Advice sort from either an estate agent, or someone who has been involved in buying (or selling) a shared ownership property. I'm happy to pick up via private message or on the phone.
My sister is currently trying to buy her first place, and her circumstances are such that a shared ownership property is (likely) her only option.
She has done extremely well to save circa £25k, on a salary of £20k. In all likelihood she's probably aiming for a mortgage of around £80k. The majority of shared ownership properties around this way that meet her criteria are being sold with the share at £90k-£100k. She has the cash available to meet the deposit on a 90% mortgage and associated fees.
Where she is coming undone is the premium, and more so because of cryptic dialogue with estate agents. Many properties are being listed with a premium of £10k+ and some with as much as £20k.
The frustration here is that the premium sits outside of the mortgage, and therefore it wipes out cash for the deposit. Further frustration is introduced by (some of) the estate agents. I understand they have a role in vetting prospective buyers, to ensure they can genuinely proceed, etc... But some have asked for the premium to be enhanced, and the enhancement will be paid to them. One agent asked for a £5k premium in advance of agreeing a viewing!!!
Is this just how the market is? Does she just need to suck it up? Should she just avoid agents that come across as less than professional?
Also, she doesn't even know if her offers make it to the vendor. Is there merit in her approaching a vendor directly for any property she likes? What are the upsides/downsides to this?
I've got no experience of this situation, I just want to help guide her and make sure she's not being taken for one by an unscrupulous agent.
I had never heard of these premiums. A quick bit of research revealed these:
Crippling shared ownership premiums are holding back house buyers in Milton Keynes, complain would-be purchasers https://www.miltonkeynes.co.uk/news/...hasers-3347925
Shared ownership, at a premium... https://www.bbc.co.uk/threecounties/..._premium.shtml
I looked at a few of these about 10 years ago. I had a shared ownership in Oxfordshire at the time and was trying to relocate to MK. Nearly all of the shared ownership properties had this. From what I could gather you are just giving a bonus to the seller which would be completely outside of the mortgage and either suck up the cost or try to pass it on when coming to sell. Some where as you said £20k+ so not sure where you are meant to get this on top of the deposit for a mortgage for essentially not much (the premiums are sold as benefits that the owner has made) some had conservatories and the like some I couldn’t see where the value was added.
I think you are meant to pay the seller and just take a reduced percentage on the LTV. If I was your sister I would steer well clear if she can, it seems shoddy to me. I ended up taking a full ownership property which I think is a much better prospect.
Is this in or around the Milton Keynes area or somewhere else? Happy to have a chat if you need more info.
Is that even legal?!Originally Posted by SeanST150
I didn’t understand shared ownership before and a certainly don’t now.
As I understand it the ownership partners are normally housing associations. If you go direct to the HA surely you will surely avoid any sharp practice and exploitation.
Alternatively perhaps she should investigate shared ownership with another individual. Whilst this is often with an existing friend I understand this is not always the case and the 'partner' is someone who has been sought solely for that purpose though you'd hope a friendship will develop out of it, probably before the purchase is made.
She would certainly love/prefer this option. But earning £20k per annum, means she'll need a deposit of at least £50k, and likely close to £100k.
I certainly don't think it is, and I've told her too report any that do ask. I've said pay along, and then ask for them to send an email with their account details and how much they need, just so she has evidence when reporting.
Indeed, going direct to the Housing Association avoids this mess, however the waiting list is years!
I've allowed her to live with me for years, with a nominal rent of £100pm, so she can save a deposit and gain her independence. I have my first child due in May, and she is desperate to be gone ASAP. I don't need her to be gone, but she's worked herself ragged as a waitress to save what she has the past couple of years.
I like that suggestion. Albeit, I can see it getting messy in a few years. When one party wants to move on or one might lose their job.
I appreciate the replies that have been made. I just see this situation as further evidence the housing market is broken.
The shared ownership scheme is clearly another well intended, but poorly executed scheme to help first time buyers.
Since I posted this thread, my sister has actually made an offer and it has been accepted. I guess she accepted the inevitable and will be handing over a premium, fortunately the premium is on a property she has fallen in love with, and the amount is towards the lower end of what has been asked, and the vendor will leave white goods and a few other bits behind.
What a mess this market is for those trying to get on the ladder!
My sister bought and sold a shared ownership flat and never mentioned any 'premiums', I guess it depends on the demand in the area. Hers didn't sell that quickly so maybe couldn't command a premium if one was possible.
I guess if people are willing to pay to jump the queue then owners will gladly take their money.
I do feel very sorry for FTB now as home ownership is getting harder and harder and renting more expensive. It makes me worry how my own children will manage. Although the current trends cant be sustainable so something must change.
Thats my worry too, I bought my first house at age 21 in 1991, 3 1/2 times salary mortgage, 30k house, my eldest is 15 now so got a few years to go before FTB stage, but the same scenario is impossible as far as I can see.
Cheers..
Jase
A work colleague of my wife's was getting a shared ownership house a few years ago and said the mortgage and buying process was so complicated compared with buying outright she nearly had a nervous breakdown
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