Shared-ownership schemes, anyone know anything about them?

[Cononthebarber]

Me and the missus are thinking of buying our first place together but have had some trouble with the banks giving us an affordable mortgage. We came across a shared-ownership scheme from Bromford Housing which we will be able to buy a 75% share in a property with the other 25% paying rent on. At the moment this seems like the only realistic and affordable way we will be able to buy.

Does anyone have any experience of these schemes? Anything we should be wary of or make sure we ask etc...?

 

[naturals]

Me and the missus are thinking of buying our first place together but have had some trouble with the banks giving us an affordable mortgage. We came across a shared-ownership scheme from Bromford Housing which we will be able to buy a 75% share in a property with the other 25% paying rent on. At the moment this seems like the only realistic and affordable way we will be able to buy.

Does anyone have any experience of these schemes? Anything we should be wary of or make sure we ask etc...?

With my surveyor's hat on (postgrad educated, 12 years' UK experience) I'd personally stay clear of these things. There are just too many unknowns most of the time and if people were looking to buy one of two identical houses, one shared ownership, one standard, I know which one most would go for. This can only damage resale values which really are the only thing I'd be worried about when buying at a time when prices are so high.

I'd strongly recommend having a look on www.housepricecrash.co.uk and posting on there for proper guidance. Plenty of property experts there who'll give you the lowdown.

 

[Jeltz]

They are fine but they are a little restrictive when you come to re-sell; the resale value will be "set" by the housing association and usually established by an independent surveyor which you'll have to pay for and the housing association will have to approve any potential buyer so it restricts you as to who to sell to (i.e. no buy to lets, no 2nd homes etc). Some schemes allow you to buy the remaining share which then removes their involvement in the future but some don't.

I have (re)sold a few for people over the years and they certainly do have a market as there will always be people who want to buy but cant quite borrow enough for what they would like to live in. The days of mortgages companies throwing more and more money at people are over (well for the foreseeable future anyway) so this affordability issue is going to be common enough for quite a while.

Estate agent since 1997

 

[Jeltz]

if people were looking to buy one of two identical houses, one shared ownership, one standard, I know which one most would go for.

I think you are missing the point, they would buy the best one they could afford so if they have the finance available for the standard one they will buy that but if they can only borrow enough for the shared equity one then they will buy that one.

 

[iceo]

we looked in to one of these a few years back. and the biggest thing that put us off at the time even with a 25%/75% own/share you are 100% responsible for any break downs and repairs (boilers/roof ect)

we live in an housing association(renting) at the moment and pay a very maintenance fee but they are willing to do less and less the new ones are having to pay out for a blocked drains or a locksmiths if there is a problem

 

[Jeltz]

Yes you have to view it the same as if you owned 100% of it as far as maintenance is concerned, you may also find that you are tied to a specific buildings insurance.

 

[Cononthebarber]

Thank you for your helpful replies, has given me something to think on...I will also take a look at that link you gave me naturals :thumb:

 

[dennisking]

My son bought his flat in London shared ownership. At Christmas he bought the remaining 25%. The only down side is the 25% is priced at todays price, not the price he 1st bought at.

 

[TRXnMe]

My son bought his flat in London shared ownership. At Christmas he bought the remaining 25%. The only down side is the 25% is priced at todays price, not the price he 1st bought at.

Would that have worked the same if the price had crashed?

 

[Mbarn]

My wife owned one when we met. Hers was 100% owned, with no rent, but it was bought through Yorkshire housing at a 25% discount, which that same 25% of the property value then had to be passed on to the next buyer.
Was so easy to sell, but it was a 1 bed flat in the city centre, at 25% below market price, so new buyers were desperate to buy it.

The ones where you pay rent on a portion make no sense what-so-ever, and a lot of the schemes now seem far too restrictive or involve hassle.

 

[dennisking]

My son bought his flat in London shared ownership. At Christmas he bought the remaining 25%. The only down side is the 25% is priced at todays price, not the price he 1st bought at.

Would that have worked the same if the price had crashed?

I guess so but he is in London one place not really effected by the price drop. He did have to get the flat re-valued and they sent a young lady to do the valuation. He must have used all his charm as she seemed to under value it.

 

[Dronfieldbrewer]

My twopenneth...
they have their place in the market but from a mortgage point of view they are not straight forward. There are only a handful of lenders prepared to lend on them, thus restricting your choice.

To qualify this.....I'm a mortgage advisor with 27yrs experience

 

[Mbarn]

My twopenneth...
they have their place in the market but from a mortgage point of view they are not straight forward. There are only a handful of lenders prepared to lend on them, thus restricting your choice.

To qualify this.....I'm a mortgage advisor with 27yrs experience

That's true. My wife could only get a mortgage with the Halifax at the time.

 

[Dronfieldbrewer]

you may find that Nationwide, Halifax, Santander are the only big lenders that will do a genuine shared ownership scheme

 

[Cononthebarber]

Again thank you for all your helpful replies, having read a lot about this scheme and digested the info we've decided it's just not for us. Too many restrictions and unknown's. I have also read about a lot of other peoples experiences where after the first year the Housing Association has increased the rent every year resulting in some being priced out of the their own homes and having them repossessed! Not nice reading I tell you! No I think we will just have to continue on plan B which is continue to save and get a much bigger deposit together, it does mean renting for longer but hey ho!