Can Someone Please Remind Me?

[Tonkers]

Well, hold your horses here.

If house prices rise, you have a cheap option to buy the place at the original price agreed.

If house prices fall you can walk away from the 50% you don't own.

Where's the downside, ASSUMING that you are getting the property for a fair price, which for a new build flat in a new build concentrated area should be down 50% from peak.

Not sure it is always agreed at the original asking price. I had a friend selling up a good few years ago who said that he would never be able to afford the other 50% as it had gone up a lot, and he sold his half and got out.

[Charterhouse]

Are we talking about private equity deals, in which case you have a loan for the other 50% with the developer rather than a morgage company - no walking away.

If we are talking about share-ownership british public sector style, the Housing Association owns and gets 50% of the sale price - if its over the 'market value' they get their proportion of the equity. If its under their own 'market value' the person coughs up to make up their losses. In the meantime they 'rent' the other half but without the obligation for repairs and maintenance. There is no walking away. You still have to pay the morgage on your share, and if you do walk away they may well get to keep the money you paid to them with that morgage.

Hmm, are you sure about that? I believe what you say about the private deals, but the ones that are available to low wage/key workers I thought were agreed at a set price and the Housing Associations have the downside should the prices fall, but I could easily be wrong.

I'm working from what a friend of mine who has done one in Sutton recently has told me. He's over later for a BBQ so I'll ask him for more details later on.

[Elizabeth]

Hmm, are you sure about that? I believe what you say about the private deals, but the ones that are available to low wage/key workers I thought were agreed at a set price and the Housing Associations have the downside should the prices fall, but I could easily be wrong.

I'm working from what a friend of mine who has done one in Sutton recently has told me. He's over later for a BBQ so I'll ask him for more details later on.

The downside is in the valuation and selling processes. As anyone who has watched this housing madness would be aware, surveyors give the prices that will keep them in the job (and some have even openly admitted it both on tele and in other places including this board). I have no doubt at all that what worked in the boom will work equally as efficiently in the bust. The Housing Association 'partner-owner'(???) employs the surveyors and the housing association has an interest in a higher valuation ergo, the valuation is likely to be generous. Given the variation in house prices it is unlikely to be outside of a range that would be enough to indicate a corruption, just high in the range, but high enough to thwart a house sale.

The individual picks up the difference if they need for any reason to get a quick sale. The Housing Association also keep an exclusive right to the marketing of the house in the first instance, so your house could be sitting on the market for however many months is in the contract because a 'qualified buyer' with the right amount of money for the housing association hasn't turned up.

After that share-owners have the right to make their own arrangements for marketing, but they still need to attract a 'qualified buyer' (with conditions about how long the prospective buyer has lived in the area - I think it takes about a year before that condition is lifted, and the share-owner still needs to stump up if the offer is unacceptable to the Housing Association partner. This will be based on the valuation - see paragraph above.

The Housing Association is under no pressure since, they don't really care if the house is occupied by a) or or for that matter whether a) has a pressing need to go somewhere else, and as such it will simply devalue their books to accept a lower offer. Its a big effing trap and one that I am incredibly glad I steared clear of (working in a housing department there was a lot of pressure to get on board with it - I mean to say, if the staff in housing wouldn't touch it, it didn't look good for the programme!)

But for this reason too I saw a number of houses being advertised in the local area that were well below the cost of other houses, and that I would have been able to afford - a little thrill ran through me - but whenever I looked I would need to have been a resident for 3 years in the local authority.

[AteMoose]

It depends on the scheme but some disadvantages could be:

1. Any rises in prices will cost you lots of money, because if you both a 25% share you will have to find much more money at a later date to pay the 75%

2. The shared equity property tends to be overpriced when compared against normal property

3. They can be hard to sell

4. If the property falls in price you are sometimes liable for 100% of the falls (even though you have 25% of the equity)

5. Even though you own 25% of the property you are responsible for 100% of the maintanance

[geoffk]

Shared ownership is failing to act as a stepping stone to full home ownership, leaving many people in worse positions than if they lived in other types of housing, researchers have found

http://www.insidehousing.co.uk/story.aspx?storycode=6501770

[Bloo Loo]

Shared ownership is failing to act as a stepping stone to full home ownership, leaving many people in worse positions than if they lived in other types of housing, researchers have found

http://www.insidehousing.co.uk/story.aspx?storycode=6501770

comment 2 is the reason these schemes have some success.

if the commenter and most others had said "No, we wont partake in this scheme", then prices would fall.

but, you MUST own your place or you are a nobody.

I note it was from 2008, I wonder how the commenter feels today.