My 2 cents:
- Apart from the small deposit, isn't the total cost you're paying out pretty similar to what you'd pay if you had a full mortgate?
Depends on the rent they charge you for the share of the property you don't own. The rent in our case was very very reasonable indeed. We bought 40% in 2004, and the rent on the outstanding 60% was considerably less than 60% of the equivalent private rent. Not sure if this has changed since then though - are housing associations obliged to charge "market rent" now?
- Does the rent rise, the same as if you were renting normally?
The rent rises, but probably not at the same rate as the private rented market (although see caveat above) Our rent was pegged to a maximum rise of RPI + 1.5% each year (iirc). So in practice it always went up this much annually. It is probable that you would have to pay a monthly service charge, depending on the scheme (ie if it is within a block of flats with common areas and facilities). Service charges in our block are apportioned as % of the floor space our flat occupies in the development as a whole. This has gone up and down over the years, due to some very haphazard housing association administration. Currently around £90 pcm. This includes provision for a sinking fund to cover cyclical maintenance, major works like roof replacements and so on, so (in theory) we shouldn't be surprised by unexpected one-off costs.
- Will you ever own the whole property yourself in your lifetime? Is it likely?
Depends. House prices are generally increasing faster than salaries. In theory this means that the value of the share you don't own could become increasingly unaffordable. In practice, our experience was that the (independent) valuers our housing association used seemed to give very sensible estimations, which meant we were able to staircase to 100% eventually. It's in the housing associations interest to get the debt off their books and on to yours. We managed it through a lot of scrimping and saving. And even if you don't get to 100% you are still investing at least a proportion of your hard-earned cash in your own home, rather than someone else's.
I would disagree only very slightly with missfran's excellent advice - yes, you do have to pay extra legal costs each time you "staircase" - so avoid if you can - but they weren't punitive. I think it took us two goes (and a massive mortgage!) to get to 100%. So it can be worth it, in my experience.
- What happens if you want to move? I'm assuming you have to move into another shared ownership property?
If by move you mean sell-up and buy somewhere new, you have complete freedom of choice as to where you can move to. This would be dependent - as with any other house purchase - on your financial circumstances, but my take would be that (assuming house prices and private rental values continue to increase at similar rates as today, and that you don't buy a dud) your financial position would most likely be better than it would have been if you were renting privately. As far as I am aware there is no preferential treatment for existing shared-ownership residents looking to move to another shared ownership scheme, but this may vary depending on schemes/providers. When selling as a part-owner the housing association (it's usually a housing association) will often have some sort of clause which means that you have to 'offer' it to them first and allow them first chance to find a buyer from their books. It is social housing after all. What this means in practice is that you may be reliant on an independent valuation to determine the market price. As mentioned earlier, the valuers used when we staircased gave what we thought were very modest valuations - great when you're staircasing and you want to buy more, bad when you want to get the best price possible when you want to sell!
- If the property is only half or quarter yours, does this mean you are limited in what you can actually do & change in the place?
We had full freedom to decorate but I think any major building works were restricted as a part-owner. Not sure what the position is now we own 100%, suspect we have a lot more freedom. I also recall that as a part owner we had to ask the housing association's permission if we wanted to sub-let, don't think this applies as a 100% owner. You'll be responsible for all repairs etc within the property.
Is the whole scheme just total pants & should I forget about it!?
No, it can be (or at least was in our experience) a very helpful scheme depending on your circumstances and requirements. At the very minimum we viewed it as an ownership model that allowed us to avoid siphoning all our hard-earned cash into a private landlords pockets and, which, through lots of saving and a couple of lucky breaks, allowed us to own our own home. But you have to do your homework, check the paperwork and work out if it is right for you.
the expected income of the buyer(s) has to be a minimum of 45K!! What the hell?! Do you think this is because rents are likely to rise and rise in the next few years?
It's probably because the housing association is 1) trying to be responsible by not selling shared ownership properties to those who will be unable to meet their mortgage and rental obligations which also 2) will save them lost income in terms of defaults, evicting, void periods, re-selling etc. It's a commercial operation. 45k per annum wouldn't buy you much of a share in many London properties (sadly).
tldr: it's worth checking out, but do your homework
