Can anyone explain shared ownership to me

[eatingsalad]

Can anyone put it in simple terms please ?

Say house is £100k.

You get a mortgage for say, £80k.
The housing authority own £20k worth of your house so you pay rent on that £20k share.

So you buy a percentage of the house "normally" and rent the bit you can't buy. I don't know if all are the same, but with some you can buy that part back over time too, to own 100%.

So you pay rent on the £20,000 and the mortgage on the £80,000? Our landlord is selling so looking up options and it's all very confusing

Who is you landlord, OP?

Yes. You have rent and a mortgage - the worst of both worlds, really.
There are usually fixed times when you can purchase more of the equity in your home, reducing the share you're paying rent on, but you need to plan carefully to have the money ready or be able to take a larger mortgage.

https://www.gov.uk/shared-ownership-scheme

Also bear in mind: there'll be a monthly service charge, which for blocks of flats can be quite high, and you'll be liable for the whole cost of any repairs, despite only owning a share of the property.

@eatingsalad normal shared ownership tends to be 'new build' via builders or housing associations-- or resales of the shared bit- but there are a few schemes like Heylo where you can buy on the open market but you need a minimum of 20% cash deposit on the total price. - ideally more.

Is your landlord someone who is currently subletting your their shared ownership property? (which usually isn't allowed..)

Sorry to confuse people, my landlord is selling the house we rent (private), rather than renting again we are looking at ways we could possibly buy. I have seen a few shared ownership properties but couldn't figure out how it worked

I often see SO slated on here.

Sorry! Pressed send too soon! It's often slated and the worst thing you can do! I actually found it to be beneficial and get us on the ladder. We bought a 40% share of a two bed semi, we lived there for three years and didn't staircase ( buy more ) but we decided not to. We sold the house and got our percentage in equity back. We made just over £10k on our part. It was simple and straightforward and we sold it in three days despite being told shared ownership homes were impossible to sell.

Shared ownership has a bad reputation on here, and it's not perfect. The service charges can be large, and as a leaseholder you are responsible for 100% of repair costs, even though you only own a share of the property. There's a lot of talk about staircasing, but in my experience most people don't bother (owning too large a share can make it harder to sell on later).

On the other hand, most people I've known have made a profit when they've eventually sold and moved on to the open market. Unlike renting, at least you have some equity rather than none.

It’s unlikely a private seller will entertain shared ownership, it’s usually done via a housing association or house building company so it’s unlikely to be a route that’s available in your scenario unless you can find a third party who’s willing to buy the house from the landlord and enter into a shared ownership relationship with you.

There are some houses on Rightmove that are shared ownership

These may be properties that were originally bought as shared ownership with a housing association/company still owning the rest.

I’ve never heard of or seen someone who owns the whole property only selling as shared ownership as a landlord selling likely wants all of his money, not just some of it… and the legal position would be complex.

I have a shared ownership. I bought 50% and pay £280 a month on this part. I pay £302 a month on the 50% that's rented. That includes service charges. I will buy another 10% soon. I've had no issues or scary stories.

@eatingsalad my mum sold her shared ownership house, the housing association had the rights to find a buyer for 8 weeks, if not sold it could then go via a traditional estate agents. However it sold in 2 weeks!. I would guess those are the properties on right move.

So you pay more for the rented portion than the mortgaged?? I thought the whole point of Shared Ownership was meant to be the rent part is massively lower, making it more affordable?

I guess not.

The poster said the £302 on the rented part includes the service charge. So, no, it doesn't sound as if the rent on 50% of the property is higher than the mortgage on 50%.

@KievLoverTwo not necessarily as in our case we could buy a 40% outright and then only have the rent and service charge element- happens a lot with divorceees etc - enough for a big deposit or 'a share' but don't earn enough/too old to get mortgages etc

OP, if you can't afford to buy outright in your area, shared ownership could be a great alternative. It worked really well for us. There is sometimes criteria to meet - e.g. to check that your household income is too low for an outright purchase to be possible for you. Different schemes are run slightly differently. It is likely that there is a particular housing association that manages SO properties in your area - you may be able to see who it is from the rightmove ads you've seen and I'd recommend getting in touch with them directly as they can explain how their scheme works. Estate agents are often a bit clueless about the details.

It will limit the mortgage providers you can use but that didn't hinder us in terms of the rates we were able to access.

I the rent part includes the service charges too.

I have a SO in central London. Rent + service charge + mortgage - and still way cheaper than renting privately. I had a good deposit and I earn a good enough salary but I'm a single parent so could not buy anything on one salary. There are issues and its not ideal but to rent the same type of flat in my area would cost me about £600/ month more than what I'm paying now.
I know people who paid their 100% SO off quickly and are very happy but also know ones that's stuck in flats that lost its value and cant sell. You need to look at where your place is located, what is the price, how much you will pay, and whether you will be able to sell at profit/ staircase to 100%. a lot of things to consider.

We sold our SO in June last year (completed last December). We bought for £95k and needed a 10% deposit. We were very lucky that it was a Victorian terrace rather than new build. We lived there for eight years, made a lot of improvements (new bathroom, kitchen, rendering). Housing association let us sell it directly on open market and not through them. Sold it to the first people who saw it. They offered £155k. So we made £60k profit and are now in a house we own outright.