How in-demand are shared ownership properties in South East

[MrsMaow]

We’ve applied for a shared ownership property, have been assessed by a financial advisor who have confirmed it’s affordable and now just waiting to see if we get allocated a property.

We won’t find out for ages if we’ve been accepted and I can’t stop thinking about it, can anyone help me worry less/let me down gently by giving me an idea of how many applicants per property there usually are? Or does anyone know how housing associations decide who gets priority if there are loads of applicants?

BTW yes I am aware of all the pitfalls of SO but it’s better than just renting, of course buying outright would be ideal but we have no chance of doing this and need to stay in the area.

Thanks

We’re in south east London and they’re always advertising them and most developments aren’t filled round this area. I don’t actually think they’re that affordable anymore - one we were supposedly eligible for and that was “affordable” on our finances was a 72% share that would have meant our housing outgoings was almost 2k a month after adding up mortgage, rent, service charges etc.

We said we didn’t want to take on 72% and couldn’t be buy a smaller share and staircase up, like you see in the adverts. They said no - because they’re systems assessed as being able to afford that much, that’s what we had to buy. Just because we could have afforded it didn’t mean we were comfortable with it so we passed on the offer.

I think the scheme was intended to make homes affordable when it first started but these days, it’s just greedy developers making things to a slightly higher spec so they can charge way more. The price of two bed shared ownership flats are pushing a valuation of 150k more than open market flats round here and other areas in London. Which is mental.

Anyway. Back to your question Round our way there’s a lot of empty flats and a lot of shared ownership flats for re-sale (at crazy prices) so there’s plenty of availability. Fingers crossed you get your property offer soon :)

'affordable' is no longer so in London/SE unless you are earning a very high salary or have two really good ones combined. It's a ludicrous term.

We looked at SO but the financials did not make sense to me. It was would have been double what a mortgage or rent would have been.

My experience is people do buy them, I'm in SE. But I think help to buy has taken over popularity, less of a demand for SO.

I'd say they are not in demand at all. We've had our SO flat up for resale since Feb, little viewings, no offers. Place is in good shape, good area, not overpriced. Estate agents just tell us it's a very limited market and the general market is slow anyway!

Thanks for the input everyone, I really appreciate it and feel a bit more optimistic now that there might not be much/any competition for the same homes.

We’re on about 30k between us, it’s affordable only because we’ve been but up a pretty big deposit after saving for about 793 years!

Where are you in the SE MrsMaow?
Our SO in Sevenoaks is just about to go on the market so here’s a heads up if it’s somewhere you’re looking at living.
After two SO properties we’re finally managing to get fully on on the property ladder, still not without a little help from my folks though!!

I know a number of people who did shared ownership and regretted it. The combination of mortgage, service charges and rent ending up working out more expensive than if they'd bought outright. It depends which housing association you go through but for all of them, things are tough right now (combination of Brexit impacting the property market and the increased costs for fire protection following Grenfell) so service charges and rents are increasing by as much as they're allowed to increase them (by govt guidelines). Housing associations are having to get increasingly tough and aren't as benevolent as they used to be. They have no choice as it's a matter of survival right now. And if they don't survive, they can't help people. (I work in the housing industry at present but don't want to be too outing).

You should keep in mind the extra costs too - staircasing, paying for a surveyor val. Giving HA first dibs on selling and it possibly not being on right move. If it's a forever home or you want to staircase to 100% maybe..

I'm with hundred. In our wider friendship group we know 3 couples who did shared ownership. All of them would probably not recommended them. One in particular has been held to financial ransom really when it came to sell.

I think everyone needs to remember that buying outright isn’t an option for everyone. SO helps people get on the ladder. There’s absolutely no way my husband and I would be able to buy our own property now without having spend 4 years in SO.

Thanks for all the extra comments

@Lmb85
Thanks for the heads up but I’m in Hampshire

@HundredMilesAnHour
That’s some interesting insight from an insider, thanks. I’m aware of the maximum the rent can increase by govt guidelines, but I can’t find anything about the maximum that the service charge can increase by, I thought it was calculated based on work needed to communal areas etc (appreciate they probably charge as much for this as they can even if it actually costs them less) - would you be able to enlighten me about any maximum %s that exist is there are any please?

Thanks so much

@Lmb85

Again thanks for the comment, for us it’s either rent for probably ever or shared ownership and I know which I prefer.

Like people say it’s a con because you end up paying for all the repairs/new appliances etc but only own whatever % - yes I know that’s true but I would honestly rather pay for repairs and stuff and actually have them done, than wait years for the landlord to agree they need doing and then additional years for them to get done.

So anyway, again, thanks for the supportive message

I can’t find anything about the maximum that the service charge can increase by

That's because there isn't a maximum. Legally, all your service charge needs to be is "reasonable" and apportioned "fairly". And this is what a Tribunal will look at if you ever ending up going that far.

I suggest familiarising yourself with the a good understanding of service charges so you can ask the right questions if/when you get offered a property:
www.lease-advice.org/advice-guide/service-charges-other-issues/

Service charges (and sinking fund) calculations can be quite a complex area when you start getting into 'mixed tenure' buildings. By 'mixed tenure' I mean a mixture of resident types such as leasehold/shared owners and renters (tenants) whether that be social or affordable rent or market rent.

It's important to bear in mind that the service charges for newer buildings tend to be higher. Although they should need fewer repairs than older buildings, this isn't necessarily the case if there's been shoddy work done by the developer or the developer has used cheaper materials etc. Unfortunately this is fairly common. Newer buildings also tend to have more shared facilities (such as lifts or electronic gates) and these all need maintaining/servicing so the service charge increases as a result. All those lovely shiny things that make your building so appealing? It's going to cost you. Make sure you understand how the service charge is apportioned (ie.split between homes) before you sign your lease. The market convention these days is by size i.e. square footage/metreage but it's also possible to do it just by the number of homes or even number of bedrooms. It's important that you understand what you're getting yourself in to. It's amazing how many people don't. I know of quite a lot of developments that apportion by number of homes so someone with a 1 bed flat living alone pays the same as someone with a 3 bed flat and 4 kids. Of course the 1 bed flat owner hates this and think it isn't fair. But if you do it by size of property, the 3 bed flat owner pays more than the 1 bed flat owner which the 3 bed flat owner hates. Both methods are considered fair legally but it's worth understanding what method is used when you buy somewhere so you can feel comfortable with your share of the split.

If you're intending to staircase (make sure you understand the extra costs involved in doing this as it can be expensive), and/or be there a long time, make sure you understand what the sinking fund covers and how it's calculated. Find out what the current sinking fund is and ensure this is on track. You don't want to move in and then find out the whole building needs a new roof in a year but the previous sinking fund contributions have been too low so you're going to be hit with a big bill. A sinking fund is basically a long term savings account for major works/repairs such a new roof, new doors & windows, new lift etc. Some buildings don't have a sinking fund (!) or have very small contributions. This makes them look very competitive when you're buying as the service charges are low. However, this isn't necessarily a good thing as it means you can be hit by huge bills when work is needed. So sometimes a high service charge is actually a good thing if it's covering a prudent sinking fund contribution as you're basically paying a little more now to avoid being hit by a big bill in the future. Are you starting to see what I mean when I say this is quite a complex area?

I'm not trying to put you off but it's shocking how many people sign up for things that they have no understanding of. And then they get hit by bills higher than they can pay. I know some who've even taken their housing association to a tribunal over service charge costs because they think they're paying too much. This normally ends badly for them as legally a service charge just needs to be 'reasonable' and 'fair'. Despite what people may think, housing associations aren't trying to make a profit out of service charges. These are not-for-profit organisations. Your service charge will include an admin fee for the housing association which covers their costs for staff, HR, IT, etc.

Hope this helps a little.

@HundredMilesAnHour has given you lots of truthful facts about S/O.
It is an unregulated market with uncapped service charges/admin/permission fees etc.
Also increasingly common is that councils are not adopting the estate which means you are paying for everything the council would normally pay for and that is on top of paying full council tax.
New Builds are now sold in a set up to be an ongoing income stream for investors.
Research very carefully and don't believe anything the sales staff tell you.

We’re due to complete on a SO house in Kent this Thur (!!) so am a bit further along the process if you have any questions I can certainly try and answer

@desperatehousewife21

Congratulations and good luck for Thursday! 😀 how exciting. How did you cope while waiting for the mortgage decision?!

I’ve asked about how to choose a solicitor on another thread already and for now that’s my only question but I’m sure loads more will come up along the way so I will PM you when they do if that’s ok? You can just ignore the PMs if I bombard you a bit too much 😀

We first registered interest back in April so the whole process has been the longest wait! We used the mortgage advisor that Moat (the SO housing association) recommended and we actually used a local solicitors as my father-in-law works there! (He wasn’t our actual solicitor tho).
I feel your pain about the wait, it really is agonising as it’s all you think about. I’m literally counting down the hours til I get the keys on Thur

Absolutely feel free to PM me anytime for advice/ hand holding!

Some interesting news on shared ownership:

www.leaseholdknowledge.com/shared-ownership-is-not-ownership-its-the-pay-day-loan-of-housing-and-most-regret-having-done-it-london-assembly-told?fbclid=IwAR07qsw5i9gbQqg9Mz6pk1CYPLllXgYebOMyDw0GlQI0QHt4PC7zmAlC2nY

I have a SO house. We own 70%. We pay 3% annual rent on the amount we don't own, £20 a month service charge and zero ground rent.
We couldn't have had a house like we have without it so it's been great for us. We hope to staircase to 100% in the next two years. We purchased out SO house through a charity and we are in the North West so house prices aren't as ridiculous as elsewhere. Good luck.

SO best thing ever.
purchased 50% at the beginning,last march the rest.
staircasing was very smooth and cheap.
if it's a house with no communal area then you do not pay for service charge.
building with lift tend to cost little more in our case £95 per month.
london zone2.
housing association are responsible to maintain the loft or any outside bits,even your windows from the outside.
does not cost more than any other properties.
our rent for 50% was around £340, 2 bedroom flat.

i'll advice anyone to purchase to 100% before selling,you don't have to go through HO and you target much wider audience.

ohh! you don't have to apply for one HO.
I've applied for at least 8-10 so i could choose the location and property i wanted.

Shared ownership were never affordable, they are market value with percentage purchase, the rest is rent with is cheaper than open market.
in our case property worth £400k, 50% rent is £340.
rent increase around 3% per year,you should ask HO for the rent increase,in our case it was written somewhere i can't recall.

If you have to wait to be allocated a house then they must be in demand?

We're currently buying a new build SO property in the NW and the experience so far is similar to buying direct from the developer. We've been able to choose our plot and fit out extras like flooring, blinds, built in wardrobes etc...

The house and the development are the complete opposite of what I'd have imagined shared ownership properties to be.