First time buyers are finding it increasingly difficult to get on the property ladder. Incomes and property prices remain distorted and banks have become increasingly stringent.

With the situation as it is many first time buyers are turning to shared equity housing schemes. Instead of buying the whole of a property you only buy a percentage. The local government housing authority or a building company own the rest. You pay rent on the remaining percentage but the amount you borrow is significantly reduced and so are your mortgage repayments. You also require a smaller deposit.

The government loves the scheme, it helps the construction industry and keeps the property market booming.

As someone looking to get onto the property ladder I had been considering such a scheme. I was therefore appalled when I came across some of the horror stories people have had with shared equity schemes.   I felt it was important that anyone looking into the scheme should be aware of what they are getting into. Here is a selection of people’s experience.  All comments are taken from the evening standard see the full article here and all the other comments as well.
– Marlise, Reading, 01/07/2010

Biggest mistake of my life! I bought a 40% share of a property through Thames Valley Housing Association in 2005. After a couple of years, rent had gone up by almost £200 and service charges sky rocketed, for a very poor service. Due to personal circumstances I had to move to London, to which TVHA gave me permission to rent via the local council. The council tenants did not pay rent for close to a year, and after struggling to pay living expenses in London and Rent/Mortgage on the shared ownership property, I went into serious debt, as well as mortgage debt. TVHA have been extremely unhelpful in this situation. Not making it easy for me to sell my share of the property (the costs of which are ridiculous). I am now unemployed and left to deal with mortgage debt collectors’ calls and harassment from TVHA for their rent. I no longer have an attachment to this property and would love to see it go as it has caused me so much stress, but I am trapped.

 

 

– SR, London E14, 15/04/2010

Biggest mistake of my life wish I had read this four years ago. Desperately need to sell to move closer to a disabled relative, there are errors in the lease preventing me from selling and the housing association are taking their time to sort it out. Paying a fortune in service charges for poor service.

 

 

– Lewis, Southampton – England, 02/03/2010

Very Interesting reading all the comments, only wish the info had been out there 2 years ago before I bought my 40% share. Rent and charges have jumped up by 75% in 2 years, flat has dropped £40,000 in value, can’t afford to increase my share, can’t afford to sell, and now paying more in combined rent and mortgage than I would have if I were privately renting….
Whatever anybody thinks, it is genuinely a mistake to get involved in shared ownership (even in a rising market) believe me!!
– Josh, London, 17/07/2009

 

Hi, I have just bought on shared ownership. This was the only means of myself and girlfriend to get on the ladder. We are paying a good £450 cheaper than renting in that area. Our incomes are low but we still managed to get a 4.5% fixed rate. This was the only option for us. To be honest all the problems are down to lack of research and thought. In a falling climate you will obviously find it hard to sell property. Not only this but we have gone into this scheme planning on staircasing to 100%. I don’t think anyone can say this is worse than renting as I am saving £450 per month to go on more equity.

As a long term I don’t see this as an investment but a foot up. To me it’s less risk of neg equity if circumstances change i.e break up. If you go in to this thinking it’s an easy way then you will find problems every day. As for the overpriced bit. Ours was on the market for 300,000. We got them to go down to 250,000 due to our independent survey we got and they accepted as they knew we would pull out otherwise. This is about 10% cheaper than all 2 beds in the area on the open market.

I think if you look at this as an easy way to own a home by still having the same rights as renting you will be in for a big awakening. I also have friends who have bought and sold on this scheme and because they did their research they have come out with no problems and quids in.
So I part own a 2 bed apartment right on the river in London next to canary wharf for 800pcm inclusive. Bad??!!

– Sarah, London, 09/07/2009

I am in the same situation trying to sell my 45% of shared ownership property to no success.
My rent and service charge has doubled it is just ridiculous! Now in the predicament of taking it off the market to try and gain some equity as if we sold now we would lose so much, however have a baby on the way and need out! Feel completely stuck in this flat, but had nowhere else to live and no deposit so had to go shared ownership! A2 Dominion housing associations are also unhelpful, time wasters and money grabbers. Good luck to anyone trying to get out!

– Gillian, London, 16/07/2009

I too, am in a similar predicament to the other people commenting. After securing a good job in Norfolk I informed my housing trust (Metropolitan Homes) that I needed to sell my 40% share of my one bedroom flat. It has taken them 5 weeks to market the property, a valuation (for which I had to find and pay a surveyor) £15,000 below one estates agents valuation and £30,000 below a second estate agents valuation. They have sent only two people to view in the two weeks since marketing and I now have only 6 weeks till I take up my new post with NHS Norfolk. (I am a nurse)
Everyone recognises that selling a house is stressful but the ‘don’t care’ attiutude of housing associations just makes the whole situation worse!

 

 

– Aji, London, 09/09/2008

The shared-ownership scheme has been around for years and the Government are always attempting to promote it, it’s a way of getting people off council waiting lists. I have lived in a shared-ownership property for 15 years and I would never recommend it to anyone, in fact I would advise people to think very, very carefully before taking part. My housing association owns the larger percentage of the house, but do not pay a penny towards the upkeep, as a ‘home owner’ I am expected to do this myself. There are lots of pitfalls with these schemes so my advice is “buyer beware”!

I offer my condolences to all those who have suffered but I also thank them for sharing their experiences. Hopefully we can now avoid making the same mistakes they have. This was not a case of me cherry picking the worst stories. This was the majority experience; please check the evening standard article for yourself.

If you are considering a shared-equity scheme the message is clear, do your research and don’t rush into anything. Make sure you read the small print.

More articles on property coming soon.