Shared Ownership or Rent?

[Yvemen]

Hi Everyone,

I’m having cold feet and would love a bit of advice.

My partner and I are ftb with 4 year old DD. The plan is to buy 25% of 2 bed flat in Greenwich, London this summer but I am now finding myself having cold feet and stressing about if shared ownership is the right route to go down or if we should just be patient for another few years and buy a house on the open market?

We were planning to put down £15k for our deposit but I’m thinking, would it be a better idea to put that into savings, keep adding to it and come back in a few years to buy a 3 bed house which could last a longer amount of years rather than 2 bed flat?

I can’t tell if I am just panicking because this is the biggest amount of money I will ever spend or if I am having a massive lightbulb moment and seeing sense

The difference in monthly cost would be around £1400 pm if we did shared ownership and £1500pm if we rented. I hate the whole renting and throwing money down the drain thing, but is it better in the long term???

Thanks in advance!!!

And when you buy a house is it not for long term usually

Not really especially if you are a ftb.

What would you consider long term? I can only forecast where I will be in the next 2-3 years. That to me is long term.

Also everyone can extend their lease. There are companies who can act in your behalf to get the best deal and do all the paperwork. I didnt think the freeholder can overcharge as their is a formula that it is worked out

If your shared i would check your h/as policy i have never heard of anyone getting this for free. Somebody had a 42 year lease and shared & expected to pay 35k

Sadly thats not the case for Shared.. you are not entitled to a Lease extension and if you get one its Informal and up to the h/a if they grant but of course they will as there is no legislation in place so they are open to charge what they like.. if a ordinary person who owns 100% pays 5k you could too.. not your % your at freeholders mercy/fairness
www.lease-advice.org/advice-guide/shared-ownership-leases/
Read down & youll see you are NOT entitled to a formal lease extension unless you are at 100% this is the case i am afraid. And if you get a lease extension it is informal and it is up to the h/a what they charge % wise of the premium.. some will be fair and only charge you % you own.. others not so much!!

Please do not go for shared ownership. Costs you cannot control, ground rent, permission fees, service charges, Section 20 charges, possible lease extension costs. You are a tenant. You cannot extend the lease until stair cased to 100% ownership. Look at the National Leasehold Campaign Facebook group. You will pay a lot of money up front to buy your share, you do not own anything and will struggle to sell in future. As a short term tenant, at least you can walk away and have more rights. You are trapped with long leasehold, and a real problem if the lease length is short, less than 80 years.
Try for a genuine freehold property instead.

Do your research carefully!! S/O is rightfully getting the bad publicity it deserves. The on going costs can be crippling and many people are finding they are trapped.

I'll give you an example of a Quote i was given from our 'charity/not for profit' freeholder/housing association..

£350 admin fees
£1000 legal fees (theres)
£600 RICS valuers fee
and putting my houses details into a Lease extension premium calculator online about a £5000 premium of which they have said to me you WILL pay 100%, when i asked why and stated this is affordable they say 'because we can', now of course we could just be unlucky with regards to having 100% but it does happen a lot as it is unregulated & you just simply are NOT entitled to a formal lease extension or a Lease extension at all, legally, as links above show. There was also a high court case where a lady fell behind on rent and got house repossessed and was not entitled any money from her share as she was deemed just a tenant.
to add to fee's i also have to pay my own solicitor so about £1000 again..

it will be a informal extension and people have some horror stories about informal.

puting in your flat at 350k 80 years left your premium will be between £6-8k at present + all fee's above which WILL be put on you.. you will be expected to pay your own & their solicitor fees and you will be expected to pay for the valuation.

An alternative as I have said is buying a smaller 1 bed place or going further out.

Waiting to save for a house further down the line is false economy.
By the time you have saved property prices will have gone up and you might only be able to afford the 2 bed flat.

uk.trustpilot.com/review/www.lqgroup.org.uk

I totally agree. Shared Ownership is NOT the answer and there is alot of hidden costs and escalating charges.

Shared ownership is a hot topic within government at the moment. I run the National Leasehold Campaign and there is many shared ownership people trapped.

Have a read of this article and also join the National leasehold campaign in facebook for support and further guidance

www.thetimes.co.uk/article/shared-ownership-scandal-dbl3bfj8f

m.facebook.com/Mistreated-Tenants-of-LQ-900386236747404/posts/?ref=page_internal&mt_nav=0

m.facebook.com/Mistreated-Tenants-of-LQ-900386236747404/posts/?ref=page_internal&mt_nav=0

Short term renting is still better than the non ownership of "shared ownership". You are still in a landlord tenant relationship with shared ownership, having paid a lot up front, with all the out of control costs described above, less rights than as a short term tenant, and then having to sell your property when you want to move. It is possible the madness of the London property market and people's ignorance about shared ownership and long leasehold in general would maintain the value of your investment, but it is a huge gamble you do not have to take.

The OP wants to us a new build so why all the talk of lease extension? New leases are usually 125 years and lease extensions are needed only when they drop to under 80. As mentioned above, the leaseholder needs to pay professional fees but even with those, it would cost under 5k in 2064! It would be daft not to buy on that basis.

I did it, when i was single got a resale 2 bed flat in Peckham with 30% share. Did the place up, was really happy. Sold it 2.5 years later for 60% increase, it was just as Peckham became trendy so i got lucky. It allowed me and my new partner at the time to have enough equity to buy a 3 bed house not too far from Greenwich.

We were with Family Mosaic. They were pretty crap overall but when the 10 flats in our building got ourselves organised together they listened to us. Always read over your annual lease charges and updates with a fine tooth comb, they were either lazy or cheeky with charges and increases that weren't right. They always reneged when we challenged

Firstly, your cold feet could be due to a subconscious awareness that all is not good with shared ownership! The marketing of Shared ownership has been changed recently because it is totally misleading. Just do a google search and you will see that it is fraught with problems and your life could become a nightmare. I saw your post and felt I had to warn you not to make the mistake that so many poor souls have made. Leasehold is not home ownership. Leasehold is purchasing time in that property only. When and if you are able to own the lease it will need extending and you’ll have to pay out again, an unknown figure. There will be uncapped service charge and ground rent to be paid, ( which may rise). If I were you wait to buy a freehold house. And this means you will pay no service charges or permission fees, ( if they are around then the house is ‘fleecehold’ and will be very hard to sell on) I really hope you take my advice, I hate to see people falling into the awful traps in the property market. Please I say again just do a google search and avoid shared ‘ownership’.

Thanks for the leasehold campaign links, we are in a similar SNAFU having gone under 80 years (poor advice from our conveyancing solicitor and lack of knowledge of this legal minefield!!)

Moonlighting- there are so many horror stories and desperate people who have been lied to, misled, being forced and bullied into paying ever rising unregulated service charges, and who now find they cannot even sell their homes. This is due to mortgage companies now wising up and refusing to lend on many SO and fleecehold properties.
We are trying to raise awareness through the National Leasehold Campaign. We want to save others going through similar nightmares.At the very least we can alert people to research thoroughly and understand the complexities of S/O and fleecehold.

We have recently sold a SO flat, formerly with L&Q actually, although we staircased to 100% and then had to deal directly with the freeholder's agent for service charge and ground rent.

Overall it was good for us - we made about 20% profit over the 3 years we owned it, meaning we could go on to buy a house - freehold - though in a different area.

Had a nightmare with the freeholders agent when selling. Find out who they are before you go ahead. L&Q are good actually, but they are just the HA and there will be a number of other companies invested.

I would only do SO if it was impossible to buy any other way - for us, this was the case and I don't regret it. But the section 20 notices, service charge, ground rent etc was quite crippling. You are very much still a tenant and not in control of much.

If there's any way of buying cheaper further out I'd do that, though not a one bed with a 4 year old. Ultimately we moved to a much cheaper area for this reason.

Thanks for raising the leasehold issues that can happen for SO. I wasn't up to speed with this particular problem, I've now looked into the development we are interested in and luckily it's a 999year lease on all of them, (regardless of SO, HTB or outright traditional sale)

I think there is still a need for me to continue looking further into the issues. As I said before the one thing that is working me is the service charge but to be fair to them, it is paying for lots of on site amenities that I will benefit from and it's not exclusive to SO owners, everyone pays that charge. I think I will have a look around at other developments upcoming in this area and assess how the prices differ???

Also, regarding the plan about how long we'll be here for, it's definitely a 5 year plan (max-ish) and we will be using this as a stepping stone to move on to a house later down the line. And we will probably move away from the central greenwich area at that point as decent houses here are hugely expensive.

@TiddleTaddleTat Thanks for that specific feedback on L &Q, much appreciated.
Good to hear some decent feedback, how long were you in your SO property with them for?

@Yvemen we were with them about a year then inherited some money which we used to staircase for the rest (around £40k iirc). We did then have to deal with them a fair bit after that - issues with upstairs neighbour, and refunds of service charge due as they'd made an error. They were always easy to get hold of and acted promptly so I'd recommend them as far as HAs go.
Find out who the freeholder is, and who their managing agent is. We had 3 different companies dealing with this. Some of them have a very poor reputation so googling them before committing is worthwhile.
Good luck

Wow 999 is great, 125 is the max we can have.

We bought our first flat through SO nearly 20 years ago. It worked really well for us. We originally bought a 50% share and then purchased the remaining 50% a year later. The housing association valued the remaining 50% at a lower price than market value so it cost us less than market value to buy the remainder! We were very lucky and sold the flat for about 40% profit after 5 years. However the flats that were sold on for 50% ownership actually went for more money relatively speaking eg 100% ownership went for £295k whereas 50% ownership flats sold for £165-170k! So sometimes it can be worthwhile holding off stair casing for full ownership!