Shared Ownership- to proceed or not...
londewy123 · 12/08/2020 09:38
Does anyone have experience of buying a shared ownership property? My DH and I (and son) are looking at a 2 bedroom flat at £160,000, 40% share. We have £16k deposit. We plan to be in the area forever really, although would ideally like to move on (already thinking that far ahead!) in 6-7 years.
We have a two year old son, currently private renting.
The development we like is spread over 3 buildings, with 6 flats in each. I've just read the small print and 6 of the flats will be reserved for short term lets for homeless people.
I just don't know if its a good idea. Its such a nice development, in such a nice area (good schools, close for work etc).
We can't afford anything 100% mortgage so have to look into SO or saving for a few more years (but with rent and nursery costs, its hard to save more than a few hundred a month, so it will literally take us years now).
Does anyone have any experience of SO they'd like to share? I would be SO grateful.
We're not precious at all but I obviously want a safe environment for my son, it sounds awful writing it but the homeless aspect worries me somewhat.
Any opinions/ experiences shared would be appreciated as I'm really in a conundrum....
THANK YOU x
lastqueenofscotland · 12/08/2020 11:10
I used to work for a housing association specifically in temporary housing, and a lot of our tenants were very chaotic.
Awful, but it would put me off.
Takingontheworld · 12/08/2020 11:11
SO yes, but not under those circumstances.
wentawaycameback · 12/08/2020 11:14
I bought through shared ownership (long time ago) - it was the only way I could afford to buy and worked out well financially. However I would also be put off.
fabulous40s · 12/08/2020 11:38
londewy123 · 12/08/2020 12:20
Thank you for your replies.
It's such a pot luck. I'm so excited by the prospect of having our own home (well already partly) and the area is so great.
Everything about the flat looks lovely but if we get the neighbour (or neighbours) from hell (ie partying all night and no regard for us at all) it will be awful.
Does anyone know if these 6 homeless would ever be sold by the council? 😭then again, the people that move it could be brilliant...
londewy123 · 12/08/2020 12:21
Sorry there's so many typos, I'm on my phone! 🙈
Sofasogood1 · 12/08/2020 12:27
Hi op. I have done shared ownership. It's not perfect but it is a LOT better than private renting. It was what I could afford.
Who owns the block?
My flat was what's called a section 106 home, so there were five shared ownership flats in a block of about 50, the rest of which were occupied by a couple of owner occupiers and the rest by landlords renting them out.
A lot of people great but a lot of dicks too. Pot luck with neighbours wherever I think.
The rented flats will be allocated to people on the housing list some of whom may have been waiting years for a home and many like you - families.
If the block is owned by a housing association they will be the new tenants landlord so should deal with any anti social behaviour etc and managing the common areas, gardens etc.
Have you looked at any other shared ownership places like what I've described above - part of private developments?
I actually think it's good to have a mix of tenants - if you still all the 'poor' people in once place areas don't do well and the people don't do well.
It wouldn't put me off, but I have the experience of living in a block with complete fuckwits who are not social tenants
Sofasogood1 · 12/08/2020 12:28
ps I doubt that a bunch of partying 20 something's will be allocated a flat. More likely to be a parent and children, family, older person, disabled person. That doesn't mean they won't be arseholes too but they'll be deemed high priority
Sofasogood1 · 12/08/2020 12:30
Will the flats be used as temporary housing or more permanent tenancies? I'd ask
Lightsabre · 12/08/2020 12:34
As @Sofasogood1 says, it makes a difference whether they will be temporary homeless lets as that would mean it is more likely to be alcoholic, chaotic etc.
londewy123 · 12/08/2020 13:24
Yes that's a very good point about being temporary or not.
I have allot of questions and don't want to completely discard the idea of this apartment.
I don't mind social housing or anything like that, it's literally just the fact there might be a frequent rotation of homeless people in the next building and what does that realistically mean living next to. Might be fine, also might be a total pain and could prevent us from selling later down the road....
So much to think about, thank you all.
Elsiebear90 · 12/08/2020 13:36
I personally wouldn’t buy due to the homeless element, there are obviously a lot of people who find themselves homeless through no fault of their own, however, there are also a lot of people who find themselves homeless because they’re an absolute nightmare tenant and no one will rent to them.
Endlessmizzle · 12/08/2020 13:36
I shared-owned my first flat in London. I would never, ever have been able to buy outright.
Benefits - I had my own one-bed flat when I earned 20k a year. I had been living in a very up and coming area, so I could see it would get value (run down area in London but with new tube coming, a lot of creative people and beautiful victorian housing stock all around. My own actual flat was in a pretty hideous block, but actually better built than some private modern blocks built by developers). I paid every penny I had over into paying down the mortgage asap as that created my deposit for my next move. I also staircased up to full asap. (I bought as soon as I was able and then doubled my salary in next three years). It gave me a respectable 'grown up' home that I was secure in, could decorate, could make plans for (repayment etc). Like, suddenly there is a huge impetus to save money and pay down the debt. This combined with the uptick in the area meant that when I sold I then had a big deposit for my next house. BUT, even though the area was now super trendy, it took longer to sell due to the SO factor. So you might not get as much as the next flat that has always been privately owned.
The other tenants were housing association too, they were a mix of delightful and problematic. It was a bit of a cliche of the delightful cheeky ten year old becoming a nightmare seventeen year old selling drugs.
I think if you ultimately want to move on from it you have to see it as an opportunity and a good, secure staging post and pay down the debt asap as you can't necessarily depend on the value going up as much as other types of flats.
I do think that renting can be so stressful and uncertain and take up so much headspace that just getting a secure space to be can free up your time to concentrate on getting a promotion, or on family etc. It sort of 'sorted' the housing thing for me at a critical stage of my life and I'm forever grateful for the opportunity it gave me!
Just mind the management charges though, and who you pay them to.
Endlessmizzle · 12/08/2020 13:40
I am actually really reflecting now on how much SO changed my life! I hope if you go for it it does the same for you!
RedToothBrush · 12/08/2020 14:21
I've done shared ownership. I found it a mixed bag. It worked for us, but I think from what I know and our experience we are probably the exception rather than the rule. For most people I think its only really viable if you NEVER have a chance of anything else and you intend to stay in an area permenantly (having something that ties you to an area in addition to work, like a family connection is a probably key consideration) and are unlikely to want to step up the property ladder in the future. If you could save a bit longer and then buy, I would tend to lean that way tbh, knowing the pitfalls.
We eventually bought the rest of the property but we had various issues with dealing with solictors when we bought initially, when we scaled up and when we sold on. Make sure you get a solictitor with experience in shared ownership if you do decide proceed. We also had a restricted number of mortages we could apply for. Not all mortages are available for shared ownership. And this of course means you get stiffed for a higher interest rate.
We did ok with shared ownership. It worked for us, but i do think it only really works for most people if the housing market is rising - you can get completely screwed and trapped if the market stagnants or drops. If you end up going into negativity equitity or financial trouble you can't sell, but you also can't rent the property out. That might limit your options for moving elsewhere for work. It only worked for us because although the market just stalled (we bought in 2007) DH's salary increased significantly and we over paid on the mortgage. If it hadn't we'd have ended up in a situation which others in the estate have found difficult - our scheme had a rent attached to the portion of the house we didn't own. This increased annually in line with inflation. We bought our way out of it, but a couple of our neighbours ended up in a situation where they were paying mortgage + rent for the property which was MORE than we were paying in mortgage for the entire property even though the property was worth the same. One of them ended up having switch to an interest only mortgage to keep the house - she couldn't afford anywhere else locally to buy.
So think about what your long term goal on home ownership is about - is it about a secure roof in an area you can't afford, a stepping stone to full ownership avoiding renting etc? Keep focused on this. And I would encourage prioritising over paying on the mortgage on shared ownership in a way I wouldn't for a normal ownership because of the trap of shared ownership.
We also know that some of the shared ownership properties on the estate had a problem with being sold on - and I've heard of the problem elsewhere. The issue is because you don't own the property outright you are restricted on the sale price when you come to sell. It effectively removes your ability to drop the price slightly to accept a lower offer than the asking price. You also can't easily reduce the price if the house isn't selling. The inital valuation therefore is key, and has to be agreed with the housing association who own the rest of the property. The worst case I've heard of is a friend of a friend who was in a situation where the housing association wouldn't reduce the price for 4 years which meant they were unable to move.
Our estate was in a really nice and desirable area and mostly larger detached properties. Our section of the estate was smaller houses and was great, but there was another part of the estate which had shared housing and social housing which did seem to have an antisocial problem.
As a rule, the shared ownership homes on the estate, despite being cheaper than anything else in the area, tended to take a long time to sell. This was despite a clause in our property that meant that if there were no interested parties for shared ownership, the entire property could be sold at 100% value too. Like you, people are more hestitant about buying shared ownership. That limits your potential pool of buyers. If you haven't got a clause to allow you to sell to a buyer who wants 100% of the property, thats another thing which might trap you to the property.
The things to look hard at are management fees, rental fees and anything which might limit how you can sell in the future. You don't realise how important and significant tiny details can be in this. We are very savvy and sharp buyers and had a solitictor who was very good at shared ownership. Others who bought on our estate had shocks later down the line with things they didn't realise in the terms and conditions.
For me, from what you've said my concern would be with the homeless tenants and whether you would get an anti-social problem developing (which could impact on the saleability of the house). Its a huge wildcard which could add to the danger of the trap of shared ownership. It would be a very serious red flag to me tbh.
I think Shared Ownership definitely has its place. It worked for us, and I think its good for a lot of other people but its not without significantly more risk than normal ownership.
missdunkindohnut · 12/08/2020 14:24
We had very positive experience of a shared ownership- was far cheaper than private renting and we sold it immediately when we were ready to move on. They sell very quickly where I live.
That said I think HA’s can differ with their rules (eg some will only let you buy up to 90%) so it’s worth looking into what all the t and cs are.
Dablikeacrap · 12/08/2020 14:25
We are trying to sell my husbands SO property. It’s been a bit of a ball ache tbh. In hindsight he wouldn’t have gone for shared ownership
Hoppinggreen · 12/08/2020 14:40
we bought our previous house and opposite were some shared ownership houses owned by a HA. The people in them were generally ok but then the HA leased some of them short term to the Council who used them to house "problem families" and used one as a safe house.
It was absolutely awful, numerous incidents and we moved out ASAP.
I wouldnt do it OP not because of the shared ownership but because of the temporary housing
missdunkindohnut · 12/08/2020 14:55
@Hoppinggreen I don’t understand, if they were shared ownership properties with joint owners living in them how could the HA lease them out as temporary housing?
NotStayingIn · 12/08/2020 15:03
For me it would be a no. My previous flat was part social housing and part leaseholders. Which I knew when I moved in and it didn't worry me at all. Sadly it was a problem.
We've had a drug dealer, several alcoholics and some rather odd characters, who were so noisy.
Once the block nearly burned down as someone had made a cannabis farm and their electrical heating set up caught fire.
We've been raided by the police in the middle of the night in a drugs bust.
Now obviously private renters and leaseholders can be problematic too, but here the issues came from the social housing flats. If the set up is properly run and really there to give homeless people a chance it could be great. But if they move in problem cases and then ignore any complaints about the people like they did in ours, then it's a pain.
It's a shame as I am honestly really for mixed living and social housing. But the council need to do more to maintain control and not leave it to the residents to try and make it work.
NotStayingIn · 12/08/2020 15:04
(My precious flat block that should say. So a mix of different flat ownerships/uses in one block)
Jussayingisall · 12/08/2020 15:11
SO is great short term and we made a lot of money in a short space of time. However they tend to be clustered among a lot of social housing, so you need to get lucky to avoid anti social behaviour. (Yes I know social housing tenants are amazing and it's channel 5 that has made it all up)
Hoppinggreen · 12/08/2020 15:18
misdunkin they didnt all sell so the ones that didn't were leased to a The Council instead.
The Shared ownership people were no problem at all, it was the ones temporarily housed by the Council that were a nightmare
Bubbletrouble43 · 12/08/2020 15:18
Hi op. I bought a shared ownership house 8 years ago ( only way to get on housing ladder in my area as a single mum) and it's been fantastic, great quality house, nice estate etc and very affordable so all good. However now I have a dp and we are thinking of increasing our share ( I also bought 40 %) I am put off by stories of neighbours who staircased ( bought a bigger share) and found it very difficult to sell on. We think we may have to move on to a fully privately owned property because we don't want to be caught in that trap. Worth bearing in mind.
missdunkindohnut · 12/08/2020 15:45
The Shared ownership people were no problem at all, it was the ones temporarily housed by the Council that were a nightmare
Oh I see I thought you meant they’d kicked out the owners or something 😂
My friend got a new build HA property actually and I remember her commenting that it was supposed to be a shared ownership but, along with a lot of others on the estate, hadn’t sold so they’d become rented HA as well. In fact the shared ownerships were actually a minority on the estate even though the buyers has been under the impression most would be SO.
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