Thinking of buying a Shared Ownership

[BuyingSharedOwnership]

I'm looking at shared ownership in my area, we need a 3 bed but can't afford anything through standard or HTB routes. We're considering these two properties, what would you go for?

Option 1:
www.rightmove.co.uk/property-for-sale/property-93150077.html
Option 2:
www.rightmove.co.uk/property-for-sale/property-83751694.html

Option 1 is possibly the nicer village, better walks, bakery on the doorstep. Closest main town is Didcot.

Option 2 is on a nicer new build estate (not quite finished, better community areas) but more central to the village and is closer to the main town of Abingdon.

I think it's 6 and 2 3s about the primary schools, but possibly different catchment for secondary (abingdon vs didcot).

Which one would you pick and why? Is there anything I'm not spotting to rule out one over the other?

I hope the locations are excellent because neither of those houses are worth anywhere near £370k!!!

Yes, South Oxfordshire so very high prices. Most 3 beds are north of £330k around here for terrace, 350 for semi and 420 for detached. I'm thinking option 1 isn't worth the 185k their asking. Option 2 more likely is priced right given it's extra square footage. You can probably get house 1 size for 20k less a few miles away in Didcot, but I don't really want to live in a town.

But my question is "if you accept these are priced reasonably for the area" which one would you go for?

I would pick house 2

House 1, but that’s because with two children I wouldn’t want my bedroom on a different floor.

You will be paying a premium for shared ownership, also if you do any improvements to the house like new kitchen/bathroom etc you will have to pay full and they will benefit from the increased value of the house, same for any repairs it is all on you even though they own part of your house, it's like renting but with non of the problems for the shared housing association. Win win for them.

Would you think offering 10k less on option 2 is reasonable given its got less sq ft since it's over 2 floors and doesn't have the en suite? It's the children over 2 floors for us too that's doubting 2. But 2 is bigger and better proportioned. Is it worth being stuck in the smaller house for 2 year of dc being a bit young for the split floor? I was on a different floor to my parents from the age of 5 and didn't have any issues. DC are 3 and 5 now. Option 2 would save fighting later on over room size as one bedroom is only slightly smaller. Even the smallest could squeeze a double (yes, thinking long term buy it all eventually)

"neither of those houses are worth anywhere near £370k"

Helpful
Houses are worth what people are willing to pay for them! Which is hugely location-dependent.
If house prices are more affordable where you live, lucky you.
Meanwhile some of us have to mortgage ourselves to the hilt to get a house in the location we want/need!

OP, I would choose based on location and schools. You haven't said how old your children are? But if due to start secondary within next 5 years I'd look closely at them.

Cross post! My point still stands I think, I would look at schools even though it's a bit early for secondary. My DS is 3 and I wouldn't want to be a different floor from him, though.

I don’t know Oxfordshire so can’t comment on locations. However, have you don’t your numbers? 185k mortgage at inflated rates due to it being SO + rent to pay on the remainder. I have just looked on Roghtmove and 3 bed modern terraced houses in Abingdon can be had from 220-230k. You’d have lower monthly outgoings?

I'd definitely to that and you can always move to a more expensive place when you’ve paid down the mortgage etc.

@jimmyjammy001 We're priced out of the area, otherwise, it's taken us 10 years with the rent rates down south to get in a position to buy at all and because we need the 3 bedrooms it's rent or shared ownership. Shared ownership will save us £300pcm on equivalent rent that we can save or over pay the mortgage with. Even if it was a "scam" it's still a better scam than lining the pockets of a private landlord! Plus at worse it's an assured tenancy so like all the people that invest and do up their council houses.

We've done our research on it and we're happy taking the risk. These properties are in our budget so it's a case of choosing which one (if at all! Option 2 has quite a few interested buyers apparently so might need to be quick or go for 1)

Which one is in a better school catchment? That would swing it for me if you find them equally appealing otherwise.

@JoJoSM2 With the SO properties we have 15% LTV and pass affordability. We can't get the mortgage on the standard market for those properties above the 200k mark (LTV/Income multiples). We also don't have the extra money for major repairs etc so are look at new builds and nearly-new. We'd be waiting another 2 years minimum to get the money together for those normal houses. We'd intend to staircase (since it's cheaper than moving given stamp duty will be back, where as staircasing later will mean we only pay stamp duty as FTB and the way it works at the moment, we wouldn't pay any as we'd "pay in advance" the SD for the full house using the stamp duty holiday and not be liable for the bit over the FTB threshold when we staircase) so worth getting the extra space now rather than more cramped and move again later.

Ideally we don't want to live in Abingdon. We've lived in villages our whole life.

House 2 is way better. It's got an en suite. Children on the floor below is no big deal. All my neighbours' houses are that design and they all have children including babies. The privacy of the top floor is great! As your DC grow the top floor will become your sanctuary.

Option 2 is leasehold whereas 1 is freehold. Does this mean that even if you eventually bought the mortgage for the whole property, you'd still only have leasehold? I would check that out because if that was the case, definitely freehold option 1.

School wise: Both have good primaries. Secondary wise, Option 1 is catchment for Didcot, outstanding Girls school, Good Boys School (yes, split gendered state schools), Abingdon has good for both genders. We have one of each, and I think both houses are catchment for both secondaries.

Damn! Even that isn't much of a decider.

So far I have:

Cons of Option 1: Smaller everything, asking more of a premium - 10k more than I'd like given size.
Cons of Option 2: Master on different floor.

I'm leaning more towards option 2 as we could have the kids share for a couple of years and keep the master suite for guests (both our parents have to stay overnight to visit). Then move up to the master suite in a couple of years when the youngest is 5.

Check the tenure first though:
www.google.com/amp/s/amp.theguardian.com/money/2017/jul/25/leasehold-houses-and-the-ground-rent-scandal-all-you-need-to-know

Don't be persuaded you need new build because you won't have lots of money for repairs. Most people don't face urgent expensive repairs on older houses, just occasional things that could be done/left a while until affordable.

Seriously look at if you can stretch to buying something without HTB even if the area isn't quite so good or it is smaller. Clearly the affordability and LTV requirements need to be met. However, lots of people are drawn into HTB or SO and into buying things which are over-priced and cost lots more long term, because the shiny new features appeal, they are told by the sellers of new builds that repairs on older houses are huge, and essentially they take a short term view of monthly payments vs overall expense over the longer period of time. Be willing to consider buying without SO and children sharing a large bedroom rather than having a room each. By paying down the mortgage on an affordable home without SO you will be in a stronger position in 5 years to move to 3 bed and find it so much more affordable. Just consider if you really need (or can afford 3 beds)

If SO really is what is the only way to get a property given your savings that can be used for a deposit, then it might be your only choice, but lots of people realise later that they could have bought older/different area and saved SHED loads of money, not having paid enough attention to the costs involved in re-mortgaging or renting or increasing their share of ownership. You need to be very savvy and take the long view and not be bamboozled by shone sharp talking SO sales person who will play on inexperience and fears of facing repair bills.

Realise that if these properties are over-priced, just because you can actually get a mortgage for SO on them, so they are available to you, they are still over-priced. It does matter. It isn't just about the monthly payments over the next couple of years.

If one is leasehold and you hadn't spotted that, it suggests you are pretty I experienced as a homebuyer. Fine, we all have to start somewhere.

Do some serious digging into costs involved in re-mortgaging and adding to your share of ownership in 3 or 5 years time. Draw up lists of costs that you would incur now when buying, monthly and in 5 years. Do this for both properties. Also do the same for a large 2 bed non-SO house.

Many families would find they are better off in a big 2 bed house they can buy without SO than a small 3 bed with SO. Quite often we just have to accept we can't afford the no of bedrooms we'd like.

And re layout and which rooms are on which floor, children are only small for a very limited time. It's hard to imagine it will be okay to be on a separate floor from them ever, when they are 2.... But by 4 or 5 or 6 things are very different. So don't be tied into a layout that works for babies and toddlers or restricted by that as the phase soon passes.

@lurch3r yes we have checked we won't be paying ground rent on the leaseholds as they are freehold at 100% and therefore the HAs don't put a ground rent on. They're not allowed to make a profit and have to break down the service charge annually to ensure it's justified.

@WombatChocolate because we have DC of opposite genders we'd soon out grow a 2 bed, even if we gave them the large room and divided it. As these are resales, there isn't a hard sell for shared ownership. Both are priced based on RICS surveys so shouldn't be too over inflated.

As I've said. We've done the calculations, it makes sense to buy a nicer 3 bed that will last and we can staircase (especially since we can use the Stamp Duty holiday to cover what would be due above our FTB 300k now, so we have none to pay at staircasing). There's no way, even if we buy a 2 bed for now, we could afford to move in the next 10 years given stamp duty, plus solictors, plus removals etc. Moving would cost us 10k (minimum), stair casing would cost us 2k in fees. And it's mainly stamp duty as we can't hope for another holiday in a couple of years.

Long term, the SO look the best way forward. Please remember we are in a very expensive area (hence moving is so pricey). We've rented in Didcot before and were miserable. We are happier in Abingdon, but cannot afford much there. We want our own garden for the DC, so flats aren't for us.

As I've said before, we're considering these two properties and I was asking for help choosing between the two. I was not asking for opinions on Shared Ownership.

Okay. If you're set on SO.....avoid the one that is leasehold. Government is no longer allowing new houses (only flats) to be built which are leasehold for a good reason...they are often known as fleece hold! Do check if there are estate charges on either too - for maintaining communal grass areas etc - these can easily amount to over £1k per year.

If you want to be there long term, dont picture your kids in the rooms now, but as large 15 year olds. Think about having enough space to escape from each other (for adults too) and that beyond a certain point, gardens are not usually played in.

Does one have a better staircasing arrangement and fees than the other? I do t think I could choose purely based on floor plans but would need to know those things too as essential features in deciding?

Good luck in choosing.

All the other stuff aside (definitely look into the leasehold thing, although I think my mum's previously SO house was listed as leasehold until it was fully staircased when it officially became freehold)

I don't know the areas, so just on houses I prefer house two. The living room in the first one is a bit odd (possibly just the way they have their furniture arranged). The bedrooms enable much more longevity in option 2 which is important atm, and nice to have two full sized bathrooms. It wouldn't bother me being on a different floor. I'd put patio doors in at some point though.

As I say, all shared ownerships are leasehold, in the case of these two both are freehold at 100% ownership. No ground rent, only the HA service charge. I don't have service charge for option 1, but for option 2 the service charge is £11pcm (includes the HA service charge and grounds maintenance). Option 2 estate (managed to sneak into a the residence FB group) is also going to be a residents association to manage the open spaces and they seem to have a tight grip as a community on the potential costs of that.

Both have similar costs for staircasing, Solicitors fees for you and HA + valuation. Which is a lot cheaper than estate agents + selling solicitors + buying solicitors + stamp duty. Even when you factor in paying rent on the un-owned 50%, given it would be gaining interest on a mortgage anyway, it's still more expensive to buy a 2 bed now and have to move in 5 years when the eldest won't want to share anymore - worse if we can't afford to move and they get stuck as teens sharing!

I think we'll ask to view both again. I am leaning more strongly to option 2, and given they're priced the same, option 1 isn't worth it unless we can knock 10k off the price. I'm guessing not since it's been on the market for quite a few months now. I know Option 2 are open to offers, but there's been a lot more interest.

@BuyingSharedOwnership good luck, I think option 2 is a solid choice :) I know these schemes come with drawbacks, we are using HTB ourselves, but they are great options for some people to get on the housing ladder, preferable to renting in my opinion.