Shared ownership. Good idea or not?

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In my area there's a lot of new estates and they seem to be doing a lot of shared ownership offers. For me, a single buyer it seems a good idea especially as the thought of a new house is nice as on my own I know I wouldn't be doing much renovating. Anyone have one? What are the pros and cons?

My friend owns a new build shared ownership house.

She divorced and couldn’t afford to buy on her own, despite having a good job.
She used her half of the equity from the sale of the marital home as a deposit and got a mortgage to buy 25% of a 3 bed house.

She did have a problem as she was 80% of the way through the sale when they realised she was not a first time buyer, but because she had already paid the deposit and a lot of fees she was able to continue with the purchase, although she was very close to losing it.

After a couple of years the house had increased in value and she was able to increase her mortgage slightly to buy another 10% of the house, because if the reduction in the rent she pays the increase in her mortgage was about the same.

Her income has not changed.

She’s looking to do the same again next year.
She hope to just keep using the increase in value/equity to increase her mortgage to buy more every few years so that eventually she will own 100%.

Selling is a nightmare. Not going into the details, but we nearly lost everything over their selling rules/regs. Genuinely pushed us both to feel suicidal.

They held all the cards, despite owning 75%. Basically, if it's something to do with repair/something expensive it's 'your' house. If it comes to selling, it's 'their' house

I know it works out for some, but for others it's a nightmare. I'd rather have a smaller place, owned outright, than a bigger placed shared. Never, ever again. Would advise the kids not to as well. Just one person's opinion mind.

glut Your experience of selling is what we have heard a lot of. A local Ha to us who does shared ownership is ultimately owned by some people who are what term bLAIRs. They were in the right place at the right time to take over the running of housing authorities for the council. They are worse than slumlords because they profess to be ethical and work for the betterment of those who don't have. There is a special place in hell for these evil people.

They run the shared ownership as a way to make additional money from development. Basically you can build HA homes on greenbelt. These shysters build shared ownership homes, sell them, when it comes to the occupant wanting to sell they won't agree to a price which is too high because down the road they want to own the home and manage it as a private residence, which normally goes for a much higher price. I've seen it happen too many times.

OP, my first response was as neutral as possible but honestly, unless you are central London don't bother with shared ownership. Buy a smaller place or rent from the HA. You would be surprised at how much HA housing is available outside of London. There are good landlords out there. Many of the HA are good and owned by honorable people with good intentions. Our family owns a HA, it's a true charity with none of my family taking a salary. Everything done by the charity is for the betterment of the poor. We don't do shared ownership.

They are worse than slumlords because they profess to be ethical and work for the betterment of those who don't have. There is a special place in hell for these evil people.

Hit the nail on the head there

Our first house was a 50% shared ownership. We lived there for 7 years before selling it and moving into our current house (non shared-ownership) 6 months ago.

Positives:

1. We got a foot on the property ladder and the equity we made got us the majority of the deposit to buy this house.

2. It was cheaper per month than renting a similar sized property in the area.

Negatives:

1. Unlike with a rental, you are responsible for 100% of the maintenance costs, so you have to budget for this.

2. The housing association we were with were utterly useless whenever we had to contact them.

3. The house was a new-ish build (was 3 years old when we moved in and were the second set of owners), and like a lot of new builds, was poorly made and had loads of issues over the time we lived there (and as I said we were fully responsible for the maintenance).

4. The housing association own the buildings insurance (because technically they are the freeholder / landlord) which meant when we had to make a claim (after our floor in the bathroom caved in!) it was ridiculously complicated.

5. The process of selling the house in the end was awful. It nearly gave me a nervous breakdown. The housing association held all the cards and insisted on choosing the buyer, but it took them forever and a day to do every little thing, and we lost out on houses that we wanted to buy because the process was so painfully slow.

Overall I think we did the right thing, but I think that's partly because we didn't buy the property from brand new (with the price premium that new houses demand) and we bought it at a time when the marker had crashed, so we made a good equity on it in the 7 years we were in it, but I didn't enjoy the experience of living in a shared ownership to be honest.

Oh, and I should say, there are some extra costs involved in having a shared ownership as legal costs are usually more for purchasing / selling, and you will have to pay for independent valuation surveys each time you buy a share or want to re-sell.

We didn't have problems with selling. Yes it was in our lease that our housing association were entitled to "nominate" a buyer. What they meant was, for 8 weeks, they were allowed to exclusively market it. But that was fine - it went on the shared ownership website, and people who were eligible for shared owernship came to view it. Several people asked to be nominated, and the housing association chose the buyer who scored the most points on their criteria. Loads of people wanted to buy it.

If no one had wanted to buy it via the housing association, then we could have marketed it via an estate agent.

I should add that our flat was in central-ish London (zone 2), and an affordable flat in central area in London is not going to be difficult to sell.

When it came to the conveyancing, selling it was a little more complicated than buying the house we were moving to. This was purely because it was a leasehold flat, so the freeholder's solicitor (who was slow and incompetent) had to be involved too. But that is not special to shared ownership, that is the case for any leasehold.

We did not have to go through the housing association to sell our flat. We owned 100% so it was no longer a shared ownership property and we marketed through an estate agent straight away and it was no different to selling any other property. We did have to pay for a sale pack (£200) which the housing association were surprised about- I can’t remember who insisted on that it must have been the buyers solicitor. The only extra legal work was due to it being leasehold.

Shared ownership is for those who cannot buy at full market value or are in a shared ownership already. It's a good idea if you need a boost onto the housing ladder. You need to be in a position that you can staircase up to 100% or move on without getting "stuck". I'm a 50% shared owner in the south east in my early 20s. It's better and cheaper than renting and we're in a high demand area with a good HA. We're only using it to get equity to buy the next place (full ownership). I would not touch it if you're already on the property ladder.

Thanks for the really honest and detailed replies. This has been really helpful. I think I'm going to steer clear of shared ownership. It will mean that I need to go for a house worth less and not as new as I would have liked but I can afford an okish house on my own so I think I'll sacrifice a newer house and hope that I can now start to build some equity and move to nicer houses in future, accepting I can't do it right now but acknowledging that I am in a good position compared to many people where I can manage to get on the property ladder without going down this route.

I know you've decided against shared ownership but here's my experience.

We had shared ownership. Selling wasn't too bad as we were allowed to choose the buyer. Only con is that the process is a little slower because leasehold paperwork etc is held by the housing association.

My friend sold her shared ownership flat in hours and was completed within 8 weeks. It really depends on the Housing Association as we are allowed to choose our own buyers and they had their own resale department. They aren't all the same

Although the resale manager at the housing association we had is a colossal bellend but that's another story and didn't affect us selling.

The same house on the same estate rents for £1200 a month. Our rent and mortgage came to about £550 a month. The savings were incredible and meant we could pay big chunks off our mortgage and our equity grew and grew. All the shared ownership owners are similar were we lived - in professional jobs and mid 30s.