Could someone explain the downsides of shared ownership please in idiot terms

[PenisesAreNotPink]

You need 66k salary to 'buy', flat costs £190k, is 'worth' £600k, rent is 900 a month.

Downsides I can think of:

I don't believe it's 'worth' 600k on the open market, they're not really being sold at that without the shared ownership part. Seems about £120k overpriced for the area by square footage.

You will never pay off the rent, will still be paying it in retirement unless you can sell your portion and then move - that's a lot of rent to go down the drain.

Salaries are unlikely to go past the £70k mark as well established public sector jobs at top of pay band already - so no opportunity to buy a greater portion (who could afford it with rent/council tax coming in at over 1200 a month)

What have I missed and misunderstood?

Don't have much to add, apart from, we're avoiding shared ownership (on a much less pricey scale) like the plague.

Would be interested to hear others' views.

The flats in our complex in E London that are shared ownership are the ones with the worst view and are the noisiest. That block has the flats and communal areas finished to a much lesser spec re flooring, kitchens and bathrooms. And yet when you price up what the 40% would mean at 100% the value of the flats is way over what the equivalent flats in the normal ownership blocks actually go for, easily 20% too much.

That sounds really wrong.

Might as well call them 'scum house'

They should be 'worth ' the percentage you're paying

Service charges are another problem. They can be very expensive .and then if any part of the building needs work very often the cost is bumped up.

We have a shared ownership flat. I think the downsides for me would be - the rent/service charge has gone up by about £180 a month over the last 8 years (originally paid about £400, now paying £580), problems/delays with getting repairs done (though this could be said of a lot of flats) and don't think we will ever be able to buy the remaining share.

On the up side our flat is big and has a high spec kitchen and bathroom. Communal areas are neat and tidy. Don't have the faff of constantly moving with a rental property. Our was a new-build so hasn't needed hardly any work doing to it.

I've got 2 friends who've owned shared ownership flats. Both bought new (they were the first occupants) at the height of the market in around 2006/7.

The main problem they had was struggling to sell. One had 2 children in a tiny flat for ages because they couldn't sell it. My other friend moved away for work and couldn't sell without making a massive loss.

Both said they would have rented the flats out if they'd owned them outright but this is considered as subletting and illegal in shareowned property.

One has since sold since the market has picked up, the other in subletting illegally and panics about being found out on a regular basis.

The other problem is the service charge, my friend said they keep upping the cost by quite a large amount each year, and they have no choice but to pay it.

My friend lives in shared ownership flats in central(ish) London and at least 50% of the other flats are being sublet (although they are not supposed to do this) and quite a few have multiple occupants - the small one bed above her has five adults living there!

As already mentioned the rent and service charges keep going up and unless you are certain of large chunks of money coming you way in order to buy bigger percentages, until you 'own' the flat, it's not good. Of course even if you 'own' 100% of the property you would still have quite hefty service charges. The new builds all have hefty service charges.

It could be that gradually as more and more people cannot actually afford to live in these places and illegally rent them out to multiple occupiers they could be rather undesirable places to live in. I wonder what happens if illegal occupants stop paying rent and refuse to move out. Will the owner have to confess to the shared ownership company? Will they be sympathetic?

Avoid if possible I feel.

We looked into shared ownership (although not in London in 2006). Poorly built, overpriced flats that when we added rent, service charge etc would leave us paying more in rent than a small house.

I'm on the cusp of leaving a shared ownership flat (tomorrow!). These are just my experiences, it may be totally different for you.

Pros:

• Low(ish) monthly payments for mortgage/rent
• A foot on the property ladder
• More freedom than just renting, in terms of decorating, improvements and long term residence

Cons:

• If redecorating is required in the block, you'll be liable to contribute towards the cost, along with the other residents.
• You cannot choose the price you sell at, and must go with whatever the RICS surveyor dictates to be a fair value. Our flat apparently did not increase in value whatsoever in three years when the rest of the entire South East increased by thousands
• Necessary repairs within the block i.e. if the main gate is broken, mould on inside walls etc, take a very long time to get done/finished.
• Our windows were only cleaned once in the three years we lived there!

It's been a good stepping stone, but in our particular block there were quite a lot of residents who didn't care about the block, being noisy at antisocial times, dropping litter and leaving old manky sofas in the courtyard.. hence us leaving tomorrow!