Talk to me about shared ownership pros/cons

[dodgeballchamp]

Hello everyone, I’m hoping someone who’s done shared ownership can tell me what it’s really like.

I’m in the position of having found two flats I like - one is S/O (can’t afford to buy it outright) and the other is not S/O and I could afford to buy it the normal way.

The S/O flat is definitely nicer, bigger, lighter, lovely decor that I wouldn’t be in a hurry to change. The other flat is further out (I’m in London and it’s in zone 4), more expensive council tax, habitable and clean but very bland and I’d want to do it up, which I wouldn’t have much money left over to do once I’d put a deposit down etc.

If it was just a choice between the way the flats look and the location, I’d pick the S/O one hands down. The rent and service charge are reasonable, I can afford them on top of the small mortgage for a 50% share. Overall, both flats would have similar monthly costs as the mortgage would obv be bigger on the non-shared ownership flat.

But is it better to buy the normal way if I can and cut out the middleman of the housing association? Should I compromise on the flat to have a regular mortgage? Do the rent and service charges increase much in S/O? Are they hard to sell on?

I’m not looking to make a profit on property, I want somewhere I can live in for a long time but obviously if my circumstances change I don’t want to be stuck, and losing money would be annoying. But then I know that’s a risk with a regular mortgage too.

Would be great to hear pros and cons from other shared owners and what you’d advise. Thanks all!

I honestly wouldn't have bought SO if I had any way of buying fully on the market. I plan to sell and buy a full ownership the minute I can.
SO are expensive really once you've worked out what 100% would be "worth" in comparison to regular ownership.
You are responsible for all maintenance costs and repairs despite only owning a percentage of the house.
The rent and the maintenance/service charges increase each year.
Mortgages on SO are fewer and less favourable rates.
The solicitor fees can be more expensive.
If and when you want to sell your market is limited to only those eligible for the scheme.
The staircasing is pointless really unless you never ever want to sell because you're pricing people out of buying SO.
If you ever fell behind in the rent for whatever reason you could lose literally every penny of equity in your home.

Some info. here:
www.which.co.uk/money/mortgages-and-property/first-time-buyers/help-to-buy/shared-ownership-awjs50y9dbf6

So they’re all the cons

I literally complete on a SO house this Thur and I can’t wait! We have rented up until now and although yes our share is 35% that’s 35% more of a house that we’ll own compared to what we own now!
No more having to have the letting agents snoop round in their inspections (hate them!) no more worrying about putting a nail in the wall in case we don’t get the deposit back.

We plan on staircasing, after all that is the point of SO. Our mortgage was v reasonable and the one our mortgage advisor found had no set up fees saving us nearly £1000 across the 5 year plan.

Yes you are still responsible for the boiler/ maintenance but then you are anyway in a house you own.

We honestly could not have had a hope in hell of getting on the ladder if it weren’t for this scheme, not until we were probably in our 50s and got inheritance but that would have meant 30 years of renting!

Oh and also before we got this house (brand new) we looked at a SO resale, the owner had 4 people all going for it, including us, so he certainly had no problem selling it!

Thanks all. Another complication is the SO flat has a short lease but the housing association said I can extend it at the same time as buying, although I’m not sure yet how much that will cost. I’m really torn - I can see the sense in buying the normal way if possible but the SO flat is lovely, I can see myself living there long term more than I can the other flat. And the non-SO one is above a shop which may also complicate mortgage matters, it also has a service charge as its leasehold so I wouldn’t be escaping that either

How long is the 'short lease' OP? This can be pretty expensive and I wouldn't recommend buying any property with a short lease. Sorry.

Location is always key but my gut instinct without seeing the properties would be to as you put it 'cut out the middle man' ie the housing association.

Isn't the SO flat leasehold OP? Won't you be paying service charges there?

Having reread your update living above a shop isn't ideal and yes you need to talk to your building society re the mortgage. Also what shop is it? Is there a likelihood of in changing and becoming a restaurant? Youw ould need to check with the local authority on that one.

It sounds like you'd be happier in the SO one as you are justifying it more. Do your sums and see what position you'd be in 10 years and then decide on the best course of action

Yes they’re both leasehold, so even the non-SO flat has a service charge. The lease on the SO one is 78 years but as I said the HA said it could be extended when buying. The other flat is above a hairdressers but as PP have said it might not be a hairdressers forever! It has a new lease though, 120 years I believe

Bear in mind that if you go for the shared ownership one you will have to go through a financial assessment and buy the maximum share that they decide you can afford, so you might be buying more like 75% than the 50% you mentioned - just a heads up in case that’s an issue for you for some reason.

I asked a different question about shared ownership recently and was given some advice from someone that works in the industry that I think you’ll find relevant and helpful on this thread:

www.mumsnet.com/Talk/property/3727657-How-in-demand-are-shared-ownership-properties-in-South-East

Good luck which ever way you go! I’m at the beginning of the process of buying a new build shared ownership house at the moment, so exciting but so anxiety-inducing!!

It was good for me as I got priority. It was a ha section of a private Barrett build. I bought and sold in to another ha buyer and it was a pain in the arse as they kept sending round people that couldn’t afford it as they didn’t do the paperwork until they liked the flat. I lost my shit and refused to see anyone unless they had applied and been accepted. Location is the most important this so if so is a better area then do it but if not stay well clear. Ha on the whole are morons.....

It is a good area, but then the other flat isn’t in a bad area. It’s just a bit further away so the journey to work would be longer and more expensive.

Another thing I’m unsure about is, if I extend the lease when buying, presumably it’ll add value to the flat, and mean if I want to staircase later it could be too expensive. If I don’t extend the lease in order to try and keep the value down for staircasing, then when I DO come to extend it it’ll cost more as the lease will have decreased even more. That seems to be a bit of a catch 22

Another thing to consider is the cladding. Almost all of the SO builds round us in south east London have similar cladding to that used in Grenfell. There’s been a huge outcry because residents are left with homes valued at £0 until it all gets sorted out ie who pays for re-cladding. It’s a horrendous situation to be in as a home owner.

I feel for you because we live in zone four, never had enough deposit to buy outright and I assumed SO was our only option. But the prices are outrageous now. There was one in our local area that I know has issue with flooding and mould (it’s only been up four years and my friend lives there - the lift is regularly out of service because of mould!) and they wanted £265 for 50% share for a two bed flat. When you include rent and service charges of £500 a month. Plus a 20k deposit. I was looking at it in the middle of the night once, whilst breastfeeding, and just thought - fuck this. Might as well buy on the open market if we need 20k.

Cut to a year later, we’re just about to exchange on a 2 bed maisonette in our local area with a 5% deposit for £275k! So how can that SO flat selling for over half a million justify its price? It’s no longer an affordable scheme and depending on the construction, you cannot guarantee quality of build.

It really put me off and I say that as someone who had assumed for the last 8 years that SO was our only option.

Another thing I’m unsure about is, if I extend the lease when buying, presumably it’ll add value to the flat, and mean if I want to staircase later it could be too expensive. If I don’t extend the lease in order to try and keep the value down for staircasing, then when I DO come to extend it it’ll cost more as the lease will have decreased even more. That seems to be a bit of a catch 22

You've got it in one and that is why I personally wouldn't buy it.

Thanks everyone. It’s helpful to talk it through. I’m leaning more towards compromising on the flat and buying the non shared one, but my mortgage adviser is being weirdly enthusiastic about the S/o property, saying if it gets me a nicer flat I should do it! He’s independent so he isn’t on their payroll...

Could you have another look round them and really scrutinise to see if this helps make up your mind? HAve a drive last both in the evening to check on noise etc.
Do you know anything about the neighbours of either place? That’s quite a big deciding factor!

You definitely don’t want to leave the lease to long. If it goes below 70 years the price will go right up. It depends how long they’ll give you as well plus some freeholders are now adding stipulations to their leases such as doubling the ground rent every 20 years etc. This can also make it more difficult to sell in the long term.

I would buy the property you can afford outright.