Shared ownership?

[Igglepiggleandhisboat]

Can I have opinions on shared ownership please? Choices really are a two bed flat (we have two DC) with no garden or go for three bed shared ownership with a garden

Can anyone share their experience of shared ownership? Good / bad? Xx

Shared ownership has a few downsides so it’s generally better to opt for something else if you can possibly afford to. If you go ahead with SO I urge you to research it a lot beforehand so nothing comes as a nasty shock.

For one thing, you will responsible for 100% of maintenance costs despite only owning say 50% of the property. It costs more money every time you want to “staircase” so you own a higher percentage. Shared ownership deals tend to be in new build properties and they are more likely than others to lose money in the first few years. I believe SO properties can also be harder to sell but not sure.

Housing Associations have really declined in their performance. Aside from the sheer rip off of paying 100% of everything while only 'owning' a crappy lease for a notional 40%, we just cannot get in touch w the HA or get them to do or fix anything. It's appalling to be relying on them. It takes years to fix a single leak.

Leasehold is a nightmare and SO is the thin end of the wedge. It's made my life a misery these last years. Is there any chance you could buy a subdivided house with a share of the freehold? Michael Gove has a lot to answer for, for promising leaseholders the world and delivering peanuts!

Thank you. I think DC could share for a few more years and maybe we could fashion a room divide in a smaller house property. Everything I read about SO is not great. Thank you x

You’re welcome and sorry to have to be negative. But if sounds like the 2 bed would be the better option even though it’s not ideal size-wise.

We have a SO property and there's been no issues, plus it's enabled us to have 'nice house in a nice area' as opposed to a nice house in a bad area or bad house in a nice area (if you get my drift!)

I think if you do it, you need a realistic exit strategy. Will you be able to staircase or build up enough equity to buy outright within a few years? If you staircase, you'll have to pay legal and valuation fees each time (in the region of £1500 - £2000). Secondly, make sure you're buying from a housing association rather than a builder. And check the reviews of the HA.

I've never actually had any dealings with our HA. Once the sale went through, they leave us alone apart from a yearly letter letting us know the rent amount is increasing in line with inflation. Last time I checked, the property value had increased quite well and there's now about £30k equity in our share.

When our mortgage deal is up in 18 months, depending on how rates are doing, we will either staircase or sell.

We're going down the SO route and I'm perfectly happy with the arrangement, and the lease agreement is very fair.

In the first 10 years anything major with the house is covered by the new build guarantee or you get a contribution from the HA towards 'necessary' maintenance.

There's no ground rent and the lease is 990 years. There's barely any additional payment per month and the amount paid for buildings insurance to the HA is way less than we'd get it for.

It was either an (over-priced) doer-upper which needed £30-50k spending on it, thereby taking the total cost way above ceiling price for the road, or a new build SO, with enough room for me to have a study (I WFH) and our (autistic) children to have enough space for their needs.

We will likely staircase in one hit 5-10 years down the line. At which point the freehold is transferred to us.

The pre-2021 scheme is not as favourable in relation to terms (as per many 'fleecehold' new builds; it's not the sole preserve of SO).

I have a SO flat, as two of my friends, we've all had quite different experiences. As a note we're all in central London and we're single when we bought them.

I got an absolute bargain on the rental % of my two bed, I think it may have been priced wrong. The flat valuation was quite high. So I bought the minimum share and have very low ongoing cost. If I sell now the flat is probably worth a bit less than it was valued at 8 years ago when I bought it, so I'm sort of stuck here as I have no incentive to move as it's so cheap. Service charge keeps going up, so be aware of that, I have no dealings with the HA, which keeps changing as they acquire one another.

Another friend bought a two bed more at market price, she ended up staircasing to 100% as was doing well. Given she bought the remainder at the beginning of covid the valuation she received to buy the remainder was low, so she would have made a profit if she was able to sell.

A third friend bought one one bed that seemed a low valuation at the time and enjoyed living in it, but his total costs weren't terribly low. He's now being trying to sell for about 18 months and no one is interested. He's reduced it a few times, but the timing just isn't right and anyone buying a SO tends to want a new one. The costs to sell are also high, so even though technically the valuation has gone up, the HA costs wipe out most of that gain.

So a mixed bag really.

I think SO flats are a different kettle of fish to SO houses (particularly post-2021).

You can have equally onerous terms (or even worse) on a non-SO leasehold property as you can on an SO leasehold property. You have to ensure with both that you're happy with the terms of the lease before you buy.

I had a shared-ownership flat in London. It was OK but the housing association was crap and some of the service charge quite high. I did manage to sell it for a profit though a few years later and it gave me a secure roof over my head and a low rent.

I think a shared-ownership house is a much better option than a flat but remember that you will be responsible for all the repairs and maintenance yourself. Lease length is also important.

I would research the housing association and check online what reviews tenants and shared owners have posted on the service they provide.

We looked into it briefly but I was put off by all the pitfalls, legal complications etc, I especially worried about being trapped. That said, I think SO is an option when you have no other buying options, so if I was single or if there was no feasible way DH and I could have bought a family sized home ourselves I absolutely would have considered it, especially if it was a long term enough home to stair case the payments to eventually own outright. I think it's preferable to private renting in that you can't have the house sold from under you, but there are a lot of drawbacks vs "traditional" buying.

How long would it take you to get to a position to afford the 3 bed yourselves? Have you looked at the mortgage guarantee scheme?

I’m in SO. It’s been great for us. Warm, secure, modern house with garden for my family to grow up in that we would have had no chance of affording on open market. We won’t staircase, will sell ours and get back the 30% we put in when the time is right. Resale SO properties here sell in a heartbeat as it’s an expensive area so many families in our situation. I’d avoid a SO flat I think but our house is ideal and no issues to report.

Hiya I had a shared ownership house for many years I wouldn’t recommend it and I didn’t know the pitfalls when I moved in. It started off affordable I had a good salary at the time this was in the late 90s I bought 45% of the value and the housing association charged me rent on the rest so mortgage and rent were ok but as the years went on house prices rocketed and I would never have been able to afford to staircase without going into massive debt, so then the rent kept increasing and in the end I was paying as much as if I had bought a 100% home in the beginning. I stuck it out but there were many problems the housing association left all repairs to me to do the boiler broke many times, they even said they would not be responsible or the windows (yet I had buildings insurance with them). I only owned 45% and the repairs mounted and the rent kept increasing but saying all that I had a nice house for many years to enjoy with my family. Eventually i tried to sell i which proved an absolute nightmare as nobody would take it on so eventually it went on the open market and fell through 5 times before I explained to a couple how it worked and all the legal complications of going from leasehold to freehold so they could own the whole thing which put a lot of people off. There are articles on nearly legal some of which I contributed to where they clearly state there is no real “ownership” in shared ownership just a long lease to a property you may never own. Think carefully

That's the same for all leasehold property, @Josie15. It's not exclusive to SO.

What was unique to SO was the lack of statutory right to extend the lease when it got to below a mortgageable level (and initial leases only being 125 years).

However, post-2021, this isn't an issue as the lease length is now 990 years. M

The lease length issue was a huge reason why SO properties could be difficult to sell. Issues with the lease, such as service charges and ground rent etc can be a problem with all leasehold properties. You see threads about non-SO leasehold issues on here relatively often. Plus new build 'fleecehold' which weren't SO properties.

You also now get a contribution towards necessary repairs for 10 years, which you didn't get before (such as fixing the boiler etc).

It's not a perfect scheme, but how many things relating to property ownership are, in reality? There are risks to all versions of ownership. Yet we're a nation of aspirational owners!

Oh so it’s changed a fair bit then I found it very unfair when I was involved with it and being unable to sell it as a share in 2018 nothing had changed then the legal process of buying out the freehold scared a lot of buyers off took 18 months in the end