Rent a 2 bed vs Buy a Shared Ownership 3 bed

[Yvemen]

Hi everyone,

I hope you can help me with a dilemma we are currently having.

Family of 3, currently renting in hither green / Lee green with a preschooler who will be starting school this September.

We will have 16k in total saved by end of August and need to move as our landlord is selling up, plus our current place is so so so small. The debate we are having us, do we rent a 2 bed for around 1450-1500pm OR buy a 3 bed flat in a new development near greenwich via shared ownership scheme which would cost us 1600-1700pm

Whichever choice we decide to go with, we are planning to stick with for at least 5 years and we are planning to have another child within that time.

WWYD?

Thanks all

How much is 2 bed private bed?

Doh sorry you already said that 🤦🏼‍♀️

Is the payment on the 3 bed part repayment mortgage and part rent or??

But the shared ownership- you’d be mad not to

Buy not but!

Shared ownership obviously, since it's not relatively that much more per month

Shared ownership ! At least that way you are gradually investing in owning you home. It worked well for us.

Thanks guys!! I was leaning more towards the shared ownership but needed to hear validation I guess 😂

@randommess yes it's be part buy part rent (including service charge)!

@Tiddle I would love to hear more about your experience. Please PM if you are happy to share!

Shared ownership! Definitely!

Shared ownership.

Shared ownership all the way if you can

Shared ownership, but do thorough research to avoid getting trapped in a dodgy lease.

shared ownership is ideal for you.
however, 16k saving may be low.

shared owner since 2003,recently purchased 100%,best thing ever if you can't afford to buy on the open market.

Thanks everyone for sharing your opinion.

@mumsy27 you are not wrong, I think we we were hoping to put down 13k for deposit and use the rest for fees but even with that significant deposit we could be just under the amount we need.

It's crazy how they position this as an affordable housing option for those who can't afford to buy outright but it is still incredibly expensive and unaffordable for alot of people!

We Will have to try to negotiate with the developer/housing association or have to save an additional 2k from somewhere so we can put down 15k as the deposit and use the rest for fees.

The shared ownership should be better but do be cautious. Exactly what does the contract say about ground rent and service charges? Don't just sign it, project what it could mean for you in a few years time. Some people have been badly burned by inappropriate terms in shared ownership contracts. Depending what the contract says about selling you could also have difficulty finding a buyer in 5 years time and it's not unusual for families to be effectively stuck in a shared ownership home that is too small but the barriers to trading up are too high.

I'm not telling you not to do it - it could be the right choice - but make sure you understand and assess the risks. It's not a "no-brainer" as pp suggest.

How does stamp duty work on shared ownership?

I assume it is a repayment mortgage as I don't think you can get interest only anymore.

I would also look at affordability if the interest rates rise if you can't get a fixed rate mortgage. Also I believe the rent will increase year on year too.

Rent increases by very little- max 2.75% at the moment. Your private rent will increase by much more. The rental element is likely to be cheaper than mortgaging that 50%

It’s just a normal mortgage but only certain lenders do shares ownership and you are unlikely to get the lowest rates (but you wouldn’t as a FTB anyway) nationwide are supposed to be good.

The service charges leasehold issues are nothing to do with shared ownership but apply to all flats.

I can’t recall re stamp duty but it’s easily googleable

I know someone who's had a SO House for several years - it's worked very well for him.

Main advantage I can see (over a private rental) - especially if you have children to think of, is that you won't be at the mercy of a landlord saying you've got 2 months to get out, since he's decided to sell.

Hey,

So the service charge element of total 1600/1700 cost is a bit steep at £250pm, but this is the same for all people in that building, whether they are private rent, private buy or shared ownership and although I could do without it, the charge pays for 24hour concierge, gym, underground parking and the maintenance and upkeep of building and area. Guess it would be one of those costs I’d just have to suck up.

I am really just so sick of having a landlord or estate agent pull surprises on us like raising rent or selling up and we then have to uproot and move. I really just want to be still for a while and have security.

I certainly will be taking some of your advice and asking a multitude of questions before signing anything as I don’t want to get trapped.

I have also heard that interest rates are quite poor for ftb, let alone a ftb doing shared ownership but we are hoping that as we are 29&30 we will be able to offset this with a 30 year mortgage?

Thanks for flagging the stamp duty part! I just checked and looks like gov’t announced in the 2018 budget that stamp duty is abolished on any shared ownership property up to 500k! Brill.

you can also get "second hand" shared ownership
www.sharetobuy.com/shared-ownership-london/
look round this site -you will have to log on - check maintenance costs too - brand new shared ownership tend to be more expensive & you may get lower percentage share - some second hand/pre owned/resale (!) are only a few years old &our def worth looking at -

I looked at shared ownership but I was better off buying out right. As it was much cheaper. But for you it sounds like the best option.

And is it leasehold or freehold? Sounds like it might be leasehold, in which case read the lease carefully. Check out the situation re ground rents. I think this doubling of the ground rent every ten years has been banned, but still...

I would also have a link at second hand SO

SO when you have a child without a doubt, you have security and can’t be made to move out.

Agree with the pitfalls of shared ownership and leasehold properties in general. Make sure you use your own solicitor- NOT one recommended by the developers no matter what incentives they offer you to do so. Try to get one who is a lease specialist and get him/her to go through it with you, with a fine tooth comb. S/O new build estates are becoming a huge problem for many.