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talksalot81

Co-Ownership...

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An MSE anecdote. I am not delighting in their misery and misfortune but all the bulls went on and on about how good an idea co-ownership was... we knew they were wrong and here is how wrong they could be!

http://forums.moneysavingexpert.com/showthread.php?t=2896712

Whilst these people were wrong not to think a bit harder it does continue to pee me off that the bullish out there were the ones that put, effectively, made the situation for these people (and hundreds of thousands of others) yet so few recognise it. People are suffering yet are still listening to the words of those who orchestrated their misery!!

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They will certainly have to swallow a bitter pill. There is no short cuts out there - you have to do your own research and if you don't understand what you are getting into then don't go there.

By the looks of it though, the scheme actually is less favourable to the 'lender' than one might think. It sounds like the scheme is going to turn into a money burning exercise! Given the timing and the apparent lack of 'minimum repayment amount', I should think that the scheme will likely lose a massive amount... and will have put a large number of people into a bunch of problems they should never have been exposed to. Basically the attempt to bolster the market has led to everyone losing out... someone didn't do a very good risk analysis...

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If you have to but having someone else taking 50% of the loss is an advantage, so co-ownership is definitely an good idea with the current market. If you can take a small per-cent and wait for exactly the right time to increase your share (just before the pickup) it may be worth taking a loss.

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That is correct but the reality is two fold:

1) Because of this attempt to prop up the market, the scheme, and thus taxpayer, has lost money.

2)) Because of this attempt to prop up the market, the buyers have moved in the market and increased their exposure. Without the scheme, individuals like those on the MSE thread would be much better off.

So it looks to me that nobody is actually gaining anything from the scheme...

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That is correct but the reality is two fold:

1) Because of this attempt to prop up the market, the scheme, and thus taxpayer, has lost money.

2)) Because of this attempt to prop up the market, the buyers have moved in the market and increased their exposure. Without the scheme, individuals like those on the MSE thread would be much better off.

So it looks to me that nobody is actually gaining anything from the scheme...

the developer ?

the bank which financed said developer?

rock on!

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I have friends in Co-ownership for about 15 years. The one thing I was astounded at, is that their rent has not increased. I think its based on what they owe not the market rent, but to buy out the other half they have to pay the market rate so they are well and truly stuck in a 'good' deal for them and will likely never own their home fully.

Agreed the developers and banks are the ones that benefit, they get to walk away with the cash, that would otherwise have been much less. All co-ownership does is manipulate the market to increase prices.

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Yes.... so the very few benefit with the majority suffering from the scheme. So what was someone thinking by heavily promoting the scheme when the market was high. Lets face it, even the developer and banks are hurt, in the bigger picture. The market, upon which they rely, has suffered and will take longer to recover... a short term gain may seem nice but it is bad business to work on such highs and lows... no point doing well today if tomorrow you are dead.

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the developer ?

the bank which financed said developer?

rock on!

Actually 80% of Co-ownership purchases take place in the second hand market. They have been operating from the 70's and can be hardly said to be, or be blamed for heating up or propping up the market as they done a poor job of it for the first 25 years or so.

Just to add I never thought they should have raised the price level to £175k (bit irrelevant now). People who were availing of this service should not have been aiming at the average priced house.

I do believe it has its use but should be limited to a far lower level.

Edited by BelfastVI

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Actually 80% of Co-ownership purchases take place in the second hand market. They have been operating from the 70's and can be hardly said to be, or be blamed for heating up or propping up the market as they done a poor job of it for the first 25 years or so.

Just to add I never thought they should have raised the price level to £175k (bit irrelevant now). People who were availing of this service should not have been aiming at the average priced house.

I do believe it has its use but should be limited to a far lower level.

:huh: So they raised it, but you don't think that raising it helped push prices up during the boom? And you don't think that it is helping keep prices artificially high now? I see TPTB have postponed housing benefit reform for a year. More support for artificial house prices.

:rolleyes:

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Actually 80% of Co-ownership purchases take place in the second hand market. They have been operating from the 70's and can be hardly said to be, or be blamed for heating up or propping up the market as they done a poor job of it for the first 25 years or so.

Just to add I never thought they should have raised the price level to £175k (bit irrelevant now). People who were availing of this service should not have been aiming at the average priced house.

I do believe it has its use but should be limited to a far lower level.

It isn't responsible but the reality is that the scheme was revamped and remarketed heavily at a time when people were really starting to say "surely it can't keep going?". Left at previous levels and left alone for people to find without prompting as a "great way to get ahead...", there would be a good few people in a good deal less trouble than they find themselves.

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:huh: So they raised it, but you don't think that raising it helped push prices up during the boom? And you don't think that it is helping keep prices artificially high now? I see TPTB have postponed housing benefit reform for a year. More support for artificial house prices.

:rolleyes:

I sell new houses, neither of these really effect them.

Yes, as I said in my post I don't think they should have raised the limit. It might actually have been over the £200k level at one stage, so they must have dropped it. I would fully support them dropping it again.

There were almost 40,000 transactions in NI during 2006. Co-Ownership account for 100's of these and not 1,000's. There average price of the houses they were involved in was under £120k for 2007. So I cant see how they pushed up prices.

The government has a duty to house the people (I sometimes take a different view to this), therefore it tries to build new houses through its desperately inefficient and incompetent housing associations. Co-Ownership is basically a way where the tenant helps out by purchasing half the house. Therefore from the governments point of view the same money is housing two family's.

Is it a good thing? I think so. It has its place. its has been there since 1978 so we can hardly say its the government intervening. I have been out bid in land auctions by housing associations. I didn't think they should have been buying it, but I had to get on with it.

'Postponed housing benefit reform for a year'. So they have decided not to intervene and leave the process as it was. I don't know when it was last reformed but I would guess 20 years ago. My point is - when does deciding not to tamper equate to artificially inflating houseprices.

Edited by BelfastVI

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It isn't responsible but the reality is that the scheme was revamped and remarketed heavily at a time when people were really starting to say "surely it can't keep going?". Left at previous levels and left alone for people to find without prompting as a "great way to get ahead...", there would be a good few people in a good deal less trouble than they find themselves.

I don't know enough about it but I understood the client purchased 50% via a bank loan and -co-ownership purchased the other 50% and rented it back at the same low rents the 'council houses' adopt. As the houses dropped in price the banks charge remained in place and the Co-Ownership 'equity' gets squeezed. The client still pays the same mortgage on the 50% the bank has, which is ok and the low rent might actually get lower. The client, if they so wished could staircase up and but a further % at current values.

I might be wrong on this but the client is ok and it is Co-Ownership that loses out. Don't go shedding too many tears for them. they made a fortune as house prices rose and had fantastic reserves built up. They still have loads of stock at historically low prices. Unfortunately it is the people who purchased their own house, without Co-ownership, at or in the lead up to the peak that are in the greatest difficulty. They were mostly investors etc and Co-Ownership did not apply to them.

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She is very likely correct about the initial price but, like we said, this sort of scheme leads to this sort of outcome. The scheme itself tends to bring about rises simply because there is more money available to throw about.

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Pound for Pound Co-Ownership is the most economical method for the government to get people housed. Add to that the fact that the government gets all its money back, index linked over time, and I would have to say it is an excellent scheme.

I would fault the people running it for allowing the upper limit to rise and follow the housing boom up. It raised to £225k at one time and I thought this crazy at the time. It is mostly for FTB's and the price limit should reflect that. The current limit is still at £175k, although their average purchase is closer to £100k. So in practice the notion of an upper limit is largely redundant.

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Post on the main board showing the real life trouble that can come as a result of co-ownership housebuying at inflated prices. I notice one EA in Ballynahinch is plugging co-ownership again.

How many of the young people of NI are now stuck in a co-ownership deal that has gone sour?

http://www.housepricecrash.co.uk/forum/index.php?showtopic=167948

I may be missing something but from my reading I would have thought that being in co-ownership in NI be a better deal that if you bought outright in the last 3 - 4 years. With CO-Ownership they are taking half (or whatever % agreed) of any losses or negative equity. With some people in the boom being 50k+ in negative equity I think most people would prefer half of that to be owned by the government rather than them.

Also as far as I'm aware in NI Co-Ownership is available for any houses not just new builds so that wouldn't lend itself to inflating prices (Any more than they where already inflated).

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Most of those who go into Co-Ownership do so blind ... they get sold the idea as if it is the best thing out there and developers & EA's do push it regardless of what picture is painted otherwise. Unfortunately human nature means that if someone gets emotionally attached to the idea of buying a house, falls for the spin from the EA/Developers about it being the best time to buy then they will 'like lambs to the slaughter' ask ... where do I sign??

Co-ownership helps those who would normally fall outside affordability rules get onto the housing market ... as far as I am concerned this is not a good thing. If you are not in a position to fund an outright MTG for a property then you shouldn't be entering into any schemes that put you into a false position re owning the home.

The only person who benefits from this is the person who gets the chq for the property.

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Pound for Pound Co-Ownership is the most economical method for the government to get people housed. Add to that the fact that the government gets all its money back, index linked over time, and I would have to say it is an excellent scheme.

I would fault the people running it for allowing the upper limit to rise and follow the housing boom up. It raised to £225k at one time and I thought this crazy at the time. It is mostly for FTB's and the price limit should reflect that. The current limit is still at £175k, although their average purchase is closer to £100k. So in practice the notion of an upper limit is largely redundant.

It is an excellent way of letting someone buy a house when their earnings and saving would otherwise exclude them. It is just one more example in a world where we no longer insist on hard work and just rewards. Nice.

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It is an excellent way of letting someone buy a house when their earnings and saving would otherwise exclude them. It is just one more example in a world where we no longer insist on hard work and just rewards. Nice.

In many cases this allows people to purchase a house that would otherwise fall into the social housing net. There is a place for the state providing housing for people but you have to look at the pound for pound spend. The state can, and does go out and purchase housing for people inside the social housing net and thats fine. Getting people to commit to purchasing up to 50% of the house eases that burden on the state and to me thats a good thing.

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Getting people to commit to purchasing up to 50% of the house eases that burden on the state and to me thats a good thing.

And ignores the fact that they are strapped for cash and have very limited history of savings.

Whatever way you paint it, you are taking the people with least income and least savings and committing them to a large debt. It is like taking a hungry man and giving him a free pass at mcdonalds - it might get him fed but sooner or later he will be in a worse state than when he was hungry.

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Would co-ownership be an option now though? With prices really low, can you see a time when it MAY be an option for people...or is it just really bad full stop?

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Would co-ownership be an option now though? With prices really low, can you see a time when it MAY be an option for people...or is it just really bad full stop?

If prices start to go up 30-40% per annum it might be a good idea, doubt any of us will ever see that again ;)

All other circumstances it's a mugs game.

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Would co-ownership be an option now though? With prices really low, can you see a time when it MAY be an option for people...or is it just really bad full stop?

I dont really promote it but I see it as an option for some people who would rather own than rent or live in a social estate. (Own is with a small o)

Basically you buy up half the house with a normal mortgage. The Co-Ownership trust (or whatever) buys the other half and charges you a very small rent. Your overall payments per month will be alot less than buying the house out right allowing you extra cash of the option to pay down the loan quicker or staircase up to owning more of the house. Its not for everyone but it has its place in the market. I prefer it to other developer led shared equity schemes. The government gets all its money back over time and over the last 20 years has allowed 1,000's of people to aquire houses that, in alot of cases wouldn't have been able to.

You are giving away half of possible gains against only suffering half the possible losses.

Some people believe mortgages are a 'mugs' game. I believe this scheme has its place and has done a great job over the years.

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The EA H R Douglas in Ballynahinch has houses which may be available under the NI co ownership scheme

I picked three at random from propertynews

47 Millbrook BT24 8HQ asking price 115k rateable value 95k

http://www.propertynews.com/Property/Ballynahinch/PNC521549/47-Millbrook-Drive/

14 Hillhead BT24 8HG asking price 110k rateable value 90k

http://www.propertynews.com/Property/BALLYNAHINCH/PNC554419/14-HILLHEAD-CRESCENT/

6 Quoile Terrace BT24 8BW asking price 89950 rateable value 52k

http://www.propertynews.com/Property/Ballynahinch/PNC541385/6-Quoile-Terrace/

Since I believe that rateable value is the highest price you should pay for property in the current market I think this shows that the co-ownership scheme is still inflating prices.

IMHO.

Co-ownership is not associated with properties. It is available for all properties up to a price ceiling of £175k (which I have said is too high). It is the applicant who is then assessed as well as the usual valuations.

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I dont really promote it but I see it as an option for some people who would rather own than rent or live in a social estate. (Own is with a small o)

Basically you buy up half the house with a normal mortgage. The Co-Ownership trust (or whatever) buys the other half and charges you a very small rent. Your overall payments per month will be alot less than buying the house out right allowing you extra cash of the option to pay down the loan quicker or staircase up to owning more of the house. Its not for everyone but it has its place in the market. I prefer it to other developer led shared equity schemes. The government gets all its money back over time and over the last 20 years has allowed 1,000's of people to aquire houses that, in alot of cases wouldn't have been able to.

You are giving away half of possible gains against only suffering half the possible losses.

Some people believe mortgages are a 'mugs' game. I believe this scheme has its place and has done a great job over the years.

I appreciate that you said own with a small o ... as ppl will never own the house outright unless they buy out the half they are renting. If & when they ever find themselves in a position to 'buy' out the half of the house that they have been paying rent for ... they have to do so at current market price. Not only have they paid rent for god knows how many years they then have to buy out the other half of the house.

I dont see how that is more afforable for someone in the long term. Sure, prices are down from peak and that may be a benefit to some but I wouldn't have thought that even taking this into consideration that you would be pleased with what you would end up paying to ever eventually own the house.

I'm not the expert in this but to try and quantify my point ... if you had bought under this scheme a house for say ... £120,000 in 2005 then you would have a MTG of £60,000, plus paid rent for the other half on top of that. It wouldn't be massively cheaper on a monthly basis compared to a full repayment mortgage. If you decided now in 2011 that you wanted to buy the property outright then you would have to find the affordability for the approx £60,000 (the current market value of half of the house - the bit you dont own). If you are lucky you would have reduced your mortgage by £10k at best in the 6 years therefore you find yourself with MTG of £110k ... nothing really to show for the last 6 years payments.

Not for me anyway ... I still think ppl go into it blind under encouragement from those with a VI. If houses were in line with normal affordability averages then there would be no need for these type of schemes.

Edited by tinbin

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I appreciate that you said own with a small o ... as ppl will never own the house outright unless they buy out the half they are renting. If & when they ever find themselves in a position to 'buy' out the half of the house that they have been paying rent for ... they have to do so at current market price. Not only have they paid rent for god knows how many years they then have to buy out the other half of the house.

I dont see how that is more afforable for someone in the long term. Sure, prices are down from peak and that may be a benefit to some but I wouldn't have thought that even taking this into consideration that you would be pleased with what you would end up paying to ever eventually own the house.

I'm not the expert in this but to try and quantify my point ... if you had bought under this scheme a house for say ... £120,000 in 2005 then you would have a MTG of £60,000, plus paid rent for the other half on top of that. It wouldn't be massively cheaper on a monthly basis compared to a full repayment mortgage. If you decided now in 2011 that you wanted to buy the property outright then you would have to find the affordability for the approx £60,000 (the current market value of half of the house - the bit you dont own). If you are lucky you would have reduced your mortgage by £10k at best in the 6 years therefore you find yourself with MTG of £110k ... nothing really to show for the last 6 years payments.

Not for me anyway ... I still think ppl go into it blind under encouragement from those with a VI. If houses were in line with normal affordability averages then there would be no need for these type of schemes.

I'm not encouraging anyone to do anything. It's just my opinion that this is a good scheme for some people. On your last point. Even when prices were/ are at 'normal affordability averages' then there will still be a need for this sort of scheme. I think the bit you missed is the fact they don't charge normal market rent for the half of the house they own. They take a nominal return on this part of the loan.

Listen, its an option, thats all.

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  • 312 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%



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