looking to buy a shared ownership house for my first property anyone any advise? - HotUKDeals
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looking to buy a shared ownership house for my first property anyone any advise?

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any advise would be helpful Read More
Deanibs Avatar
5m, 4w agoPosted 5 months, 4 weeks ago
any advise would be helpful
Deanibs Avatar
5m, 4w agoPosted 5 months, 4 weeks ago
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#1
is it a new build? If not, may be worth asking how much the rent has increased over the last few years on the % you don't own as this could be an issue in the future. The same for any service changes. I know a few have not recommended them but personally not really had an issue. Do you have any questions, I have been in mine for a while now.
#2
theone
is it a new build? If not, may be worth asking how much the rent has increased over the last few years on the % you don't own as this could be an issue in the future. The same for any service changes. I know a few have not recommended them but personally not really had an issue. Do you have any questions, I have been in mine for a while now.
Sorry i didn't mention the property is a new build, have you had a chance to improve the equity you own as of yet?
#3
We had decided that we didnt want to increase the equity. We kept that at 50% mainly because we want to move as its a flat and not a house. If we were looking at staying longer we would have increased the equity %. The issue we had with increasing the equity before moving is unless we were to increase to 100% selling would be an issue due to the increase in value between buying and what it is now worth. It would no longer be affordable housing really. For example, the whole value was £164k when purchased but our neighbour just sold for £250k

I believe you have to instruct a solicitor each time you increase equity (or at least our housing acc wanted them involved) so its not as simple as just increasing the % without incurring further costs over and above the purchase cost.
#4
theone
We had decided that we didnt want to increase the equity. We kept that at 50% mainly because we want to move as its a flat and not a house. If we were looking at staying longer we would have increased the equity %. The issue we had with increasing the equity before moving is unless we were to increase to 100% selling would be an issue due to the increase in value between buying and what it is now worth. It would no longer be affordable housing really. For example, the whole value was £164k when purchased but our neighbour just sold for £250k
I believe you have to instruct a solicitor each time you increase equity (or at least our housing acc wanted them involved) so its not as simple as just increasing the % without incurring further costs over and above the purchase cost.
So all in all i am guessing you are happy with how its going? Do you also get to do anything to the property as if you owned 100% or is there a few restriction?
#5
We can do whatever we want. They did say they wanted to come and check any work we do but only for H&S to ensure a new bath for example is not too heavy and will fall into the flat below but you should be fine. Overall, very happy and would recommend it for getting on the housing ladder. Our Rent has increased but in nearly 7 years it has gone up by approx 15% and this has been gradual, not not at once.
#6
theone
We can do whatever we want. They did say they wanted to come and check any work we do but only for H&S to ensure a new bath for example is not too heavy and will fall into the flat below but you should be fine. Overall, very happy and would recommend it for getting on the housing ladder. Our Rent has increased but in nearly 7 years it has gone up by approx 15% and this has been gradual, not not at once.
Sounds good then, how was it with getting a mortgage was you restrict because its a shared ownership?
#7
Slightly.... there were not many options for shard ownership in 2010, we went with leeds and even with 10% deposit we were on a very high interest rate (7.89%) but this wasnt for long and now on 1.74% ish so much better


Edited By: theone on Jan 25, 2017 12:09
#8
theone
Slightly.... there were not many options for shard ownership in 2010, we went with leeds and even with 10% deposit we were on a very high interest rate (7.89%) but this wasnt for long and now on 1.74% ish so much better
glad its much better now hopefully i can get one at a much lower rate soon. Thanks
#9
no problem, hope it goes well
#10
You have to remember you don't actually own the whole property and you'll have restrictions on what you can do because of this.
When you come to sell on both will affect the resale value.

They are a great way to get on the ladder, not so great when you want to move up the ladder.
#11
joedastudd
You have to remember you don't actually own the whole property and you'll have restrictions on what you can do because of this.
When you come to sell on both will affect the resale value.
They are a great way to get on the ladder, not so great when you want to move up the ladder.
If you don't mind me asking what do you mean by saying not so good when trying to move up the ladder?
#12
Deanibs
joedastudd
You have to remember you don't actually own the whole property and you'll have restrictions on what you can do because of this.
When you come to sell on both will affect the resale value.
They are a great way to get on the ladder, not so great when you want to move up the ladder.
If you don't mind me asking what do you mean by saying not so good when trying to move up the ladder?

I have never really looked at shared ownership so don't know that much about it, but my impression when comparing it with standard properties is that it is more expensive but attractive to those who otherwise can not afford to buy at all.

On resale, you won't get as much capital growth as standard properties as you will be marketing to a limited market unless you have already bought the whole property out and there are no huge service charges associated with the property that stays with the property.

Capital growth often comes with demand so less demand, less growth.
#13
An estate agent will value the property so the value is the same as a "normal" property that is not shared ownership. The experience I have is that is will get offered out at the % value of your share initially but if this doesn't sell within the period the housing acc has first refusal then it can go on the open market.

If this happens it can get purchased one of 2 ways. Either at your % share or it can be purchased outright at 100% value as a normal property and not via shared ownership. I am not sure if this depends on the overall value of the property as it may be unlikely for the property to sell if you owned 75% and the property was £300k. This wouldn't be particularly "affordable" as the requirements would high.
#14
You really need to read the small print. I know someone who had a shared property and they could only ever sell it for the same value, or less, than they had paid for it. Any sale had to be offered to the developer first. If the developer bought the share back they would own the property outright and would therefore be able to sell it at any value they wanted. Further to this all work that need to be carried out had to be approved by the developer. Not sure on who would pay for work undertaken but my guess would be that internal the occupier and external jointly. So you could end up helping the rich get richer where the only advantage to you is being able to say you (part) own a property which in real terms you rent - funding the developer future. The people I know that had one had to move when it became to small for them.
#15
I don't really get the concept of shared ownership. is it basically u pay 50 percent rent and then 50 percent mortgage. are u allowed to out it on rent or not say if u decide to move to a different property and then share the rent with the other owners. if the property is empty do u share the council tax or not it's not really shared.
#16
MynameisM
I don't really get the concept of shared ownership. is it basically u pay 50 percent rent and then 50 percent mortgage. are u allowed to out it on rent or not say if u decide to move to a different property and then share the rent with the other owners. if the property is empty do u share the council tax or not it's not really shared.


You purchase 50% and pay a reduced rent on the other 50%. It is meant to be cheaper than renting 100% and for people who cannot afford to purchase the full 100% due to wages etc... You are responsible for the upkeep of the property as if you owned 100%. You can staircase to 100% so after a few years could own 100%. You pay full council tax etc

Edited By: theone on Jan 25, 2017 15:18
#17
Deanibs
joedastudd
You have to remember you don't actually own the whole property and you'll have restrictions on what you can do because of this.
When you come to sell on both will affect the resale value.
They are a great way to get on the ladder, not so great when you want to move up the ladder.
If you don't mind me asking what do you mean by saying not so good when trying to move up the ladder?
Normally the shared percentage is owned by a housing association/group.
When you come to sell the house they normally have small print which can restrict who can buy the property as well as having first refusal.
Meaning before you can even put the house up for sale it has to go through them and you have to wait for them confirm it's ok to go on the market.
Once it's on the market they normally reserve the right to stop/pause the sale if they deem the buyer doesn't mean their criteria.
On top of this because it's shared ownership (with all the restrictions which come with it) the resale value is less then if you own it outright.

In short more complicated and longer sales process, less property value growth and restrictions limiting buyers.
#18
Be very careful. Housing associations are some of the worst. My ex bought a place and the t&c were shocking. Despite only owning 50% she has to pay 100% of the service charge which went up from 90 quid to 160 in 3 years. As the price of the property increases so does the amount you have to pay to buy the other half. Also, if you decide to sell you must use their people you cannot get in independent valuation. If you can avoid it I suggest you avoid. If private landlords behaved in this way there would be an outcry.

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