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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:

KanielOutis · 22/10/2017 18:31

I’m wondering how low their combined wages are to only afford a £34k mortgage. I have a sole wage of £32k and can borrow circa £100k. They must have very, very part time jobs if their joint wage will only get a £34k mortgage.

Original poster

DavidBowiesNumber1 · 22/10/2017 18:31

milkjetmum Nice to read something positive

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Original poster

DavidBowiesNumber1 · 22/10/2017 18:35

itsalljibberish The 34% they'll be paying between them so my son will own 83%. It will be noted......

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Original poster

DavidBowiesNumber1 · 22/10/2017 18:38

KanielOutis They both have full-time jobs. They only NEED 34K mortgage, why would they go higher if it's not necessary?
They would also have to pay rent, service charges, Council Tax, bills, petrol, running & maintaining 2 cars, food, clothes etc.....

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gluteustothemaximus · 22/10/2017 18:46

From personal experience I would avoid shared ownership like the plague.

The rent you pay on top of the mortgage, is daylight robbery as they do nothing for that. They treat you like shit, and refer to you as the tenant and not the shared owner. There are lots of rules about upkeep, it’s never viewed as your property.

Would never do it again, or recommend it. Plus selling it is a nightmare.

Is there anything they can get with a huge deposit like that, that they own outright?

Original poster

DavidBowiesNumber1 · 22/10/2017 18:50

gluteustothemaximus To be fair the rental amount seems reasonable and that plus the monthly mortgage payments would still be far cheaper than renting a similar property privately or buying. Neither of which they could afford.

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gluteustothemaximus · 22/10/2017 18:55

Yes, I’ve just number crunched, so it does look like it’s their only option to get on the ladder.

I’d just do a bit of research on the housing association itself, see if there are positive reviews.

Ours was terrible. Truly awful. Sovereign was their name. I would hate anyone to go through what we did.

Original poster

DavidBowiesNumber1 · 22/10/2017 18:56

Sorry, I need to correct my last post;
What they would pay in rent, service charge & mortgage each month is much cheaper than they would pay to rent or buy a 2 bed flat where they are now

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Original poster

DavidBowiesNumber1 · 22/10/2017 19:01

gluteustothemaximus My parents are going to case the joint next week after I relayed comments from here and what I've just read about the HO online......

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itsalljibberish · 22/10/2017 19:01

We had sovereign too! Avoid!!!

gluteustothemaximus · 22/10/2017 19:04

Also, find out if they can staircase so that they can own more of the property one day, if that’s what they want to do of course.

gluteustothemaximus · 22/10/2017 19:07

Yes, knowledge is power and all

itsalljibberish a fellow survivor!

KitKat1985 · 22/10/2017 19:13

Hi. I live in a shared ownership house and have done for nearly 7 years, which we are currently in the process of selling (we've had two children since we've moved here, and have outgrown the house). In many ways the scheme has worked for us and we have made money. We have a 50% share in a 2 bed house which we bought 7 years ago for £70,000. That half is currently being re-sold at a value of £107,500, so we've made equity of £37,500. However I think the trick here is that we 1) bought a re-sale property and not a new one (in my personal opinion the new build shared ownerships are very overpriced compared to typical market values), and 2) luck with timing as we bought shortly after the market crashed and so housing values have climbed since. So in many ways it has benefitted us and we never would have made it onto the housing ladder otherwise. However, the housing association are a pain to deal with (never answer calls, always claim to have lost letters etc) and whilst the rent is subsidised, unlike in a 'typical' rental scenario the housing association contribute nothing towards property maintenance, upkeep or repair bills. They also charge a monthly service charge even though the only 'service' they provide us with is to send us a shit magazine once every 3 months. The main thing I would say against it though is that the area here isn't great. It's largely council / social housing and there's a lot of antisocial behaviour issues that we'll be pleased to leave behind when we move.

I'd also say that our initial deposit was a 5% deposit on our half (so £3500) so literally no way onto the housing ladder otherwise. I'm really surprised you say they can't buy anything outright with their deposit. Even allowing a few thousand towards purchasing costs, they would still have a 60k deposit. Surely they could get a small property on the open market for that money, and have a decent LTV on their mortgage to keep the interest rates down to make the monthly repayments manageable? To put it in context, for our next house we're combining our equity monies, money we've paid off the mortgage and some savings to give us a deposit of 55k (so less than your son has now!), and our mortgage advisor has said we can borrow up to 240k on a 30 year mortgage (although I should add our combined earnings have grown since we first bought so our annual gross combined salary is about 50k-ish between us, and it sounds like your son and his girlfriend earn less than this). But even then I'd be really, really surprised if they couldn't afford anything on the open market on their own, even if it's just a 1-bed flat or similar to start them on the housing ladder. Even if not, given that they are only 19 and 20 and so very, very young, I would have thought it would have made more financial sense to stay in their flat (which you say they have very small rent on) and save for another year or two.

Original poster

DavidBowiesNumber1 · 22/10/2017 19:30

gluteustothemaximus Yes, they can staircase

KitKat1985 Thanks, you've made me feel a bit better about it all

I'm just about to check out prices for 1 bed flats in the area near the development they are looking at.
Unfortunately they can't continue to stay in the flat they rent now for much longer and with this money coming it seems the best thing to do is get on the ladder, however they can.

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JoJoSM2 · 22/10/2017 20:53

Are your calculations correct? If the 66k is enough for a 40% share of a 1-bed, then that’s full value of 165k.

If they bought in the open market, they’d put down 66k leaving 99k mortgage. If they took it out over 35 years, the deals start from £299 for a 3- year fix, £310 on a 5-year fix, £348 for a 10-year fix.

Even if they’re both on minimum wages (working full-time) they should be able to comfortably afford it.

AwkwardPaws27 · 22/10/2017 21:24

When my partner and I looked at shared ownership, we were told we had to buy the maximum share we could afford based on our income and deposit (but I'm not sure if this is the case on all developments). Be aware of the service charges; some developments seem to put these up a lot within a couple of years. We managed to buy a smaller property (1 bed instead of 2)a bit further from the station instead, with share of freehold.

Original poster

DavidBowiesNumber1 · 23/10/2017 05:40

Sorry, I'm 2 hours ahead of UK so I fell asleep last night before I saw there were more responses.

JoJoSM2 I'm not privy to their exact income details, my son just says what he can and can't afford but your information was definitely interesting. I've suggested they look on the open market but it seems they are set on this 2bed house rather than a pokey 1 bed flat, if they could find one for less than 165K anyway.

AwkwardPaws27 I'm now concerned about service charge increases. The house details list it as £25 per month but it is TBC so it could be a lot more. Although I assume that for the house it wouldn't be so much as for the flats?

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JoJoSM2 · 23/10/2017 08:13

Fair enough. Two bed houses are much nicer than 1 bed flats to live in. I just hope they don’t shoot themselves in the foot financially by going down the shared ownership route.

rizlett · 23/10/2017 08:40

Have a search on the moneysavingexpert forums for more info about shared ownership.

Hsmumma · 23/10/2017 08:49

I live on a new build estate where there is a few shared ownership houses one of which is up for sale. It's part of the first phase which was built in 2012, we moved into ours in January and it was up for sale then and still hasn't sold now 7 months later. Buy freehold any day

BobbinBora · 23/10/2017 17:58

We owned a shared ownership house and it was super! It sold within 24 hours and had lots of interest. We even made a decent profit!

The selling process is SLOW. It took around 6 months.

But the property itself was brand new and a high spec. It was great!

Good luck

CollieBobs · 23/10/2017 17:59

This reply has been deleted

Message withdrawn at poster's request.

Original poster

DavidBowiesNumber1 · 25/10/2017 01:54

BobbinBora Thank you for that. I knew there couldn't be all negative experiences

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KitKat1985 · 25/10/2017 07:35

What has your son decided to do OP?

Original poster

DavidBowiesNumber1 · 25/10/2017 10:16

KitKat1985 They've found a lovely 2 double bed' ground floor flat with a small garden on a different development for 55,000-25% share.
It will be mortgage-free, they may possibly take a higher share though. The rent & service charges are affordable and they will have £'s in their pocket to enjoy being young too.

OP posts:

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