Is shared ownership worth it?

[hertfordshiremum1984]

Hi,

I wanted some opinions and experiences on shared ownership.

Has anyone done it and loved it or done it and regretted it?

Is it worth it or financially unwise?

I can't see buying outright ever being an option for us as we don't earn enough, so it's shared ownership or renting forever. Any thoughts?

We have been in a shared ownership house for 3 months now so still early days and no experience yet of buying more shares/ selling the house.
However like you we could never afford to buy a whole house and didn’t want to be stuck in private rent putting money in a landlords pocket.

We got a 3 bed semi detached brand new house on a new development in our home town so didn’t have far to move. The house is perfect, we are a family of 4, nice garden not huge but fine for our needs.

No problems so far but like I say haven’t been here long but if you have any questions I will try to help

Close friends of mine did shared ownership on a flat, was only way they could get on the ladder on outskirts of London. Over a few years they gradually bought more and more until they owned it outright. They then sold and bought a house using the equity as deposit. So I've only seen it be good.

You will get people saying it is the worst thing ever and other it is great. In 2016 the rules surrounding SO changed - so the model leases for grant funded properties now state that they cannot have a locality clause and the maximum household income is £80,000. Prior to 2016 the properties were restricted to people who lived or worked in the area and a household income of no more than 40,000. This meant that there were very few people eligible to purchase the property if you wanted to sell and even fewer who could secure a mortgage on it.

With the relaxing of the eligibility rules it is becoming a more mainstream product, with most high street banks making mortgage offers.

We are at the later stages of purchasing a new build SO property.

The only downsides I've come across is your choice of lenders is vastly reduced and rates seem higher than a traditional mortgage.

It is forecasted that SO will gradually replace Help to Buy when it's phased out, which should aid a wider choice of lenders and better rates.

Lenders will factor in the rent as part of the affordability assessments. It's not as cut and shut as the advertisements often make out when they show the headline figures of the reduced house price. I.E 50% share of a £200k house means you only need a £100k mortgage, in real terms you will need to pass affordability of £100k plus the % the rent is set at.

Ensure you ask about ground rent, service charges and estate charges.

Thanks for your replies - I think my main concern is that the rent part might become unaffordable, there's also the concern of service charges and the cost of staircasing (buying more shares).

Also, does anyone know if once you've bought the whole property there is an option to buy the freehold if it is a house?

You would need to check the contract paperwork.

Ours states that when staircasing to 100%, the freehold will be transferred to us with no additional charge.

Our service charge is something like £2.20 per month and includes buildings insurance, so is nominal.

DH and I bought our first flat on shared ownership almost 13 yrs ago now. We had a lovely 2 bed brand new flat and the rent/service charge was affordable. We paid around £550 p/m for mortgage and rent/service charge so couldn't have rented somewhere equivalent for less.

We only ever owned 50%, had no issue selling as it technically worked out we bought the remaining share and sold on the same day so we just sold through a normal estate agent.

It allowed us to move to a house 5 years ago and we have now moved on again this year to a bigger house having amassed £100k equity so has definitely worked well for us.

That's very positive about the freehold being transferred.

I'm mainly hearing positive things so far.