A friend has asked me (as someone who's bought a house, no other reason that I can tell!) about what I know about this type of scheme in order for them to get onto the London property ladder. Has anyone got any experience of how they work (either first hand or from friends etc) and what pitfalls to look out for?
An example of a "provider" would be [url= http://www.lqgroup.org.uk/ ]this lot[/url] who are apparently all official and above board but I know next to nothing about it. By the looks of it you commit to buying a "share" of the property whilst paying rent to the company for [i]their[/i] share. Anyone got any useful intel? TIA, as always...
Yep know a fair bit about them, email in profile for specifics.
Difficulty is mortgages usually,not many lenders keen (especially at the mo) but you have summed it up, buy a chunk (25/50/75%)pay rent on remainder, option to staircase (buy bigger%)or sometimes sell% back if times get hard!
Is a cheaper option than buying 100% and more flexible, and assuming house prices rise you are investing in your chunk of the property which is better than renting.
Usually Housing associations offer them and they tend to be pretty upright and honest (ones we've worked for!)
Nice one, YGM...
You currently need to put down a 5% deposit on the part you are buying as no lenders are offering mortgages for 100% of the share your friend is buying.
As said above its better than 100% renting but you will only own the leasehold not the freehold as this is owned by (normally) the housing association so they are your landlord for the share you don't own. Lenders will normally insist that there is a "staircasing arrangement" in the lease agreement so you are able to buy the remaining share if needed at a later stage.
The main drawback as i understand it is that the housing association will normally require you to give them 1st refusal when you come to sell the property and they can then advertise it themselves for up to 13 weeks. Not sure if that is the same with all associations but certainly on the ones I've arranged mortgages on.
A good way to get on the property ladder.
Thanks both for your comments. In particular...
A good way to get on the property ladder.
...will be a re-assurance aside from all the nitty gritty.