Shared equity does not lead to full ownership

Readers' comments (10)

• Bryan Latter | 08/11/2008 9:41 am

  I agree ! As a retired business & property consultant, I believe that such H.A. schemes have become an easy way to secure public funding at the expense of providing affordable rented homes.
  People don't understand that unless they can afford to buy additional shares at escalated values, they will never be more than 'tenants' paying rent & service charges set by the landlord, and have difficulties in selling their stake in their ownership. It's become a 'Con'.

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• R Burton | 11/11/2008 3:51 pm

  I think that shared ownership is the only way I can get on to the property ladder which is a shame as I think it is all a scam. I earn what I think is a decent wage (£22,000 per annum) but as I live in London I cannot afford to get a mortgage as property prices are too high. Even though prices are coming down, London properties are still way out of my reach.
  
  I do not see shared ownership as affordable properties as the price of the property is set the same as or higher than market value and as the property value increases over the years it makes it impossible to buy more shares. Also you have to pay for a mortgage as well as rent and service charge. If the HA's were selling the property at a price lower than market value then it would be more affordable. E.g. If the market value for a 1 bedroom is £160,000 then the shared ownership property should be set to £120,000-£140,000. The HA should then agree to give owners a chance to buy more shares within the next 5 or so years at the original price of the property or current price of the property if property has fallen in value. I know the HA needs to cover their cost but they are still getting money from the owner through rent and i think they probably still make a big profit from the sale of the property!
  
  I just think that they need to revise their shared ownership schemes and help first time buyers onto the market. I currently live with my parents and although I’m working full-time I cannot afford to rent privately, I am not eligible for social housing, I cannot afford to buy a house outright and in some cases I do not even earn enough for shared ownership. There’s no real help for people in my situation who want to be independent. The schemes all have a catch one way or another.

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• Gemma Cantan | 20/11/2008 3:01 pm

  I am actually on a similar scheme, 'open market homebuy'. I opted for it over three years old and don't believe I was properly informed. We have a 75% share in our property. The house prices have increased so we have managed to raise a little equity but it doesn't seem to be making any difference as we're struggling to afford to buy a bigger house and pay back the housing association but we earn better ages than we did back then and it doesn't seem to account for anything. We wanted to remortgage last year as our fixed rate ended and we wanted to save a couple of hundred pounds, the housing association took 6 months to complete! Yes, seriously 6 months of me pulling my hair out because they were arguing over the silliest details. These kind of schemes are only suitable if you a) never plan to move b) can be assured that you will be able to buy a bigger share in the property and c) that you like the area you plan to live. If I'd have known then what I did now, I would have stayed well clear of them but I was young and naive and believed that it would be financially possible to move. It certainly isn't what they sold to me!

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• Edina Dinde | 09/03/2009 2:13 pm

  The sole purpose of shared ownership is to allow foolish people to get onto the housing ladder. Without first time buyers, the lifeblood of the housing market, the housing crash would have happened sooner. So the government invented crazy ways to keep people buying.
  What good is 1/4 share in a property to someone?
  The government should be ashamed of itself for encouraging this monstrous scheme.

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• storm | 13/06/2009 9:40 pm

  I tend to be suspicious of shared ownership, altho I bought a DYSO resale. I've been looking into new build home-buy, and the service charges are almost criminal. I suspect that Shared Ownership is a debt time bomb, when in a few years buyers want to off load their badly built, over priced properties, with a black hole called a service charge. The best view on early S/O, if you bought your share for cash, is that it bought you cheaper rent and a long lease. As long as you kept paying. So, Shared Ownership with a mortgage just does not make sense. You have three wolves to keep at bay.

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• Derrick B | 10/11/2009 4:28 pm

  Shared Ownership is no longer an affordable way to buy property. Originally, Shared Ownership was introduced on the idea that you would buy a percentage and then pay a reduced rent on the portion that you do not own. With the bank interest rate being low and the HA’s increasing the rentals by their maximum increases every year, this is no longer an affordable way to buy a home. Future buyers should be warned. Shepherds Bush HA increased their rental portion by 6% this year during a recession!
  
  If you are having financial difficulty and you find yourself in a position where you cannot afford to pay your mortgage + rent – perhaps after being made redundant, subletting temporarily until you get back onto your feet is not an option! The HA would force you to sell. You would be forced to pay a fee upfront for an approved evaluation from a pre approved list of HA surveyors and up to £300 for a HIP. You are forced to pay a commission to the HA for marketing the property, Your solicitor fees and the HA’s solicitor fees plus a few other costs so if you like most leaseholders only own a 25% share, You will probably walk away from the sale at a loss or having only made a VERY small profit. The HA who own the majority 75% share take the profit and do not contribute toward any fees related to a sale.
  
  Leaseholders also end up paying very high service charges and have no say how the building is managed and most times it is completely mismanaged as is the situation with my building.
  
  Shepherds Bush Housing are probably the worst HA to buy Shared Ownership from as it is now 1.5 years that I am waiting for defects to be repaired!!! They fob you off at every opportunity.
  
  I am trapped in a situation where there seems no way out! It is about time that the rules of shared ownership are changed. It is about time that future buyers are made aware of these issues which are NEVER brought to your attention when you are looking to buy the property.
  
  A 200K property on an interest only mortgage would cost me just under £1000p/m. Currently a 25% share is costing me £1200 p/m.
  You work out which is the more affordable option and which option provides you with more freedom!

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• SR | 12/11/2009 9:15 pm

  Derrick B is absolutely right and I find myself in exactly the same situation with the same complaints. It is unacceptable that you are placed in this position where you are almost guaranteed some sort of loss on the property mainly because the HA don't keep the place up to repair or they are money grabbing at every turn on the service charges and rent, or ramping up the fees on re-sales. I think there is a reasonable expectation here/human right that you are not screwed over by public bodies in receipt of taxpayers money. When is anyone going to speak up on this subject for the Shared Owners. The TSA and Housing Ombudsman are a waste of time and the HA's are a law unto themselves.
  
  However though I must disagree with Derrick on one thing; that Shepherds Bush are the worst HA. That honour must surely go to Swan Housing.
  
  Shared ownership, don't do it
  
  SR

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• Narinder | 24/12/2009 8:23 pm

  I recently viewed an Shared Ownership new built property and liked its layout and location but at the same time i was asked to deposit a cheque of 250£ as a holding deposit. I was asked to confirm within 7days if i am going forward with it. Having drawn into it because of the low initial downpayment i committed. But then i started exploring the market for Mortgages and checking on these SO schemes i found out that its like falling into a long term TRAP. Having known the facts, now i dont want to continue with the purchase. Is there any way by which i can get refund of 250£ which i paid as holding deposit?

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• fidel | 08/03/2010 11:23 am

  I'm surprised to find lots of people are against SO. What would you recommend as an alternative? Surely having a 25% ownership is better than zero ownership overall. Paying 100% rent vs 75% rent (and service costs) + 25% mortgage, I know which I'll choose.

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• Jonathan Wilson | 20/04/2010 9:11 pm

  Fidel, you have either misunderstood the previous points or you have not read them properly. SO is not what it seems. The terms of an SO should be very carefully considered before agreeing to them. I took on a DIYSO 14 years ago and would now like to buy out the 35% stake the HA owns in my/our property. To do so will cost £103,250! This astronomical figure is due to the fact that housing prices have kept rising and the DIYSO deal my wife and I took out was that we pay the HA 35% of the market value for a 35% share. This means we cannot sell and move to a property more suited to our needs within the area we currently live and work in. I am interested in setting up a group to lobby on behalf of HA SO tenants, like my wife and I, who are trapped in unsuitable accommodation. If you would are intersted please contact me via email jonniwilson@ntlworld.com

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