My Shared Ownership experience: Sue talks about the long-term costs of Shared Ownership
ฝัง
- เผยแพร่เมื่อ 5 มิ.ย. 2024
- Sue Phillips, founder of Shared Ownership Resources, talks to me about the long-term costs of Shared Ownership based on her personal experience. We discuss how difficult staircasing to 100% ownership can be. She also explains the problem with short leases and how costly lease extensions can be. Watch to hear her first-hand experience of the Help to Buy: Shared Ownership scheme.
LINKS DISCUSSED
Sue's Twitter page - / resourcesshared
Shared Ownership Resources website - www.sharedownershipresources....
CHAPTERS
Intro 00:00
Why Shared Ownership? 00:42
How much did it cost? 02:45
Staircasing to 100% ownership? 03:27
The problem with short leases 07:27
Who is responsible for informing shared owners? 11:54
Lease extension 17:00
Raising awareness about Shared Ownership 22:32
Shared Ownership Resources 25:15
ABOUT ME
I'm Lemuel. I'm not a financial advisor. I'm not an expert. I'm just a regular guy that enjoys talking about how we can do better with money.
If you want to learn more about how you can do better with money, then subscribe to the channel and hit the notification bell so you get an alert whenever I upload a video.
TOPICS
shared ownership experience, first hand shared ownership experience, shared ownership selling process, what's shared ownership, shared ownership, help to buy, shared ownership explained, shared ownership pros & cons, staircasing, what's shared ownership uk, first time buyer tips, housing association, social housing, lease extension
DISCLAIMER
This video is not meant to address the specific circumstances of any particular individual. It is created for educational purposes only. You should not rely upon it as legal, financial or professional advice, or a substitute for it. I do not accept any liability whatsoever for errors, omissions or misstatements contained therein. You should consult a suitably qualified professional if you require specific advice or information.
The way they designed this scheme is for you to fall in love with the property so you don't see the full picture which is that you may never own 100%.
Save your money buy something small which needs some touching, check for areas of growth in the next 5 or 10 years Transport, amenities , schools are important factors. You most probably won't like the area but you must play the long game. Every one would love to live in a new place in a nice area. Be patience do you due diligence. The universe ✨ has a way to punish instant gratifiation.
Haha! Very true!
Yes, this is what I'll probably do now. The government are greedy and selfish I believe, and mainly they're out for only their own benefit. Therefore I think its just best to do it yourself without their help.
@@lucydawkins4552 exactly
Easier to say, what if you have a young child and cant move to a 1 bed fixer uper.
What works for some does not work for others. We own a 400k home with 25k to pay on 100%. We purchased a 50% share for 58k. Worked just fine for us.
I agree with you. It's not a one size fits all (or doesn't fit all in this case) but it's important for prospective shared owners to understand how the scheme works, warts and all
The best video I've seen on this topic - thank you, Lemuel! Huge kudos and gratitude to Sue for create a resource!
Omg thank you thank you! This couldn't have come at a better time. I'm currently looking to buy but on my salary alone, I cannot afford to buy outright in London. Even with Help to Buy. So I've been looking at Shared Ownership but there's not enough resources and information out there. So thank you again! Currently watching while on my lunch break as I refresh Rightmove 😁
Lol! You are very welcome! Thank you for leaving a comment.
You’re right! It’s not the most transparent scheme. I’ve done quite a few videos on Shared Ownership. Here’s a playlist to all of them: th-cam.com/play/PLUG_SDz9gLQI3lKk_GIxi9Kgn_GeCaDDp.html
Yeahhhh shared ownership never appealed to me. If you have no other way then we gotta be understanding but if you can save a get your own, do that! Don't rush. Patience and discipline will pay off!
Yeah, if you think there’s a good chance in the foreseeable future you’ll be able to buy with the scheme, I honk waiting until then would be my preference as well
Regrettably I live in a shared ownership property. Yes I have a roof over my head but at the cost of being on my own so only one wage so never earning enough to be able to staircase. Depreciating asset due to this ridiculous lease and unaffordable lease extension. Would NEVER encourage my kids to go down the shared ownership route. You’re just stuck there, no equity gain like regular mortgages. Rubbish!
@@JustMe-qh5ql thanks for sharing this experience! I really hope you are able to staircase one day or get something better...whatever your wish, I hope you get it. The cost of living is so expensive unfortunately. I'm glad you're on the property ladder but I hope u achieve what you desire !
Very informative. Thank you. A point that is so often missed is that not all home owners/buyers benefit from increasing house prices
Thank you, Jonny! You're absolutely right! Also, if you want to take advantage of an increase in house value to buy more shares, you need your salary to increase as well so you can borrow more against your house's increased value...
I think shared ownership is spot on but for get RIP off london look elsewhere am in my late 50s and have no way of buying a house renting 600 a month could be told to leave any time just bought 25%for 35000 new 2 bedroom house 125 year lease used savings and a inheritance rent and service charge 250 pm kids will still have a inheritance and when I retire social pay the rent and the house will increase in value but the best bit I have security to live somewhere long term forget all this london price stuff and let's get back to reality if your circumstances do not allow you to buy ahouse then consider shared ownership its spot on
Everyone needs to make decisions based on their own circumstances. It sounds like you've made the best decision for you and that's great to hear!
Informative as always thank you
My pleasure! I'm glad you think so 🙏🏿
Great videos brother! I have been a subscriber for quite a while, learnt a lot from you! There are a lot of buy vs rent videos on TH-cam but would like to see you do one from a UK perspective, specifically on how the numbers add up when someone can plan to invest in equities while renting (and build up LISA savings to buy a home later) versus getting into Home buying right away once they save up on a deposit (and invest in equities once the home debt is manageable)
Thank you 🙏🏿
That’s a great topic suggestion, and I’m thinking about how I cover it because there are so many variables.
Whatever I do, I’ll including investing as an opportunity cost!
@@SelfInvested Yes, it's perplexing for many savers (and investors) like me - do i put that deposit down or put it into my broad-based diversified equity (index fund) tracker? Do i build up LISA savings and buy a home later or get a 95% mortgage now when interest rates are low? And how much of the opportunity cost am I losing because the equity markets seem heated up? Difficult questions indeed, but worth a video for sure, we will all learn something as we go along! Thanks for sharing and for responding!
@@srinidhibtech You’re welcome! Thank you for leaving a comment 👍🏿
It's great to hear Sue's experience. Learned a lot from this discussion.
Thanks Rachel!
amazing how quickly house prices went up in a relatively short span of time! barely 15 years.
Yup! And house prices generally grow quicker than salaries, so it becomes less and less likely that people will be able to buy the remaining share of their home...
@@SelfInvested yeap. it would have been better for people to move to cheaper areas such as Leeds and Manchester where they can maybe buy 100% since house prices are lower in those places.
London is just such a different game from the rest of the country!
@@anthonyhui1010 As long as that is a solution that works for you!
@@SelfInvested Thanks. Just don't do shared ownership!
Shared ownership - I once thought that this was the way to go in earlier years but decided against it, due to information I gathered and experiences from friends.
Yeah, there’s a lot more to the scheme than many people think. It can work for some people, but there are many points you need to be aware of before signing up!
Yes, I'm so glad I've seen these videos. I feel sorry for people who have gone through the shared ownership route already.
One of the biggest problem is that , for example if you set your mind for 5% mortgage let's say for a flat that is 400k so you would need 20k plus legal fees and ect. By the time you will be able to save for it in few years the property will be 450k with the way the prices are growing. Not everyone wants to move out so far away from London to be able to afford a flat. That's why I think many people go for shared ownership where you could get 25-35 percent from 4k up to 10k. Where is more realistic and it wouldn't take as long to safe for it. Although I not the best option to pay service charge and all additional fees. Paying 5 years of normal rent is a dead money that can't be recovered. Paying 5 years of shared ownership it still paying off big chunk of your percentage that you have mortgage. Assuming that flat price will go up your equity will go up also. I wouldn't be interested to staircase I would hope that after 5 years I paid off some chunk of mortgage plus equity could give me normal 10% mortgage somehere else.
You're right, Shared Ownership does work for some people. The reason I make these videos is not to tell people not to use schemes like Shared Ownership, but to open people's eyes to the scheme because the official platforms are not very transparent - especially about the pitfalls...
@@SelfInvested Of course I get your point and I really appreciate these videos. Maybe I word it a little bit different than I wanted it to sound.
All the best
No worries! My response was probably more defensive than intended!
Thank you for your comment. I'm thinking of doing the same (shared ownership instead of dead rent but only for a set period of time before selling my share and buying a property) but did feel a bit put off by all the extra costs etc. I have a deposit for help to buy but I don't have the salary to get a mortgage for a full property atm (I'm single so one income and it's average for now).
@@EvieBam The important thing is do your research and have a long term plan that’s realistic! I prefer the Help to Buy scheme over Shared Ownership, but it has a higher barrier to entry because you generally need a bigger deposit and need to be able to afford at least a 55% share mortgage (in London). Here’s a video where I compare the two: th-cam.com/video/kkfCOIj60IM/w-d-xo.html
This is the perfect example to highlight the pitfalls, it couldn't be any more realistic
I agree! The great thing about Sue’s experience is that it’s over the long term…
surely there is a duty of care to people who are financially vulnerable and those who rely on their housing association's shared ownership schemes as a means of owning their own home!
There is a strong case for housing association to be regulated because at the moment they are coming across as a 'DEL BOY' industry! - Way too many hidden costs to the detriment of the buyer!
It might be hard to believe but a Housing Ombudsman, which deals with complaints about housing associations, already exists...
£30,000 for 50% 😮
In London!! Lol! I know, it sounds unbelievable!
Thank you very much for the great Video! One question I had is that once I manage to staircase up to 100 percent, would it be then the same as if I purchased a property outright? i.e. is there no restriction on selling the property in the market? Can I sell it at the price that I wish to or does it have to be sold at the market price? Thanks
Hey Paul! I’m glad you liked it! From my understanding, once you staircase to 100% you own the leasehold (if it’s a leasehold property) or the freehold (if it’s a freehold property). This means you should be able to put it on the open market at whatever asking price you wish
@@SelfInvested thank you :)
Just what I was going to ask, cheers guys!
Shared ownership - a great scheme when you know what you're doing. Right now when flat prices are collapsing my son bought new build SO flat in London paying £12,500 less than initial value with the incentive of no service charge for 12 months. He's planning to staircase to 100% as soon as possible. Thanks for insights from Sue Phillips !
It can work for some people, but it’s important to be aware of the pitfalls. I’m hoping to speak to someone who the scheme has worked for so they can share their experience and tips!
@@SelfInvested You already spoke to one. It definitely worked for Sue.
I’m not sure she thinks it worked out the way she had planned...
@@SelfInvested That's life. You cannot plan everything.
That’s true, but I think she wants people to go into the scheme with their eyes wide open because certain crucial aspects of the scheme were not made clear to her from the outset
Whenever I asked about short lease, the dealers deliberately try to deflect it's serious complications. Instead they try to persuade you to buy it
they renew the lease on new home buyers and you should either buy the lot and they give you the free hold (house) or sell it back to them before you get to 80 years and get a new one.
I didn’t get the part where she mentioned there are restrictions on living with your partner ?! What restrictions ? I am hoping to buy a house this year with shared ownership scheme but I am in a relationship, I was hoping my partner can leave with me or my mother if I ask her to come from Bulgaria for couple of months?! I didn’t though I had to ask someone for permission as long as I am paying for the bills , I mean it is my house right ?
I think the restriction she mention was to do with renting your home out while not living there. The Shared Ownership scheme doesn’t really allow to let out your whole property.
Hope this makes sense?
@@SelfInvested It absolutely does ! But as long as I can invite my partner or mother to live with me without asking for permission I am good I think. Thank you for yet another quick answer . 🍀
What is your experience? Are u in a shared ownership scheme. Or do you have a video which explains your journey? X
Hey Red! No, I’m not a shared owner. I just make videos to explain how the scheme works. I’ve found that there’s a lack of in-depth information about the scheme online, so I try to give people a better understanding of how it works so they can make a more informed decision about whether it’s right for them. I do the same for the Help to Buy Equity Loan scheme as well
Hi, hw many years lease extended by housing association? Thnx
So, she staircased 100% before extending her lease. Since she owned 100% of the lease before extending, she would have been able to do a statutory lease extension after 2 years, and so extend by 90 years...
@@SelfInvested we can extend lease after buying 50% or more share? Thnx
@@Pkv898 You don’t have a legal right to, as far as I understand. It would be at the discretion of your housing association, and there’s no guarantee that it will be extending by 90 years and ground rent will be reduced to zero - even if they allow you to. Also, if you extend the lease with only a 50% share, you’ll still be responsible for 100% of the cost of extension, so that’s something you’ll need to consider. How long do you have left on your lease? Have you sought legal advice?
Is there a way to ever be the owner of freehold through this scheme or even if you pay 100% this always be only a lease/not your home.
Yes, the underlying asset can be a freehold property. This would usually be a house, as oppose to a flat, but I would always get this confirmed by the housing provider to be certain
wowwwww that lease issue and passing the buck
I know, right?! I think it’s something that should be highlighted from the outset
These videos are not helping those who are trying to sell their shared ownership homes 🤣🤣🤣
Would love to know the percentage of HA that actually buy back the properties that are offered to them, as a lot of us were mis-sold based on this information. We were informed that the HA would at least make an offer to get out of the contract quickly; & if we are not happy with their offer then we could instruct them to go forward in finding a buyer within an 8 week period.
Based on all the info & active discussions at people fingertips; people will be more reluctant than ever to buy a SA let alone a preowned one. So I wonder is it easier to hand back the keys? & walk away. What’s the implications if you do? Aside from repaying your mortgage loan & 6/7 years impact on your credit rating.
You should maybe update descriptions or something on some of your other videos. I am looking at buying shared ownership in Bristol soon where its a little more affordable than london, £5k deposit for 50% of a £200k flat. I've found some of your other videos where you say how bad it is, and extortionate increases in service charges etc, then I found a video where you say the schemes been updated and its now more viable, and now another video saying to almost avoid it....I really don't know whether it is for me and in this case youtube isnt helping as advice and info and opinion videos are kinda all over the place.
My personal spot, just out of a relationship where we sold the house but I don't have a lot of equity. I make a good wage so my affordability isnt a problem, for me its the deposit and trying to save one asap so that I can get back on the property ladder at 37. Shared ownership seemed a good idea for me as I can quickly save £5k or more and be back in a property, which I will then carry on saving and in a year or two buy the whole flat, not staircase up in little increments costing solicitors etc each time, but a one time, right now I want to buy the other 50% thing. Am I the type of person this might still work for?
I think for me, if I find a flat where I had the affordability for the full amount, but not the deposit, then that might work for me, as long as I can make sure I buy the entire flat quite quickly?
Hey Jessica! Thank you for your comment! That's a good suggestion about leaving a link in my description to my other Shared Ownership videos, I think I'll do it! I already have a playlist of all the relevant videos, see here: th-cam.com/play/PLUG_SDz9gLQI3lKk_GIxi9Kgn_GeCaDDp.html
I made an update video to the one you mentioned about the changes to the scheme, after the government released more details about it, see here: th-cam.com/video/tw7j2kSIHe8/w-d-xo.html - the changes aren't not what I had hoped they would be.
Please don't get me wrong, this scheme does work for some people. Everyone's situation is not the same, so it could work for one person and not for another. I plan to interview people that have made the scheme work for them, so there is some balance between the interviews - not just negative.
The main point of these videos is not to tell people to avoid the scheme, but to open people's eyes to how to it works because as I am sure you are aware, the official platforms are not very transparent and do not contain a lot of detail.
Many people end up trapped or disappointed by this scheme because they sign up without fully understanding it.
I hope that by making these videos, people will be encouraged to do their homework, so if they choose to use the scheme, they know what they are getting into and have a plan for how they will get it to work for them.
@@SelfInvested thanks for the reply. Your videos have opened my eyes to the leases and the length of time left on them. 80 years sounds like so long! I’m very torn at the moment between buying a shared ownership flat or a flat a little further out and less fancy for say £160k with a 5% deposit, because then at least I will have all of the flat! And £8k isn’t an impossible amount for me to raise.
Just sucks that I am 37, previously lent a deposit from my exs parents so all of the money in my current place which we have to sell isn’t mine, and I really want to get back on the property ladder again as soon as possible 🤞
You're welcome, Jessica. I get you, but try not to rush into anything without considering all your options. Have you spoken with a mortgage adviser?
@@SelfInvested no I haven’t yet, still selling the house I’m in at the moment, so I’m going to clear a little bit of debt with the small amount of equity I do have and then maybe speak to one about my options in the future. I know that when we bought the house I’m in at the moment the mortgage broker Taylor wimpey put us in touch with was really good so I may go back to him, or wait until I am in Bristol and speak to one there who knows the market a bit better :)
Shared ownership is fantastic option if you actually can afford to buy your share outright.
I bough my share of flat in Birmingham for 20000. I'm planning to live there maybe for 5 years.
so at the moment i have 2 bedroom flat for 350£ rent monthly including service charge and ground rent. (Bargain). in couple of years I'll save another 20 -30 K + at least 20000 (or maybe litle more) from selling my share. So armed with 50000 there are places around Birmingham where I can buy my very own property outright or maybe with help of small mortgage. probably I'll need to renovate it myself but still.
That does sound cheap! Sounds like you have a plan, good luck with it all!
Itskind of extortion. The owner not only takes their portion of capital gains but also buyers one. Its a plain extortion. I wonder how they can call it shared ownership legally. Quite extraordinary way of taking someones money away (blatantly a legal theiving)
Move out of London, invest in a good season ticket or a good family car or get a transfer in another city. London is overrated.
I don’t think you’re wrong, but it’s a big decision!
why do we have to stair case? Why not get your 25% paying it and sell your 25% (assuming you are in a good 125 years lease)
Most of the stress I've seen its thebstari casing. I know I cant afford it, but I can afford in a near future to buy my 25%.
Hi Julian! Thank you for watching. In answer to your question, you don’t have to staircase. The problem is Shared Ownership has been sold as a way to staircase to 100% home ownership. The other problem with Shared Ownership, which is covered in this video, is that the underlying asset is usually a leasehold property. The problem with this, even if you have a 125 year lease, is that eventually, within your lifetime, the lease will need to be extended. If you plan for your home to make up part of your “post-working life” income or children’s inheritance, this will be problem. Not to mention that Shared Ownership didn’t even have a statutory right to extend their lease until very recently (not even sure if the change has been enacted).
However, under the changes to the new model of Shared Ownership, all new homes will have to have a minimum lease of 999 years, which will resolve the lease extension issue
@@SelfInvested Thanks for responding. I have learnt so much with you videos.
is there a minimum number of years for a lease for a buyer to feel comfortable (I understand now why 125 sounds like a lot but its not).?
Let's say over 200 then
@@davidromero1549 To be honest it depends on your situation and plans. For example, if you bought a place with a lease of 99 years but planned to sell and move to another place within 5 years, you might not having any trouble selling a place with 94 years left on the lease. However, if you were buying your forever home and it had 125 years, then you’ll eventually have to extend the lease to maintain your home’s value, and this would be an additional expense.
Having said that, the longer a lease is, the more marketable a place is, and leases for new flats are getting longer (many are starting with 999 years) because of planned changes to the leasehold system. Because of this, if I were buying a leasehold property, I’d be looking at, as a minimum, a home that’s had its lease extended by 90 years, through the statutory route. This means the lease is likely to be over 160 years, and the ground rent will be zero. Ideally, I would want a share of freehold, but the next best thing is a 999 year lease with zero ground rent, and where the residents manage the building.
Hope you you find this useful. I have many videos on this. Let me know if you want me to send you the links…