need to, especially if they have lost equity in the last few years.
7. How good is the Housing Association that runs your property. Ours wasn't bad. It was just run by a bunch of incompetent monkeys... dealing with them was a pain in the backside.

Like I say, don't let it put you off. It worked for us. If you do go into it, make sure you do your homework as it is much more complex than buying a normal property.

brilliant this is the sort of info i need.
it all seems a bit too perfect.
but yes, it may be a good option for us.
tomorrow i start the information gathering. thankyou.

Don't do it

why?

done a bit of digging and it's a not-for-profit organisation.
we have all the details on service charges.
still feeling it is the answer.

don't do it? need more info on that one please.

Huge generalisations follow! You will be responsible for 100% of maintenance. 100% of insurance for buildings. You will have a mortgage PLUS rent to pay for the proportion you don't own (which can work out at more than a full mortgage). If you plan to re-sell, it may be trickier to do so, and less likely to achieve comparable private home market value. Your neighbours may not be so invested in their home as you...

good good, this is the stuff i need. DH and I can sit down and read through all of this together. thankyou.

A friend of mine fell victim to the service charge racket. It rocketed out of control after she moved in, and now she is faced with having to sell because she can no longer afford to live there.

Your neighbours may not be so invested in their home as you...

That one I would say, more depends on the area the property is in generally anyway.

If you plan to re-sell, it may be trickier to do so, and less likely to achieve comparable private home market value

Hasn't appeared to be the case on our estate. They have held value and saleability comparable with fully owned property.

I WOULD say, to be mindful of the area generally. Is it all shared ownership or a mix. Is it a sought after area, with good schools etc, then shared ownership is more likely to fair a lot better. If its an area where there isn't much building or likely to be much building, again its not a bad bet. Basically, is it usually a high demand area - if it is, I don't think it is so much of a concern as those issues will help offset any concerns potential buyers might have.

The other thing I forgot to mention, was to look at the staircasing options and whether you can buy the entire property or not. Some schemes only allow you buy a certain percentage. Ours was 100%. I wouldn't be so keen to look at ones with restrictions on them.

Building insurance was never much of an issue as it was included as part of our rent.

Our mortgage and rent combined worked out far cheaper than a mortgage would have. We have been caught out by the bust of 2008, but our mortgage now still works out more despite the house now being valued as worth less (it is comparible with other houses). We see it as a long term investment, and hope to recoup that loss in time.

A friend did this and it was pure genius how she went about it. She was guided by a brilliant solicitor who knows the ins and outs of it. In the first instance the organisation itself gave a low valuation of the property, then she did it up all bells and whistles and sold on at market value. May not apply to you of course...

It's definitely a sought after area, house prices are high and the area the property is in is a good one, good schools (children already at primary). the rent includes buildings insurance. we rent in the area currently and it's stupidly expensive and the longer we do that the less we'll be able to borrow to buy.

I really want to find somewhere we can just live for years to come within our budget which is unlikely to change for a while. The service charge thing is worth checking the small print on isn't it. Apparently it's not-for-profit so they've advised that they wouldn't be able to raise the rent ridiculously as it's affordable housing. What they mean by that I need to find out.

The Housing Association I was with, had terms so they couldn't raise the rent annually more than 0.5% of the national interest rate (I forget exactly which calculation of interest rate it was). So you DO have to allow for it rising annually, but you'd get that if you were renting anyway.

(For the record in case the housing association is the same, mine was Outlook Homes, but they are part of the Harvest Housing Group and use several different names. We did have minor issues with them, but I think thats the nature of Housing Associations rather than any wider problem).

Hi harrirose22 - could you please post this in our Media Requests topic?