Can I buy shared ownership for a.parent?

[SquashBandicoot]

One of my parents is renting a private flat that is increasingly unsuitable. There is a shared ownership build nearby with a very affordable 25% share for over 55s.

My parent wouldn't get a mortgage alone even for this small amount. If I got a mortgage with them, would they then be able to live in the flat as they are one named homeowner and it wouldn't matter that I don't?

I can't afford a normal flat purchase for them but this is very doable. Parent is in their 70s and this would mean they would have a safe, suitable accommodation. Bit worried about when it comes to sell though as would have to cover costs myself.

Work out the compound interest effect on both rent and service charge of 5% per year for ten years.

Those figures are NOT what you will pay every year for the next ten years.

Keep this in mind.

@RedToothBrush I'm more put off by the equity release, think the compound interest on that would be horrifying.

I wouldn’t say it worth equity release for a small % shared ownership that won’t gain much value. The rent and service charge are cheap- they are likely contracted to go up by RPI or CPI (the HA can tell you) so maybe worth doing the calculation- but hopefully it would align with the pension increase he’ll be getting

You are wise.

For reference if the rent and service charge increase in price by 5% (assuming this as the inflation rate) every year, by year ten the rent will have increased from £266 a month to £412 and the service charge will have gone up from £191 to £296.

That's an extra £250 a month. And your wages are unlikely to increase in line with inflation.

Now obviously inflation could be lower than this. This is for illustration only. But it does make it look very different as a prospect. It depends on how long you think they might live.

This is the problem with shared ownership.

We owned 50% and initially our mortgage was higher than our rent. Eventually our rent ended up more than our mortgage and it made very little economic sense to stay where we were as our household income had increased. We were effectively paying more than if we owned 100% of the property with a mortgage!

We were able to staircase out of this but there were others on the estate who couldn't. It seems criminal tbh.

We were paying rent to a housing association who were supposed to be supporting people on lower incomes and supposed to support affordable housing. They were a not for profit organisation unlike some shared ownership properties.

So we eventually ended up subsidising all the housing association properties which were rental only.