Is Shared Ownership Property a Solution or Just Another Problem For First Time Buyers?

[@shakil-ep2tc]

Cool, I've been looking into shared ownership recently as a first time buyer. I want to build equity while living in London. Sure, I could save a bit and buy somewhere with a 45 minute commute into London, no thanks. I'm young (25) and wanna be in London for the time being and shared ownership sounds like a better deal than spending £800 to rent one room somewhere and be left with no equity at the end. My plan would be to buy 25%-35% of a property and not staircase at all. I'd keep the property for 3-5 years (in which time the valuation will hopefully appreciate) and then sell and use that equity to buy a house outside of London. It sucks that this is the only way onto the London property ladder, but I don't see it changing. I'm on a decent salary and even with an impending promotion to 50k~ my options are still limited to shared ownership or renting.

[@weird0.0]

This is literally what I am doing as well. It's definitely not perfect but nothing is worse than renting (especially in London). As you said, the 25% equity in 5-10 years (+career progression in that time) would hopefully lead to fully owning a home down the line. Good luck to you!

[@gold_bars]

It’s not as easy as you think it is. Having a 3 - 5 year plan is all great and all but nothing goes to plan, and with shared ownership a Plan B is not the way forward. Remember, you have to sell your property to the housing trust first BEFORE you can open it up to the market and that market is also LIMITED to a select few people. You’re better off using that money to start a business or buy an ACTUAL, FREEHOLD property up north (Manchester, Liverpool, etc). Shared ownership is a complete and utter con. Your house price increasing over the next 3 - 5 years isn’t going to make you a millionaire either, and that’s before you factor in your legal fees and expenses.

[@CCP_Operative]

Have you bought a house yet?

[@tomnicholas_]

Thanks this was super helpful. I get bored so quickly when it comes to anything financial so it was great you clearly summarised the considerations.

[@hayleyteasdale7896]

My experience of shared ownership wasn't entirely awful, we managed to get on the housing ladder with a 2.5k deposit, but trying to sell 4 years later was awful. Also being both a tenant AND a homeowner meant we had all of the responsibility with none of the freedom afforded with a normal tenancy. I will add, we bought new in 2006, then 2008 happened. We separated and sold at the end of 2010, obviously at a loss, so that also soured my experience.

[@JustJakesMoney]

Thanks a lot for that Hayley! Your experience seems to be the case for many I've seen online. All the best

[@SelfInvested]

Good breakdown, Jake! I agree with you and think Shared Ownership is probably the least generous scheme for home ownership. But as you say, everyone’s situation is different so there are some the scheme will actually work for…

[@JustJakesMoney]

Thanks, really appreciate that! and yeah absolutely, I know people that have used the scheme and, so far, have been happy, I perhaps didn't emphasize that point enough. But then again I think because it's a relatively new scheme, many of the problems won't be apparent until further down the line

[@carlb721]

Shared ownership is a poor deal. Plus they're located in social housing blocks. .. which comes with a ton of issues

[@CCP_Operative]

I can't work out what economic problem shared ownership solves. Renting allows people freedom to move frequently without the the fees and taxes of selling a property. Owning allows the owner customise the property to their taste and incentivises them to look after the home since it is their owned by themselves. As an economics student you may be familiar with the modigliani miller theorem that states the value of a company (in our case a house) is independent of how it is financed e.g. what share of debt is used vs what share of equity. Thus there is no added value that comes from splitting home ownership between the housing association and the resident, it just seems to add complexity and additional fees.

[@123sumom]

Great video

[@alexandrucosnete3242]

I’d rather rent all my life than use shared ownership.Leasehold is a big no no for me wich is why i’m not even considering buying a flat with a normal mortgage.But some people are so desperate to get on the housing ladder that they sign up to these schemes

[@CCP_Operative]

haha

[@laianepeixoto698]

What?! You have to ask permission to have a pet in a share ownership?? 😑😑😑😑

[@teainortakoy]

Yes, I was in a shared ownership house and had to ask permission. My two cats had been there for years and I only found out, I was meant to ask just before I moved out!!