Shared Ownership schemes..Would you ?..Have you ?

I bought a shared ownership home with my ex husband years ago. The half that was rent was below the market rental and after a couple of years we were in a position to get a bigger mortgage. We sold the house as a shared ownership because you can get the top price as they so popular and bought a similar house for thousands less. I think they are a wonderful thing, you can’t go wrong. The only downside is that you’re responsible for all repairs but then you would be if you owned outright anyway.

Recipe for disaster, unless you have very good legal advice and know how you would be placed if the other party moves and needs to sell their share, what you do, if they prove unbearable to live with on these terms, and what happens in the event of a death.

I imagine these schemes are usually two generations of a family living in a shared property, but honestly do you want the noise of a young family, right next door, and do they want old people who may need care later on sharing with them?

I wouldn't touch it with a barge-pole if I were you.

No, grandtante, that’s not how it works. Usually these properties are owned by housing associations. You buy a share, perhaps 25%, and pay rent on the remaining 75% at a rate below open market rates. You can buy more shares if you want, or not. No other owners or occupiers involved!

Generally speaking if the buyer has to pay rent for the remaining equity share, then it's to be avoided if possible especially in areas where house values may fall . The total monthly outgoings are often as much as a fixed rate mortgage for 100% share.

The main benefit is for first time buyers buying in a very expensive area and getting on the ladder, with a longer term view of moving to a cheaper area and buying outright with normal mortgage second time round.

There are usually restrictions on the type of buyer that can repurchase an equity share home, and there are a fair number of recent schemes that don't allow ' stair casing ' to the full 100% ownership.. read the small print carefully. The available equity is sometimes capped at max 80%, i.e to keep the value of the home always below market rate, for future buyers.

People may not qualify for a 100% mortgage and be able to afford a deposit for a 100%/ purchase - that’s the attraction of shared ownership.

My nephew lives in a shared ownership house. His business was just starting and it was the only mortgage he could get. It's worked well so far, but there are restrictions on things like building work, which have been annoying as he has a growing family.

Now that he's got a bit more money he is looking to move, but it will be a bigger jump from this house to the next, as he doesn't own all the equity. OTOH, he at least has equity, which he wouldn't if he'd been renting all of the property.

I tried applying for shared ownership several times, and the housing associations wouldn't even consider my application. They are demanding a ludicrously high annual income and if you don't have that they won't even look at your past payment records etc. If I earned as much as they specified I could afford an ordinary mortgage! I understand this obligatory high income is an FSA ruling. The same department which meddles with credit card repayments. All this and having to pay for all your repairs! (Yes I said "pay for". You don't get to choose the contractor.) Forget it!

I think that is in case you choose a company that makes a botch of it which reduces the value of the Association's share. It makes sense, really, but yes - it annoys my nephew, too.

Co-ownership in NI is a great scheme. Worked for me.

What do you call a ‘ludicrously high’ income ruthie? And how does the FSA meddle with credit card repayments?

having to pay for all your repairs!
The only thing I felt was unfair. Maintenance should be shared equally.

I don’t know about that.

If I break something in my house I pay for it. I don’t see why a co-investor should pay half when they don’t live there. My nephew has never complained about that - just that he can’t please himself when it comes to home improvements. They have to be agreed by the association and they decide who carries them out (and at what cost).

nadateturbe

^having to pay for all your repairs!^
The only thing I felt was unfair. Maintenance should be shared equally.

With my sons flat and the ones on the estate where I lived a few years ago the fabric of the building, roof, windows, external drains etc were the responsibilty of the Housing Association and the internal the responsibility of the buyer. Repairs and redecorating of the shared hallway and stairs were covered by the monthly maintenance charge.

It’s a big mistake to assume that the conditions of purchase in one experience are the conditions for all.

I’m flummoxed by the posters who unexpectedly found a condition. Didn’t they read the agreement before they bought🙄

Oh yes, my nephew was aware of the conditions of the contract. That doesn’t mean he can’t have a bit of a moan though, surely?

Of course 😬 We all like a bit of a moan😁

Hope you feel a bit better today.

With flats the landlord will always be responsible for the structure, roof, windows and drains. A service charge will be levied to cover such things and share access ways, lifts etc. If you are buying a shared ownership house, you will be wholly responsible for its maintenance and if there are shared access ways, open spaces etc which you are entitled to use a service charge will be levied for their maintenance. All this is clearly set out in the documentation and there is no excuse for not understanding these matters before you commit to the purchase.
I see no reason why someone buying a shared ownership house should expect not be responsible for all maintenance - the rent they pay on the unpurchased share is subsidised by the housing association so why should the HA also subsidise maintenance?.

I don't call replacing something you broke maintenance. I'm talking about keeping the structure in good condition. The co owners get half the profit when the house is sold. If its well maintained it will fetch a higher price.

And yes, I knew before I bought! Lathyrus. Doesn't make me like it!
But Co ownership was better than renting. It meant I could live in an area of mg choosing.

my choosing.

I agree, GSM. My nephew lives in a house, which he maintains and decorates at his own expense. As I said, his only concern is that he is not allowed to extend or rearrange rooms as his family grows. which means that he might not be able to stay there as long as he’d planned. This wouldn’t matter so much, but making a move is difficult because he doesn’t own all the equity.

Has he asked for permission to make alterations? He is unlikely to be given permission to extend, but internal remodelling not lowering the value of the property might be permitted.

Yes I think so. He understands the fact that he doesn’t own the house (and that doing half an extension isn’t going to work), so he’s not ‘complaining’, but as the OP was asking about experiences of shared ownership I thought I’d mention it.

Yes, good point.

They can work for some. However, my elderly neighbour and her late husband did this and when he died she could afford neither the rent nor the mortgage. Her house is in a bad state of repair as she can’t afford to maintain it and she is pretty miserable about it all. If she was to sell it, she’d be unable to afford anywhere else. So it’s not been a good choice for her. We had some shared ownership properties built nearby about five years ago and they are absolutely tiny. We were interested in them when they were being built, but realistically we would have struggled with the size.

It sounds as though your neighbours should never have considered shared ownership but continued renting. A couple always have to consider what would happen if their income were suddenly halved.