Shared ownership now?

[Dufflebag]

We are desperate for some security and unable to buy on open market (we tried!). We are in London. Is now a terrible time to buy shared ownership, with house prices dropping and rates so high? It would give us security but the properties where we are seem to be valued 50k higher than similar ones that are fully owned and the price is set. I am worried about negative equity I suppose, and expensive debt.

Hi! Totally understand the need for security, and rents are absolutely eye watering now.

Are you looking at buying a shared ownership property as a resale or as the first owner, so to speak?

Thank you! Yes, rents are indeed eye watering, even compared with last year . We are looking at resale, which seem a bit better priced than new builds.

I don't have lots to say really so I don't know why I'm wading in...😂but anyway...

We were going to buy shared ownership when we were looking 4 years ago, but we ended up buying 'fully owned' - although with a 5% deposit and a hideous 40 year term(!) - such is London, I guess.

Some thoughts/chit chat.
If you plan to stay for a while, really can't afford to go the 'fully owned' route, buy a resale (where the prices are better as you say!) and are able to put down a 10% deposit or more, and aren't subject to really high service charges, then I personally believe shared ownership is a better option than to be stuck renting. I hated being at the mercy of shitty landlords!

But if you can scrape together enough to go the 'fully owned' route, I think it's probably slightly preferable? I think it's a valid step to go SO, but you sometimes are a bit hamstrung in a way you aren't if you go the usual route. You pay the full cost in time and energy for all the upkeep etc, but you only actually own a small percentage, and that can really suck. The upsides are that you have a lot more control over your space, no one will be kicking you out or changing the cost or terms of your accommodation, and you're building equity. These are all great things, obviously. I think SO gets a bad rap, sometimes unfairly.

Where are you looking? Have you spoken to a broker about what's possible? We thought SO was our only viable route but when we spoke to a broker we were surprised that it wasn't totally impossible to go 'fully owned'. Sorry I keep putting 'fully owned' in speech marks but I'm unsure what the correct term is.

Sorry disclaimer: I do realise mortgage stuff and the economy is quite different now.

Oh thank you! Yes everything you have said makes a lot of sense, especially going for a higher deposit on SO to make it work better.

Yes the market is really tricky at the moment. I don't know the term for 'fully owned' either!

I think it’s crazy to buy right now

I don't think it's crazy to buy now, necessarily.

If you can afford it, if you need somewhere secure to live, if you don't overpay for a place. And especially if your mortgage would be less than your rent is.

Yes, security is definitely the main draw. We would definitely be seeing it as a home - secure shelter - rather than an investment. Just nervous that it will be financially damaging further down the line to buy a house currently, making us less secure, and wondered if SO was more risky than a full/ normal purchase in this market. Renting is brutal in London - it's gone up hundreds per month in the past year.

I think SO is normallly more risky than a normal purchase, but mainly because SO is normally geared towards new build properties, which tend to lose money in the first few years because they are no longer so desirable once pre owned.
But if you are looking to buy a resale property anyway, then that is more sensible in my opinion.
SO definitely has its downsides, it wouldn't be my first choice. But if it is a choice between renting or SO then I would choose SO for the security. I do know that London is a particularly difficult place for both buying & renting so I guess the other option if to buy a normal property further out.

Sadly if I went any further out I would be leaving London. I was born and raised in London and we have a strong community where we live.