As above really, I'm potentially going to buy a 40% slice of a 2-bed terrace new-build house on the government scheme.
Anone had any good/bad experiences doing the same thing?
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Homebuy shared ownership scheme - anything I should be wary of?
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Posted 2 years ago #
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We did this on our first property - owned 50% rented the other 50% - worked very well, got us on the property ladder and allowed us to afford a mortgage and pay for our 'own' house. Didn't have any issues overall, but sometimes the agency tried to pull a swift one by trying to get us to pay bills for maintenance that they were responsible for - nothing major (and was put down to new staff - not convinced myself but it wasn't an issue once it was queried - only happened twice in the 9 years of living there).
Last 2 years of the stay we bought the remaining 50% and wasn't a problem.
I think it is a very good way to start out on the property ladder - means you can gte a mortgage that you can afford and any structural issues or faults gets picked up by the Agency - not everything i.e. if you break your washing machine - you sort it, but if the plumbing in the house goes wonky and wasn't caused by you i.e. driving a nail through a pipe, then they pick up the bill.
Didn't have any issues with them and I don't think they had any issues with us.
We were 'unique' in the sense that when we went for it, we went for 50%...most they had before us was 20% ownership.
I'd recommend it as a good thing.
Posted 2 years ago # -
Can they put in clauses forcing you to buy them out by a certain date?
Posted 2 years ago # -
There seems to be some difficulty obtaining mortgages for these schemes at the moment
Feel free to get in touch if you want more "confidential" info.
Website and contact info in profile.
Chris.
Posted 2 years ago # -
Not that I know of bikemonkey...we were 7 years before buying the rest of it but there was no pressure to do so...in fact when we asked about it they asked if we were sure we wanted to...when we said yes, they said fine, no porbs, this is what we do...I think they were surprised as we were the first to ask to do so...well with that Housing Agency anyway.
Posted 2 years ago # -
can you sell your 40% on?
Posted 2 years ago # -
They can work in a rising market, I'd be very wary of them in a flat/falling one. Be very careful of the terms - usually a fall in value means their share isn't worth any less and you eat the loss from your share instead. Regular rent reviews (which inevitably only go in one direction) can mean what you pay on the rest goes up even when the local rental market is oversupplied and rents fall.
You end up with less flexibility if you need to sell, especially if you can't afford to buy it outright before you need to do so.
Posted 2 years ago # -
I would say the only thing is to thoroughly research your mortgage options.
We got approved for the Homebuy Direct scheme, where the govt / developer put up upto a 30% deposit on a new home.
However, what we weren't told is that only 4 banks will fund mortgages on the scheme and that all of them now want a 5% deposit on the 70% mortgage
(so we still ended up having to try to find £6k deposit when we thought we didn't need one at all!)
Posted 2 years ago # -
We have 33% owned by government as I'm a key worker. We didnt get a new build. Apart from buyiong a house on the most expensive day in the history of house prices nothing bads happend yet
Posted 2 years ago # -
actually its 17 1/2 %. Good job i'm not a maths teacher!!
Posted 2 years ago # -
I'd be very wary of them in a flat/falling one.
i'd thoroughly agree with this!!
my girlfriend bought one at the peak of the housing market and its lost about 20k in (total) value. My first thought was to just rent it out, but this is prohibited by the contract for some reason. So the only option is to sell, but you have to offer it to other shared-ownership people first.
My girlfriends flat was a new build (like many of the shared ownership ones) and has very poor build quality. This *might* be because many were rushed whilst being built in the rising market.
The finish is very poor (despite look okay from a distance) and there seems to be a new problem every month, lack of ventilation, paint flaking off, doors don't line up very well, the gas ventialtion had to be re-done etc etc etc...
Posted 2 years ago # -
They can work in a rising market, I'd be very wary of them in a flat/falling one. Be very careful of the terms - usually a fall in value means their share isn't worth any less and you eat the loss from your share instead. Regular rent reviews (which inevitably only go in one direction) can mean what you pay on the rest goes up even when the local rental market is oversupplied and rents fall.
You end up with less flexibility if you need to sell, especially if you can't afford to buy it outright before you need to do so.
I'm not sure I'd agree with any of these points based on my experience. My other half had a shared ownership property (new build; purchased through a housing association). She owned 40% of it, whether its value went up or down. Rent was reviewed annually but never went up excessively. She subsequently bought out the 60% share. If she had wanted to sell instead of buying outright then the housing association would have had first refusal to buy back the remaining 40% (at independently assessed market value), but she could have sold it (the 40% plus lease) on the open market if the HA hadn't wanted to exercise their right. When she bought it the surveyor openly stated that he thought it was a good investment.
Of course, check the details for your particular scheme, but don't be put off by comments like those above.
HoratioHufnagel: it sounds like your gf's loss was a result of buying at the top of the market rather than it specifically being due to being shared ownership?
Posted 2 years ago # -
-m- - Member
They can work in a rising market, I'd be very wary of them in a flat/falling one. Be very careful of the terms - usually a fall in value means their share isn't worth any less and you eat the loss from your share instead. Regular rent reviews (which inevitably only go in one direction) can mean what you pay on the rest goes up even when the local rental market is oversupplied and rents fall.
You end up with less flexibility if you need to sell, especially if you can't afford to buy it outright before you need to do so.
I'm not sure I'd agree with any of these points based on my experience. My other half had a shared ownership property (new build; purchased through a housing association). She owned 40% of it, whether its value went up or down. Rent was reviewed annually but never went up excessively. She subsequently bought out the 60% share. If she had wanted to sell instead of buying outright then the housing association would have had first refusal to buy back the remaining 40% (at independently assessed market value), but she could have sold it (the 40% plus lease) on the open market if the HA hadn't wanted to exercise their right. When she bought it the surveyor openly stated that he thought it was a good investment.
If I want to purchase further amounts (in increments of 10%), is it possible to remortage for say 70% of the property if my income increases and the mortgage people allow me to borrow more?Posted 2 years ago # -
I bought 44% of a new build shared ownership two bedroom flat six years ago.
The build quality isn't brilliant and the architecture of the building was obviously copied from somewhere else and plotted to fit. There are no windows on my south west wall and as a result my living room gets about four hours of direct sunlight a year.
I'm on the third floor and the water pressure at night isn't strong enough to have a shower with. This is a problem as I do shift work.
I might have to put a water tank in.If I could do it again I would probably try to get shared ownership of an older property.
I got a shared ownership mortgage with Lambeth Building Society. This was bought out by Portman which was then taken over by Nationwide. Each time this happened I did receive a cheque. £600 first time, £180 the second. When my mortgage term finishes again I will apply to another smaller building society. Not all building societies offer shared ownership deals and I could only get a fixed rate one, i.e. not one which was linked to the interest rate.
There is a clause in the contract about renting out but three of the flats in the block are now sub-let.
A fourth, which was repossesed by the bank, still sits locked up a year later.
The rent I pay on to the housing association went up by £100 after one year. From £217 in the first year to £360 now, six years later.Still, it is cheaper than the mortgage on a two bedroom flat and with the money saved I buy a new bike each year and go on a cycling holiday which was the original intention, although on an index linked mortgage I would now be saving even more.
I didn't have any money though for the first couple of years as moving in and just having to buy so much stuff seemed to swamp it all.
Also I had to buy my parking space. £5,000. Yes, five grand but I put that on the mortgage.Basically, I would recommend it. If I could afford to move, I would seriously think about renting out this place and getting a full mortgage on the new one.
Whereabouts is the place?
Posted 2 years ago # -
If I want to purchase further amounts (in increments of 10%), is it possible to remortage for say 70% of the property if my income increases and the mortgage people allow me to borrow more?
I can buy upwards to 100% of my property, but once I own over 50% I am responsible for such things as building insurance, at the moment I'm not.
Posted 2 years ago # -
If I want to purchase further amounts (in increments of 10%), is it possible to remortage for say 70% of the property if my income increases and the mortgage people allow me to borrow more?
There could be some set increment that you have to buy; in my gf's case this was 20% at a time. In purchasing more you should be able to borrow based on the percentage you're buying - so if you're extending the amount you own to 70% then the lender will lend you on that basis.
It seems that it's now a common requirement that developers build a certain % of shared-ownership properties within any new development. In some cases I'm sure they cut costs on these as their margin is lower - however I suspect that many of the issues people have raised above are as common in new-build properties generally. The only obvious cost-cutting at my gf's property was that it had a cheap kitchen - this was easily fixed with some new flooring and cupboard doors after a few years. We later lived in a 'normal' house on a different part of the same development - and the quality of construction was far, far worse.
Posted 2 years ago # -
A lot of the new housing developments round here have a certain number of shared ownership houses. From the research I've done, it seems that the 100% value of the shared ownership is above market value when compared to the properties you have to buy outright. If you look at what the new builds actually sell for, and the fact that a lot of the developers are throwing stuff at you (free carpets, fitted wardrobes etc.) to try and get you to buy, I'm convinced that shared ownership is something to do only if there's absolutely no other way.
Posted 2 years ago # -
I work in a HA (IT) so I might not be 100% on all the facts but the word on the street is
As with buying any house you have to have it valued by the mortgage lender, if it is valued lower than the asking price the chances are the HA will sell it anyway, it's a lot of capital tied up.
When purchasing extra % usually 25%'s although again they are flexible, the home owner gets three different valuations and the average dictates the cost of the purchase.
As we are a HA rent increases are set by the inflation rate, this year rents are going down
The sales department are very accommodating and will try to help you buy your house e.g. paying legal costs, independent mortgage advisor to try and help you get your mortgage.
If the property is a new build then it will be covered by the new homes guarantee, so snags etc will be covered.
Posted 2 years ago # -
Oh yes, and developers to have to provide of a % development as affordable housing, this is then sold on at cost price to the HA
Posted 2 years ago # -
Wifey and I have a 50% share in a Moat property. Generally recommened it, but Moat are fairly useless. Promised callbacks that never come etc. Recently the feckers retrospectively charged us £400 for 'underestimations with regard to service costs' and took it via direct debit with no prior notice. We've been trying to find out what the charge was actually for for 6 months now.
ARGH@Q£@£$@ tl;dr - good idea in general, moat housing are feckers
Posted 2 years ago # -
Its a good way of living in a house you couldn't otherwise afford.
(smug)We were jammy with our last one, got it as the market was rising, bought it outright then sold it just as the market was falling apart. Made a fortune 8)(/smug)
Think the rules have changed now though, you can't buy it outright and then sell it open market, rightly so.
We're now on another self build affordable scheme and about to move into a new house we couldn't possibly hope to afford under 'normal' circumstances.
I'd say go for it.Posted 2 years ago # -
Thanks for all your inputs, its good to hear views of people who have been through the same thing.
Posted 2 years ago #
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