Jump to content
House Price Crash Forum
Guest

Help Me Persuade Colleague...

Recommended Posts

Guest

My colleague is about 55, bought his house decades back, so has never had to cope with extortionate house prices. However he is sympathetic of my situation (potential FTB, priced out of the market), and keeps making (un)helpful suggestions like borrow from family, retrain to do a job I hate that earns huge amounts of money.... etc etc.

I can counter all his arguments except one... "what about Shared Ownership housing?"

I'm convinced Shared Ownership is a bad idea... but can't quite get my head around why..... please help!

Why is S.O a bad idea in a rising market?

Why is S.O a bad idea in a falling market?

Maybe I'm wrong, maybe it is a fantastic idea?!?!

Thanks all

Long time lurker

Share this post


Link to post
Share on other sites

IMO it combines on the bad sides of renting with all the bad sides of owning.

Your share will never add to to a true value of the house. For example on a £150k a 50% share will cost you about £90k. Then when you come to sell you can only sell it back to the developer on their terms and at that their price.

You'd be better off just renting. At least them you won't have to pay for maintenance.

Share this post


Link to post
Share on other sites
Guest

Your share will never add to to a true value of the house. For example on a £150k a 50% share will cost you about £90k. Then when you come to sell you can only sell it back to the developer on their terms and at that their price.

Cheers... do you know of a "calculator" I can plug in figures to give scenarios? Or an article that describes the maths of Shared Ownership?

Share this post


Link to post
Share on other sites

What Pent Up said.

If you are desperate to get on the housing ladder you are far better off buying something much tattier outright as it is then yours and you can sell it.

Share this post


Link to post
Share on other sites

Shared Ownership is a con.

I looked in to it in 2003 and immediately dismissed it when I read the small print. The most noticeable caveat was that should the property rise in value then the equity is shared (50% SO with the housing association); should property prices fall, however, then I would have been solely responsible for any negative equity. Heads they win, tails I lose.

Furthermore, with Shared Ownership you have all the downsides of homeownership AND renting and few of the benefits.

Mortgage and interest rate rise concerns? Check. Rent rise concerns? Check. Landlord consent to modify? Check. Broken boiler and upkeep? Pay for it yourself. Freedom to move? No - have to wait for a buyer AND get permission from the SO landlord to agree to the sale.

Is this true of SO across the board? I don't know, but it was enough to make me dismiss it as an option and never to consider again.

You are better off renting: all of the benefits of renting and none of the drawbacks of "homeownerism".

Share this post


Link to post
Share on other sites

Ask if he aspired to owning half a house when he was a kid.

Offer to sell him half a mars bar - so he can eat it the whole bar now, but needs to pay you rent for the next 30 years on the half he's not buying.

Shared equity blox is often labelled Affordable - clearly it's not else you'd be able to afford to buy the whole thing.

Share this post


Link to post
Share on other sites

There are certain types of things that loose money the moment you them.

Cars

Mobil Homes

Retirement appartments

Shared ownership houses and or apartment's,

In the case of shared ownership , I think the reason for this that they come with all the downside to owing and only part of the upside . The biggest problem with them is the limited market for resale you have to sell to someone else who is willing to only buy a part share. I have seen shared ownership with just 12.5% buy and the rest rent , what is the point if you can only buy such a small % why bother tying yourself up with all the grief hassel and cost's . Far better off to stay renting or buy something much cheaper that you can own outright.

Share this post


Link to post
Share on other sites

try a search on the forum as i seem to remember several pages of arguments from some very clued up posters thoroughly analysing s.o. over the years and showing it for the fraud it is. Its sickening that our own mps support it rather than fix the underlying problem

Share this post


Link to post
Share on other sites

The one other thing to think about with SO is the annual rent increase on the part you rent. At the moment private sector rents have not changed much, and I have refused rent increases and the landlord kep the rent the same for several years. If he wants to force it up, you can always move. With So, generally the rent is pegged to RPI, as it is known you cannot just move. Then there are the service charges which can rise by huge amounts, which again you can do nothing about. My advice either Buy or Rent, do not try and get the worst of all worlds.

Share this post


Link to post
Share on other sites

Leave your colleague alone and let them make their own mistake. If it goes mammaries North after you poke your nose in you will end up getting blamed.

:lol::lol: comedy gold!

Share this post


Link to post
Share on other sites

The only reason he's suggesting it is that he's 55 and has watched house prices balloon all his life.

People of that age are used to trusting their experience as with many things it's generally right.

The trouble is that the increase in total global debts is so big and has accumulated so long that they are unable to think outside of it, and see that the current situation is unusual and unsustainable.

To them, they think any sacrifice to get property ownership will ultimately be worthwhile, as prices rise so fast and with such certainty.

Share this post


Link to post
Share on other sites

:lol::lol: comedy gold!

Tis true I was in a similar situation with a colleague who had shares in Northern Wreck and Bratfraud & Bingley. I poked my nose in and said I would sell them ASAP, but they was his pension innit and share prices always go up. I got screamed at as each one was nationalised because I had somehow in saying I would sell the shares ASAP entered a time machine and forced the banks to make appalling business decisions in the past.

Share this post


Link to post
Share on other sites
Guest sillybear2

S.O. is like a dog chasing its own tail, "yay, my 50% stake has risen in value by 90%, I'm rich. Oh, bummer, now I can't afford the other 50%".

Share this post


Link to post
Share on other sites

My colleague is about 55, bought his house decades back, so has never had to cope with extortionate house prices. However he is sympathetic of my situation (potential FTB, priced out of the market), and keeps making (un)helpful suggestions like borrow from family, retrain to do a job I hate that earns huge amounts of money.... etc etc.

I can counter all his arguments except one... "what about Shared Ownership housing?"

I'm convinced Shared Ownership is a bad idea... but can't quite get my head around why..... please help!

Why is S.O a bad idea in a rising market?

Why is S.O a bad idea in a falling market?

Maybe I'm wrong, maybe it is a fantastic idea?!?!

Thanks all

Long time lurker

Why would anyone in their right mind want to own their own property like the generation before them when they can own just a fraction of it for the same/more interest payments to the bank? How selfish of a younger generation for daring to dream of a life like their forefathers.

Don't bother trying to persuade your colleague it is a bad idea, whatever you say will fall on deaf ears. He doesn't want you to have the same opportunities that he had. That's the point – if you did, his property would halve in value and he doesn’t want that.

Edited by MinceBalls

Share this post


Link to post
Share on other sites

Shared Ownership is a con.

I looked in to it in 2003 and immediately dismissed it when I read the small print. The most noticeable caveat was that should the property rise in value then the equity is shared (50% SO with the housing association); should property prices fall, however, then I would have been solely responsible for any negative equity. Heads they win, tails I lose.

Furthermore, with Shared Ownership you have all the downsides of homeownership AND renting and few of the benefits.

Mortgage and interest rate rise concerns? Check. Rent rise concerns? Check. Landlord consent to modify? Check. Broken boiler and upkeep? Pay for it yourself. Freedom to move? No - have to wait for a buyer AND get permission from the SO landlord to agree to the sale.

Is this true of SO across the board? I don't know, but it was enough to make me dismiss it as an option and never to consider again.

You are better off renting: all of the benefits of renting and none of the drawbacks of "homeownerism".

+1

this is my understanding aswell. You have to share a percentage of any gain when you come to sell, although it is not that easy to sell a SO and the developers portion has to be sold back to them on their terms (which will never favour you).

by far the worst part is that while you share equity it is not the same for negative equity, you alone shoulder any losses. And having to pay back the developer the original price for their percentage, having already sold at a loss pretty much wipes out forever anyone that has had to sell a SO in neg equity.

the rent paid on the developers percentage is also often higher than a mortgage for the same ammount would be.

worst idea ever, a con that allows developers to get rid of overpriced hutches to dim witted ftb's while guarenteeing themselves protection and future profit without the risk of loss.

Share this post


Link to post
Share on other sites

I've never met anybody who bought into a SO scheme and spoke well of the subsequently, except a poster called zag who I think used to post here or somewhere similar.

S.O. is like a dog chasing its own tail, "yay, my 50% stake has risen in value by 90%, I'm rich. Oh, bummer, now I can't afford the other 50%".

And if it falls in value, you can't buy the other half cheap because you are in negative equity and can't get finance.

Share this post


Link to post
Share on other sites

My colleague is about 55, bought his house decades back, so has never had to cope with extortionate house prices. However he is sympathetic of my situation (potential FTB, priced out of the market), and keeps making (un)helpful suggestions like borrow from family, retrain to do a job I hate that earns huge amounts of money.... etc etc.

I can counter all his arguments except one... "what about Shared Ownership housing?"

I'm convinced Shared Ownership is a bad idea... but can't quite get my head around why..... please help!

Why is S.O a bad idea in a rising market?

Why is S.O a bad idea in a falling market?

Maybe I'm wrong, maybe it is a fantastic idea?!?!

Thanks all

Long time lurker

I think the new "Home Buy" program is no longer actually shared ownership. The buyers now may own 100% of the property, and may bear 100% of the negative equity. Check that in the small print.

Share this post


Link to post
Share on other sites

The only reason he's suggesting it is that he's 55 and has watched house prices balloon all his life.

People of that age are used to trusting their experience as with many things it's generally right.

The trouble is that the increase in total global debts is so big and has accumulated so long that they are unable to think outside of it, and see that the current situation is unusual and unsustainable.

To them, they think any sacrifice to get property ownership will ultimately be worthwhile, as prices rise so fast and with such certainty.

Except for when he was between the ages of 35 and 40 odd perhaps.

Share this post


Link to post
Share on other sites

S/O works for many people. As a developer I can assure you that it does NOT mean you can ONLY sell back to the developer at a price they agree. In 99% of all agreements you can sell 100% of the property to a willing buyer or the amount you have bought. The association you have bought from will have their own re-sale dept for people looking to buy S/O. The company you own the share with also have a vested interest to get the best price as they own a share of it. The housing assocciatiion are also Non-profit makinbg organisations and most people within them have an ethos that is focused on helping people. Obviously I will now get replies saying - my brother had an awful experience etc., but no organisation is perfect.

To answer someof the other points, yes you are a home owner so when the property is outside its defect guarantee period you are responsible for upkeep and maintanance, welcome to the world of owning a home. If you do not want that responsibility stay in the rental market. You Can decorate any way you wish to. You want to knock down a wall etc. in any leasehold property you will need to ask for permsission; that is normal. If prices go up you only get the % on the amount you own; yes why would anyone expect more? Would you rather rent and get no increase? Mortgage interest rates going up, again that life if you own a home. Again if you want to be 100% safe from market fluctuations stay in the rental market. Service charges are regulated and have to be not for profit. The rent is pegged at .05% above RPI and is subsidised by the Govt. If prices go down and they do from time to time yes you lose, albeit far less than you would have done otherwise. Have to sell to move, again welcome to the world of owning a home, estate agents, chains etc.

S/O is not for everyone but it is a way to get on the property ladder, pay off your own mortgage and have security of tenure IF that is what you value.

Also why bother about what you work mate thinks? If home ownership is not for you that is your choice surely?

All the best whatever you do in the future.

Share this post


Link to post
Share on other sites

S/O works for many people. As a developer I can assure you that it does NOT mean you can ONLY sell back to the developer at a price they agree. In 99% of all agreements you can sell 100% of the property to a willing buyer or the amount you have bought. The association you have bought from will have their own re-sale dept for people looking to buy S/O. The company you own the share with also have a vested interest to get the best price as they own a share of it. The housing assocciatiion are also Non-profit makinbg organisations and most people within them have an ethos that is focused on helping people. Obviously I will now get replies saying - my brother had an awful experience etc., but no organisation is perfect.

To answer someof the other points, yes you are a home owner so when the property is outside its defect guarantee period you are responsible for upkeep and maintanance, welcome to the world of owning a home. If you do not want that responsibility stay in the rental market. You Can decorate any way you wish to. You want to knock down a wall etc. in any leasehold property you will need to ask for permsission; that is normal. If prices go up you only get the % on the amount you own; yes why would anyone expect more? Would you rather rent and get no increase? Mortgage interest rates going up, again that life if you own a home. Again if you want to be 100% safe from market fluctuations stay in the rental market. Service charges are regulated and have to be not for profit. The rent is pegged at .05% above RPI and is subsidised by the Govt. If prices go down and they do from time to time yes you lose, albeit far less than you would have done otherwise. Have to sell to move, again welcome to the world of owning a home, estate agents, chains etc.

S/O is not for everyone but it is a way to get on the property ladder, pay off your own mortgage and have security of tenure IF that is what you value.

Also why bother about what you work mate thinks? If home ownership is not for you that is your choice surely?

All the best whatever you do in the future.

Thanks for confirming everything I ever thought about Shared Ownership.

It's clearly not for ignorant and irresponsible people like me.

Share this post


Link to post
Share on other sites

To answer someof the other points, yes you are a home owner so when the property is outside its defect guarantee period you are responsible for upkeep and maintanance, welcome to the world of owning a home.

ahhh, super. Where can I buy one of these 'once in a lifetime opportunitiy' houses where I get to pay for 100% of the upkeep and maintanance but share 50% (or whatever) gains are made? I want one.

FFS: what are you (and some Labour MP's) going on about? There is nothing good about this. HOUSE PRICES ARE TOO HIGH WHICH IS WHY THOSE ON SMALL AND MEDIUM INCOMES CANNOT AFFORD TO BUY THEIR OWN HOME ANY MORE.

The answer? HOUSE PRICES MUST COME DOWN. Not INVENT NEW HAIRBRAINED SCHEMES TO ENSLAVE PEOPLE IN YET MORE DEBT ON A FALSE PROMISE.

Edited by MinceBalls

Share this post


Link to post
Share on other sites

ahhh, super. Where can I buy one of these 'once in a lifetime opportunitiy' houses where I get to pay for 100% of the upkeep and maintanance but share 50% (or whatever) gains are made? I want one.

FFS: what are you (and some Labour MP's) going on about? There is nothing good about this. HOUSE PRICES ARE TOO HIGH WHICH IS WHY THOSE ON SMALL AND MEDIUM INCOMES CANNOT AFFORD TO BUY THEIR OWN HOME ANY MORE.

The answer? HOUSE PRICES MUST COME DOWN. Not INVENT NEW HAIRBRAINED SCHEMES TO ENSLAVE PEOPLE IN YET MORE DEBT ON A FALSE PROMISE.

I know how you feel MinceBalls, as you probably know.

But he will not understand your logic, and anger. I think they really manage to convince themselves that current house prices are "fair" - "small crowded island", etc. I don't think they realise how retardedly stupid that "logic" is. Really. They don't do it out of "evilness". Just a gigantically imbecilic frame of "mind". Now I feel more pity (and shame for the species) than anger.

Share this post


Link to post
Share on other sites

Join the conversation

You can post now and register later. If you have an account, sign in now to post with your account.

Guest
Reply to this topic...

×   Pasted as rich text.   Paste as plain text instead

  Only 75 emoji are allowed.

×   Your link has been automatically embedded.   Display as a link instead

×   Your previous content has been restored.   Clear editor

×   You cannot paste images directly. Upload or insert images from URL.

Loading...

  • Recently Browsing   0 members

    No registered users viewing this page.

  • 140 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?


      • down 5% +
      • down 2.5%
      • Even
      • up 2.5%
      • up 5%



×
×
  • Create New...

Important Information

We have placed cookies on your device to help make this website better. You can adjust your cookie settings, otherwise we'll assume you're okay to continue.