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nick1122

London Wide Initiative?

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Ive recently been accepted into the London wide initiative. This is like shared ownership, but with one big difference- you pay no rent on the share you dont buy.

The scheme in question is in SW London

http://www.nottinghillhousing.org.uk/prope...id_Content=1007

and

http://www.barratthomes-wandsworthparkside...il.php?newsID=5

1-beds are around 220+ and 2-beds are around £300k +. You need to 'buy' a minimum of just under 50% (think about 47%in this scheme) , for the 2-bed@ £300k your minimum is about £140k mortgage.

The all you have to pay is service charge and bills. There is no requirement to pay rent on the part you dont buy- ever- until you sell- when you pay the same percentage back (e.g 47% of your market valuation at that time).

The flats are decent spec, and reasonable size (for a newbuild in London)- I viewed the showflat at the weekend. Not in the nicest part of wandsworth, but adjacent to a park.

Now, Im not stupid. Im aware of falling prices (and have lurked on this site for well over a year). However, for an outlay of a mortgage of just over £140k I can move into a new 2-bed flat (with no worry over escalating rent on the un-owned part).

Its pretty much the only way I could afford to buy within London at present.

I realize that prices may fall for sometime, but does the benefit of only paying half a mortgage out-weigh the potential price fall, especially if I keep the flat for many years?

I know thats an impossible question, but would love to hear views. I have a list if guide prices for all the flats and floorplans, which happy to scan in when Im back home (Im just away from home atm- back end of week).

Many thanks#

Nick

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1-beds are around 220+ and 2-beds are around £300k +. You need to 'buy' a minimum of just under 50% (think about 47%in this scheme) , for the 2-bed@ £300k your minimum is about £140k mortgage.

There just might be a reason why they cannot sell the flats at their "value". £300k+ for a 2-bed flat is far from cheap. If mortgage multiples revert to 4-times then you will be looking for a buyer on something like 56k and with a 25% (i.e. 75k) deposit. What are the chances somebody like that would want to live there in exchange for maybe around £1200 in monthly interest?

In addition, I suspect there might be a snag or two somewhere in the contract. Would you be allowed to vote to change the management company if they charge too much in maintenance? Thought not. Do they have to agree to any sale? Is there a provision to force a sale after (say) 10 years? Will they rent the rest of the development to hard-working DHS claimants? I expect others will be able to think of more potential problems.

I don't see that it makes economic sense. Suppose that the flat falls by 50% in five years and you want to sell then. You are looking at losing £1000+ per month of ownership in capital. Interest and inflated maintenance is on top of that. Maybe you expect newbuilds to fall by much less than that?

If you go ahead I am sure we would all appreciate if you could keep us posted maybe once a year or so.

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Ive recently been accepted into the London wide initiative. This is like shared ownership, but with one big difference- you pay no rent on the share you dont buy.

The scheme in question is in SW London

http://www.nottinghillhousing.org.uk/prope...id_Content=1007

and

http://www.barratthomes-wandsworthparkside...il.php?newsID=5

1-beds are around 220+ and 2-beds are around £300k +. You need to 'buy' a minimum of just under 50% (think about 47%in this scheme) , for the 2-bed@ £300k your minimum is about £140k mortgage.

The all you have to pay is service charge and bills. There is no requirement to pay rent on the part you dont buy- ever- until you sell- when you pay the same percentage back (e.g 47% of your market valuation at that time).

The flats are decent spec, and reasonable size (for a newbuild in London)- I viewed the showflat at the weekend. Not in the nicest part of wandsworth, but adjacent to a park.

Now, Im not stupid. Im aware of falling prices (and have lurked on this site for well over a year). However, for an outlay of a mortgage of just over £140k I can move into a new 2-bed flat (with no worry over escalating rent on the un-owned part).

Its pretty much the only way I could afford to buy within London at present.

I realize that prices may fall for sometime, but does the benefit of only paying half a mortgage out-weigh the potential price fall, especially if I keep the flat for many years?

I know thats an impossible question, but would love to hear views. I have a list if guide prices for all the flats and floorplans, which happy to scan in when Im back home (Im just away from home atm- back end of week).

Many thanks#

Nick

Ask yourself, why are these share schemes necessary? It is because house prices are overvalued, the affordable part (your 50%) is what the properties should cost and will cost once the property market has corrected. In-fact, an over correction is likely.

Stay out for another year or two. It would be completely irrational to buy now.

Edited by Quagmire

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Don't touch it with a barge pole sonny!

Its only due to mad hatter schemes like these that the housing boom has been kept inflated for so long.

Give it a few months, and you'll probably be able to afford you own with 100% ownership.

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Ive recently been accepted into the London wide initiative. This is like shared ownership, but with one big difference- you pay no rent on the share you dont buy.

The scheme in question is in SW London

http://www.nottinghillhousing.org.uk/prope...id_Content=1007

and

http://www.barratthomes-wandsworthparkside...il.php?newsID=5

1-beds are around 220+ and 2-beds are around £300k +. You need to 'buy' a minimum of just under 50% (think about 47%in this scheme) , for the 2-bed@ £300k your minimum is about £140k mortgage.

The all you have to pay is service charge and bills. There is no requirement to pay rent on the part you dont buy- ever- until you sell- when you pay the same percentage back (e.g 47% of your market valuation at that time).

The flats are decent spec, and reasonable size (for a newbuild in London)- I viewed the showflat at the weekend. Not in the nicest part of wandsworth, but adjacent to a park.

Now, Im not stupid. Im aware of falling prices (and have lurked on this site for well over a year). However, for an outlay of a mortgage of just over £140k I can move into a new 2-bed flat (with no worry over escalating rent on the un-owned part).

Its pretty much the only way I could afford to buy within London at present.

I realize that prices may fall for sometime, but does the benefit of only paying half a mortgage out-weigh the potential price fall, especially if I keep the flat for many years?

I know thats an impossible question, but would love to hear views. I have a list if guide prices for all the flats and floorplans, which happy to scan in when Im back home (Im just away from home atm- back end of week).

Many thanks#

Nick

Great find and welcome to the board. I think it's another con to be honest, but I'd be pe' off if I'd bought a part-buy part-rent then these things showed their ugly heads...but as it is, it makes me laugh.

Anyone getting involved will be shafted when prices fall 80%+ so keep off.

This may be the last throw of the dice before the banks harvest all these new build firms about to lose a mint.

Let 'em burn!

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Imagine if you had bought in inner city Leeds or Manchester a 2 bed appartment shared ownership at 220K 2 years ago . Its now worth about 70K . You would still had been 40K out of pocket from your 50% shared ownership and could have bought outright if you had waited . Developers and Builders are dumping property at the moment in DESPERATION and this will bring prices right down. They are looking for SUCKERS to get into shared ownership schemes at overinflated prices before the whole Property Sector spirals downward and out of control .

Also check if any have been bought by BTLs and been reposessed or being sold in desperation at Auction.

Edited by joey

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Ask yourself why they are able to have an offer like this, which is basically accepting a 50% loss until you sell.

It's because the place cost less than 50% of it's asking price to build.

This is simply the newbuilders seeing where the market is going and seeing if a few chumps will bite.

If it falls by 50%, you lose 50% of what you paid, and so does the builder. Only the builder is better off than you because they sold half of it at the peak, and have therefore used a tempting offer to make sure that they got 75% of peak asking price.

Let me just repeat that... Take this flat, and watch it fall in value. The fall in value will affect you twice as much as it affects the builder, despite the fact that you own 50% of it.

It's a similar deal to 2 people with identical jobs.. one gets paid £40k, the other gets paid £20k. Guess which one you are. :P

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Thanks for all the replies.

For a few hours I thought the thread was going to sink without trace / or reply!

The reason the London Wide Initiative is able to support such a scheme (according to the literature!) is a because it is a combination of support between housing groups and regeneration bodies- I wont bore you with the details, but here is a link:

http://www.housingoptions.co.uk/ho2/ho2/lo..._initiative.asp

As you can therefore see, I have the dubious honour of being a key worker. This may sound great, but even with that qualification, and an average - OK salary I have not been able to afford to even get on a keyworker scheme in London, until this one!

Many so-called keyworker schemes are way out of reach for me, or you end up with tiny amounts if equity in your flat / house. High end examples (but not unusual)- check out:

http://www.nottinghillhousing.org.uk/prope...id_Content=1101

or:

http://www.thresholdkeyhomes.com/scheme_de...&keyworker=

I attended many keyworker open events over the last year and a half, only to find them priced out of reach. I could have bought, but would have been spending something like 60-70% of my salary just on mortgage + rent (for the un-owned part, which in reality may have meant you owned just 15-30%).

At many events I went to last Summer there was almost an air of hysteria, with many of the properties been sold off-plan on the very first night. Remember these were often keyworker properties, at ludicrous city-boy prices, been sold to keyworkers. The downside been the keyworker may only 'own' 12.5% of the property.

One of the most anticipated, and well attended, I went to (people cramming from all angles into a hotel conference room for the first launch night, then racing with their cheques to be first in the queue to book their flat) was for apartments at Point Pleasant in Putney.

Many I met were buying the minimum (12.5%) or not much higher! See (for an example of a fantastically well marketed site!)-:

http://pointpleasant.tv/

(key in any email address to be able to bring up floor plans)

All, bar the top floor, went almost immediately! (I resisted, the most I could have afforded was a 30% share of a £300k apartment, but that would have cost me £1300+ to cover mortgage and the rent for the un-owned part!- yet only own less than a third!).

Interestingly I have since found out that their qouted monthly service charge figure, at the presentation night (£70 if I remember) was incorrect by a considerable amount!

Even cheekier, was the fact that they slapped £15-20k extra on each of the prices on the day (compared to the price list I had been given (and the one on the website pointpleasant.tv). So my £300k appt became £315k overnight. That was too much even for me!

Anyhow, I hope you can see that given the nature of the schemes that I have witnessed over the last couple of years, why the London Wide Initiative seems much more reasonable- but- just as a half-decent keyworker scheme come through- house prices begin dropping!

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Thanks for all the replies.

For a few hours I thought the thread was going to sink without trace / or reply!

The reason the London Wide Initiative is able to support such a scheme (according to the literature!) is a because it is a combination of support between housing groups and regeneration bodies- I wont bore you with the details, but here is a link:

http://www.housingoptions.co.uk/ho2/ho2/lo..._initiative.asp

As you can therefore see, I have the dubious honour of being a key worker. This may sound great, but even with that qualification, and an average - OK salary I have not been able to afford to even get on a keyworker scheme in London, until this one!

Many so-called keyworker schemes are way out of reach for me, or you end up with tiny amounts if equity in your flat / house. High end examples (but not unusual)- check out:

http://www.nottinghillhousing.org.uk/prope...id_Content=1101

or:

http://www.thresholdkeyhomes.com/scheme_de...&keyworker=

I attended many keyworker open events over the last year and a half, only to find them priced out of reach. I could have bought, but would have been spending something like 60-70% of my salary just on mortgage + rent (for the un-owned part, which in reality may have meant you owned just 15-30%).

At many events I went to last Summer there was almost an air of hysteria, with many of the properties been sold off-plan on the very first night. Remember these were often keyworker properties, at ludicrous city-boy prices, been sold to keyworkers. The downside been the keyworker may only 'own' 12.5% of the property.

One of the most anticipated, and well attended, I went to (people cramming from all angles into a hotel conference room for the first launch night, then racing with their cheques to be first in the queue to book their flat) was for apartments at Point Pleasant in Putney.

Many I met were buying the minimum (12.5%) or not much higher! See (for an example of a fantastically well marketed site!)-:

http://pointpleasant.tv/

(key in any email address to be able to bring up floor plans)

All, bar the top floor, went almost immediately! (I resisted, the most I could have afforded was a 30% share of a £300k apartment, but that would have cost me £1300+ to cover mortgage and the rent for the un-owned part!- yet only own less than a third!).

Interestingly I have since found out that their qouted monthly service charge figure, at the presentation night (£70 if I remember) was incorrect by a considerable amount!

Even cheekier, was the fact that they slapped £15-20k extra on each of the prices on the day (compared to the price list I had been given (and the one on the website pointpleasant.tv). So my £300k appt became £315k overnight. That was too much even for me!

Anyhow, I hope you can see that given the nature of the schemes that I have witnessed over the last couple of years, why the London Wide Initiative seems much more reasonable- but- just as a half-decent keyworker scheme come through- house prices begin dropping!

Mate, please don't buy into this shite.

In 3 years time, people will be screaming to get out of these scams.

Edited by Notlongnow

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Thanks for all the replies.

/Snip/

Anyhow, I hope you can see that given the nature of the schemes that I have witnessed over the last couple of years, why the London Wide Initiative seems much more reasonable- but- just as a half-decent keyworker scheme come through- house prices begin dropping!

The point is they were always going to drop, the question was always when and now the questions are by how much and for how long?

Flats are likely to get absolutely hammered. We are already seeing falls far greater than 50% in many areas on various flats at auction and some reasonable drops in London. I believe you need to ask yourself 1 question.

Would you care if, in 2 years time, the flat was worth half of today's price after you had bought it? Act on this!

Good Luck and welcome!

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The best way to get it clear in your head is to ask yourself - "Would I go for this if I was being offered 20% ownership? If not, 40%? If not, 60%? If not, 80%? What is the correct %?"

Why buy only 47% when you could buy the whole thing for the same price? They are only showing their desparation by making these stupid offers.

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Can you rent it out? Perhaps 'unofficially' (or will they check up on you periodically?).

This might be that opportunity to take out a self-certified loan and start a BTL empire.

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Can you rent it out? Perhaps 'unofficially' (or will they check up on you periodically?).

This might be that opportunity to take out a self-certified loan and start a BTL empire.

Yes, I think you can rent it out for a set time (upto 2 years I heard)

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Ive recently been accepted into the London wide initiative. This is like shared ownership, but with one big difference- you pay no rent on the share you dont buy.

The scheme in question is in SW London

http://www.nottinghillhousing.org.uk/prope...id_Content=1007

and

http://www.barratthomes-wandsworthparkside...il.php?newsID=5

1-beds are around 220+ and 2-beds are around £300k +. You need to 'buy' a minimum of just under 50% (think about 47%in this scheme) , for the 2-bed@ £300k your minimum is about £140k mortgage.

The all you have to pay is service charge and bills. There is no requirement to pay rent on the part you dont buy- ever- until you sell- when you pay the same percentage back (e.g 47% of your market valuation at that time).

The flats are decent spec, and reasonable size (for a newbuild in London)- I viewed the showflat at the weekend. Not in the nicest part of wandsworth, but adjacent to a park.

Now, Im not stupid. Im aware of falling prices (and have lurked on this site for well over a year). However, for an outlay of a mortgage of just over £140k I can move into a new 2-bed flat (with no worry over escalating rent on the un-owned part).

Its pretty much the only way I could afford to buy within London at present.

I realize that prices may fall for sometime, but does the benefit of only paying half a mortgage out-weigh the potential price fall, especially if I keep the flat for many years?

I know thats an impossible question, but would love to hear views. I have a list if guide prices for all the flats and floorplans, which happy to scan in when Im back home (Im just away from home atm- back end of week).

Many thanks#

Nick

Don't do it, don't do it and don't do it for all sorts of reasons.

Heres what you see... I buy a flat for 50% of what the price is... I don't pay any rent ever .... and when I sell I have to pay back 50% of what its then worth.

1/ Are you sure its not 50% or 50% of the initial purchase price whichever is higher ?

2/ This is a gimmick in the same way that a free toaster is a gimmick... if you were buying a central barratt flat now normally you'd go in and say something like ... its on the market for £300k... I'll offer you £200k (even then you may be overpaying).... they will use this to try and limit the deals they give..... its a massive win for them... you buy at £150k (50%) and they keep the rest, whereas previously they might have sold at £200k but not had any interest in the property. Equally £150k probably cover their costs, or thereabouts.

3/ new build ALWAYS move upwards more slowly than other tyoes of properties and flats especially.

4/ new build flats ALWAYS lose value the moment they are lived in... sold at £300k, worth £200k when you move in, worth £175 in a years time etc..... your share being worth £87500. (a loss of £63k).

5/ Watch the service charges.. these can be truly extraordinary and you'll have little or no influence over them.

6/ Where is the flat in the block... normally the sharedownership flats are round the back relying on the galmour of the highly priced ones with the view to sell.... if they have a duff outlook or face north etc avoid.

All in all I would say don't do it..... the killer is if you could get a mortgage on it, and indeed how long the share ownership "tie" is for.

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Don't do it, don't do it and don't do it for all sorts of reasons.

Heres what you see... I buy a flat for 50% of what the price is... I don't pay any rent ever .... and when I sell I have to pay back 50% of what its then worth.

1/ Are you sure its not 50% or 50% of the initial purchase price whichever is higher ?

2/ This is a gimmick in the same way that a free toaster is a gimmick... if you were buying a central barratt flat now normally you'd go in and say something like ... its on the market for £300k... I'll offer you £200k (even then you may be overpaying).... they will use this to try and limit the deals they give..... its a massive win for them... you buy at £150k (50%) and they keep the rest, whereas previously they might have sold at £200k but not had any interest in the property. Equally £150k probably cover their costs, or thereabouts.

3/ new build ALWAYS move upwards more slowly than other tyoes of properties and flats especially.

4/ new build flats ALWAYS lose value the moment they are lived in... sold at £300k, worth £200k when you move in, worth £175 in a years time etc..... your share being worth £87500. (a loss of £63k).

5/ Watch the service charges.. these can be truly extraordinary and you'll have little or no influence over them.

6/ Where is the flat in the block... normally the sharedownership flats are round the back relying on the galmour of the highly priced ones with the view to sell.... if they have a duff outlook or face north etc avoid.

All in all I would say don't do it..... the killer is if you could get a mortgage on it, and indeed how long the share ownership "tie" is for.

That is what Ive been thinkin (if I kept the flat for as long as possible then I'd not pay anything on 50% of it for such a long time that maybe the figures would swing my way.. but yeh, I have major doubts)

Service charges are £150 for 1-bed and £200 for the 2 bed (per month).

Car park places cost £15k on the purchase price plus an extra £47 PER MONTH service charge.

The keyworker flats do have a good aspect but are on the lower floors (e.g. upto about floor 10 or 12 of the 22 storeys)

You do pay back 50% of the value of the flat at the time of you selling it, however the literature doesnt make clear whther thats 50% of the 'valuation' or 50% of the actual selling price, although the valuation is independent, apparently.

As you can tell I have looked into it in depth. In fact I feel like a connoiseur of shared ownership and keyworker schemes, Ive been to so many and reseearched them so much! Though like a corked wine, they all seem a little less appealing now.

To be honest, for this scheme, my head says 'NO' but my heart says yes. Im fed up with renting in London, it gets to you after a while! But I do feel the replies to this post make sense, that I should hold on (having held on this long!!)

Oh yeh, one other interesting thing. The housing agency promoting this scheme normally review all applications for their shared ownership scheme carefully (because they were so massively over-subscribed, 2006-2007) assessing need (e.g a single person couldnt have a 2-bed flat, larger builds reserved for families etc).

However at the presentation last weekend, we were told its first come, first served (at the official launch date this coming Sunday) and that as long as you have affordability you can have what you like!!). They suggested getting there very early on launch day, and even hinted that people may be sleeping out the night before, like at a New Years Sale!

Sale spin? :)

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