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Original poster

Help To Buy Shared Ownership Advice Needed

50 replies

DavidBowiesNumber1 · 22/10/2017 15:55

NC to keep anonymity as I will show this thread to my son.

He will (hopefully) soon have a sum of money (66K) to put towards buying a property.

He currently lives with his GF in a rented flat (very small rent).

There are a few 'Help To Buy' properties available locally on a shared ownership basis.

They can take a full 40% share in a 1 bed flat that wouldn't require a mortgage
OR
a 40% share in a 2 bed flat requiring a 24K mortgage
OR
a 40% share in a 2 bed house requiring a 34K mortgage

Neither of them earns very much so the 34K mortgage would stretch them a bit but it is doable.

I think the 2 bed flat would suit them better for now and is comfortably affordable but they like the idea of a house better (private garden, freehold, less service charge etc.)

Does anyone have any experience of shared ownership under 'Help To Buy'?

What would you suggest?

OP posts:
scaredofthecity · 22/10/2017 16:00

are you sure he's entitled to the scheme with such a high deposit? When we looked into it a few years ago there were fairly strict rules about that kind of thing.

If so with SA the advice is always buy the best you can as they can be difficult to sell and staircase and you ideally don't want to have to move in a few years time.

Unescorted · 22/10/2017 16:08

The rules have changed. The restrictions are earn less than 80k as a household and it has to be your only house.

PaintingOwls · 22/10/2017 16:10

I would go for a freehold house over leasehold flat every time as the leasehold will come worn ongoing fees.

Original poster
DavidBowiesNumber1 · 22/10/2017 16:31

scaredofthecity They meet all the current eligibility criteria.

Unescorted Thank you Flowers

PaintingOwls I agree but I just don't want them getting themselves in too deep. They are only young (20+19) and I think it's a lot to take on.
I'm worried about if either of them are out of work due to sickness/job loss for any period of time, with the bigger mortgage they wouldn't have any money to save each month.

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Original poster
DavidBowiesNumber1 · 22/10/2017 16:38

Also if they can afford to save regularly it would give them a better chance of increasing their share in the future.

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Signoritawhocansway · 22/10/2017 16:43

Check small print. Even houses likely to be leasehold... after all, they won't own all of it, just the share. I speak as a shared ownership in a house person.

Original poster
DavidBowiesNumber1 · 22/10/2017 16:47

Signoritawhocansway I did wonder that Hmm

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Signoritawhocansway · 22/10/2017 16:49

Also not sure re less service chargr either. We pay it based on a percentage of our non-owned share I think

Stellarbella · 22/10/2017 16:53

Shared ownership properties are a very risky and precarious investment if you ask me. Whilst your DS will be investing a large deposit, he doesn't get a proper lease as you would if you were buying outside of the shared ownership scheme. Rather, he gets an assured tenancy. If he misses enough rent payments, he could be evicted. In some cases, the court has no discretion about whether or not to evict - it has to make a possession order.

In those circumstances, bang goes the deposit you paid.

You might say that the same would happen if he missed some of the mortgage payments, but that's not correct - if the mortgagor takes possession proceedings, the court does not have to make a possession order - it has a discretion if the arrears can be paid off over a reasonable period of time.

Original poster
DavidBowiesNumber1 · 22/10/2017 16:54

Signoritawhocansway it's all a bit vague on the property details where charges are concerned. It just says the same £25 per month on all the properties but it states the actual amount is TBC

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Original poster
DavidBowiesNumber1 · 22/10/2017 16:58

Stellarbella I did not know that!

But....this is their only way they can afford to buy (even a share) of a property.
If they stay renting it's just money down the drain and they can't afford anything bigger than they have now

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itsalljibberish · 22/10/2017 17:30

You won't make money on a shared ownership property as the housing associations ensure they stay a low price. We sold out 50% share and it was valued by an estate agent at £80,000 when the housing association values valued it at £65,000. The housing association refuse to allow you to accept more than their valuation for it. Someone offered full asking price within a week so we had to say "thanks, but actually we have to sell it to you for 15k less than that"
I didn't have great experiences with ours full stop. Mine was a 2 bed flat and was next to lots of 1 bed HA flats with lots of antisocial behaviour as mostly young single out of work people in them.
Also they kept increasing our service charge by about £250 each year saying that maintenance needed doing or costs for communal cleaning etc were rising.

Original poster
DavidBowiesNumber1 · 22/10/2017 17:41

itsalljibberish That's terrible!

If they take the house then possibly they wouldn't need to sell so making a profit isn't their goal but it seems like daylight robbery to force you to underprice!

I've certainly got a lot to think about now Shock

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itsalljibberish · 22/10/2017 17:49

Personally I wouldn't ever do shared ownership again. If I had to then I would choose house over flat purely because of the service charges etc.
We also used to get narky letters every other week moaning about people putting the wrong things in the wrong recycling boxes and upping our service charge as we would all get billed if someone put a computer desk for example in the bin stores as it would obv need disposing of which they charged for.
Even little things like I put a bolt on the gate of our communal garden as it kept slamming in the wind and they wrote a letter and made me remove it. It wasn't even a padlock, just a bolt!
I never felt like I actually owned the flat, it felt more like I was renting!

TefalTester123 · 22/10/2017 17:50

Wouldn’t they also be able to buy a 1 bed property, with a mortgage that does not come under help to buy and is not involved with a housing association.
Is the help to buy property brand new? If so then it loses value immediately. These schemes are propping up house builders. Better to buy an older property.

itsalljibberish · 22/10/2017 17:51

Oh and our housing association made up rules as they went along! After 2 years there they decided no BBQ gas was allowed in the communal garden anymore, and we added an extra washing line which they said wasn't allowed so they removed it after a year! I could go on and on.

Original poster
DavidBowiesNumber1 · 22/10/2017 18:10

itsalljibberish Your previous post (re; antisocial behaviour) got me thinking so I Googled the development they are looking at. Of the 62 new homes 31 are council rent and 31 shared ownership. I'm going to get flamed for this but the council in question is known for it's drunks, druggies and down & outs. My son & GF have been brought up and always lived in fairly 'naice' neighbourhoods. I'd hate to see them somewhere they're unhappy with.

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Original poster
DavidBowiesNumber1 · 22/10/2017 18:13

TefalTester123 They wouldn't find anything under 150K and they can't afford a 90K mortgage. As I said, 34K would really stretch them

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JoJoSM2 · 22/10/2017 18:18

Are they ready to be Property owners and take responsibility for it? It might an idea to invest the money until your son is able to maintain stable employment and regularly save money. They could also put money into a lifestime ISA as there’s a 25% government top up with it.

He also needs to check the rules for shared ownership - I think the HA decides what share the buyer can afford rather than the buyer. There’s also rent to pay on top of that and the mortgage interest rates are higher than for normal properties. I’d discourage him from shared ownership if there’s a chance of getting sth on the open market.

milkjetmum · 22/10/2017 18:19

We have always been in shared ownership, starting with 50% of flat, which we then sold and bought 40% of house.

As pp have said you won’t make money on shared ownership investment like you would a normal house. But is more affordable (our rent and mortgage is around 500pcm total for 3 bed detached, private 3 bed semi two doors down is rented at 1000pcm).

My main suggestions would be that they get somewhere where a lodger is a possibility is separate bathroom and decent 2nd bedroom so they can let it out to a friend if money gets tight also in case they split up

JoJoSM2 · 22/10/2017 18:20

34k borrowed over 30 years at 2.5% would be £134/month. If that’s a stretch then how will they ever manage to buy furniture or appliances?

itsalljibberish · 22/10/2017 18:26

Yes. Forgot to say don't forget the rent on the 50% they don't earn.
So I had a 100% mortgage for £70,000. The mortgage was £450 a month, the rent was £300 a month which included the service charge.
So even without the mortgage payments they'll probably need £300+ for rent and then bills on top.
Re antisocial behaviour I believe that lots of developments now only get planning permission if also building properties for Council tenants to rent. In fact on my road now 30% of houses are Council rent properties. These houses are 3 and 4 bed tho so very little antisocial behaviour as most have young kids. I really struggled with the anti social behaviour from the 1 bed flats though.

itsalljibberish · 22/10/2017 18:27

Own not earn Confused

itsalljibberish · 22/10/2017 18:30

Also, more importantly when arranging the mortgage don't forget to get it written up so that your son owns 66% and his gf owns 33% due to his deposit contribution rather than 50/50.

Original poster
DavidBowiesNumber1 · 22/10/2017 18:30

JoJoSM2

They have fully furnished a 2 bed flat so don't need anything for the new place.
The mortgage calculators we used today we're working on a 25 year term, not 30.
There's also rent & service charge to pay each month too plus extra petrol as it's further away from both their jobs.
They have both been in the same jobs since leaving school and have lived together for the past 1.5 years so yes, they are responsible.
They really couldn't afford to buy on the open market in the same area.

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