59 Years old, should I buy a Shared Ownership property?
Discussion
Longstanding PHeader here.
To cut a long story short: divorced alcoholic ex-wife 10 years ago, sold family house and became single parent (of two). This was agreed with solicitors to be for 6 months, so I rented a place near the children's school and didn't work. I wasn't eligible for most benefits, but paid maintenance for ex-wife. The six months by stages turned into 3 1/2 years, by which time my share of the funds from the sale of the house were reduced to almost nothing.
A decade later I'm in steady, but not particularly well paid, work, in my late 50s and have been renting a small semi-rural cottage for 6 years in a desirable area of the country. My aged mother still lives in the family home in Thames Valley. At some point I will expect to inherit, but there may be some significant Care bills.
Buying in my area will be impossible. A decent 3 bed house is >£650k, a 2 bed flat in town >£300k. Prices have gone up by about 20% in the last 18-24months.
I have only a small deposit and would need to pay a repayment mortgage in 10 years (you can get them up to 70y.o.) which makes mortages very expensive. This means I had pretty much ruled out buying until I receive an inheritance, although obviously that cannot be guaranteed.
However, I've been offered a Shared Ownership property by a housing association. I qualify as I'm unable to afford to buy on the open market.
Its a new build mews, three floors, garage on the ground, kitchen/living room on 1st floor, 2 beds on second floor, one of two units. There's no outside space, limited storage and a basic specification, but much cheaper to run than my current 500 year old cottage in 1/3 acre.
While it has a garage, and the estate it's on is reasonable, its not the kind of place I would choose. I've been over there a few times at various times of the day, and it appears quiet and ordered, mostly younger residents, quite a few white vans, and obviously PCP type of cars parked up (decent parking too). Its a long way from being a sink.
Beggers and choosers and all that.
Property is £280k, I 'buy' a £100k share, and rent the other half. I can get a mortgage for the balance of the £100k. Mortgage & rent is a bit less than my current rent. It won't be affected too much by interest rate rises as the repayment is by far the biggest component. In ~ten years time I'd own the 35%. Freehold and rental costs are reasonable and limited to rpi + 1/2%.
What would you do?
- Continue to rent (I've paid about £65k in rent over the past 5 years) until the inheritance comes through and then try and buy?
- Take the Housing Association?
Any other stuff to bear in mind?
cheers
To cut a long story short: divorced alcoholic ex-wife 10 years ago, sold family house and became single parent (of two). This was agreed with solicitors to be for 6 months, so I rented a place near the children's school and didn't work. I wasn't eligible for most benefits, but paid maintenance for ex-wife. The six months by stages turned into 3 1/2 years, by which time my share of the funds from the sale of the house were reduced to almost nothing.
A decade later I'm in steady, but not particularly well paid, work, in my late 50s and have been renting a small semi-rural cottage for 6 years in a desirable area of the country. My aged mother still lives in the family home in Thames Valley. At some point I will expect to inherit, but there may be some significant Care bills.
Buying in my area will be impossible. A decent 3 bed house is >£650k, a 2 bed flat in town >£300k. Prices have gone up by about 20% in the last 18-24months.
I have only a small deposit and would need to pay a repayment mortgage in 10 years (you can get them up to 70y.o.) which makes mortages very expensive. This means I had pretty much ruled out buying until I receive an inheritance, although obviously that cannot be guaranteed.
However, I've been offered a Shared Ownership property by a housing association. I qualify as I'm unable to afford to buy on the open market.
Its a new build mews, three floors, garage on the ground, kitchen/living room on 1st floor, 2 beds on second floor, one of two units. There's no outside space, limited storage and a basic specification, but much cheaper to run than my current 500 year old cottage in 1/3 acre.
While it has a garage, and the estate it's on is reasonable, its not the kind of place I would choose. I've been over there a few times at various times of the day, and it appears quiet and ordered, mostly younger residents, quite a few white vans, and obviously PCP type of cars parked up (decent parking too). Its a long way from being a sink.
Beggers and choosers and all that.
Property is £280k, I 'buy' a £100k share, and rent the other half. I can get a mortgage for the balance of the £100k. Mortgage & rent is a bit less than my current rent. It won't be affected too much by interest rate rises as the repayment is by far the biggest component. In ~ten years time I'd own the 35%. Freehold and rental costs are reasonable and limited to rpi + 1/2%.
What would you do?
- Continue to rent (I've paid about £65k in rent over the past 5 years) until the inheritance comes through and then try and buy?
- Take the Housing Association?
Any other stuff to bear in mind?
cheers
Mrs RJ moved into a shared ownership house when she was a single mum.
She was paying about the same for mortgage and rent as she was for the full rental on her previous place.
When she sold up, the ownership company came and valued it, they gave a fair market appraisal and had a waiting list of prospective buyers
There was no negotiation for the buyer, the price was the price.
Took about 6 weeks to go through the legal stuff and she got half of the uplift in value, plus another £2k for work she'd done to the place to meet her own tastes.
Ended up she came out of the deal with around £35K in the bank, much better than returning the keys on a rental after 5 years.
If you can find a good association to work with, then it's a great idea IMHO
She was paying about the same for mortgage and rent as she was for the full rental on her previous place.
When she sold up, the ownership company came and valued it, they gave a fair market appraisal and had a waiting list of prospective buyers
There was no negotiation for the buyer, the price was the price.
Took about 6 weeks to go through the legal stuff and she got half of the uplift in value, plus another £2k for work she'd done to the place to meet her own tastes.
Ended up she came out of the deal with around £35K in the bank, much better than returning the keys on a rental after 5 years.
If you can find a good association to work with, then it's a great idea IMHO
I'd go for it.
Security of tenure is priceless at your age, I would assume. I am 54, live in a shared ownership new-build for the last 5 years, and that feeling of being secure certainly helps me sleep easy at night.
I don't have a third of an acre, of course, but a knee injury has written off 2022 for me. Next year, when I am better, my small garden can be whipped into shape. I would be weeping about getting a third of an acre back into line.
Security of tenure is priceless at your age, I would assume. I am 54, live in a shared ownership new-build for the last 5 years, and that feeling of being secure certainly helps me sleep easy at night.
I don't have a third of an acre, of course, but a knee injury has written off 2022 for me. Next year, when I am better, my small garden can be whipped into shape. I would be weeping about getting a third of an acre back into line.
Similar to OP. 59, renting since we split years ago.
I'm in London and I have blown about £150k on rent. My current rent for a small 2 bed takes 75% of my take home pay and I'm in a reasonably well paid job.
Job keeps me in London, blooming Eck! I've gone off on one again, sorry.
Anyway, are not part ownerships difficult to sell on?
At least, if you have a good landlord, rent means that repairs, renovations, white goods etc tend to be looked after without extra expense to you.
I still have the house as ex wife and two of the kids still live there, so one day I might get enough to buy a little place in the middle of nowhere, but the constant upkeep is eye watering.
I'm in London and I have blown about £150k on rent. My current rent for a small 2 bed takes 75% of my take home pay and I'm in a reasonably well paid job.
Job keeps me in London, blooming Eck! I've gone off on one again, sorry.
Anyway, are not part ownerships difficult to sell on?
At least, if you have a good landlord, rent means that repairs, renovations, white goods etc tend to be looked after without extra expense to you.
I still have the house as ex wife and two of the kids still live there, so one day I might get enough to buy a little place in the middle of nowhere, but the constant upkeep is eye watering.
Erast Fandorin said:
Hoofy said:
Any benefit to moving in with your mum? (Financially and socially.)
She has health problems, and is 60 miles away. Aside from the issue I'd have with moving back to my mum's at 59, that would also make me a carer, something I'm not really ready for at this stage.Ignore the fact that moving back home at the age of 59 might make you feel a bit s
t about yourself but look at it as a way of protecting your inheritance.I'd consider it if I were in a similar situation financially.
Are there any potential opportunities to have similar housing available for social rent via the housing association? (As opposed to part rent part buy)
Given there's uncertainty over future inheritance, I'd look to explore this option if available.
If you end up with a decent inheritance, you can buy for cash/small mortgage in a good/slightly cheaper area.
Can't see the benefit in shared ownership if there's a risk of not being able to staircase relatively quickly to buy out completely.
Wish you the best in this difficult situation.
Given there's uncertainty over future inheritance, I'd look to explore this option if available.
If you end up with a decent inheritance, you can buy for cash/small mortgage in a good/slightly cheaper area.
Can't see the benefit in shared ownership if there's a risk of not being able to staircase relatively quickly to buy out completely.
Wish you the best in this difficult situation.
Edited by PH.sausages on Friday 6th May 22:57
PH.sausages said:
Are there any potential opportunities to have similar housing available for social rent via the housing association? (As opposed to part rent part buy)
Given there's uncertainty over future inheritance, I'd look to explore this option if available.
If you end up with a decent inheritance, you can buy for cash/small mortgage in a good/slightly cheaper area.
Can't see the benefit in shared ownership if there's a risk of not being able to staircase relatively quickly to buy out completely.
Wish you the best in this difficult situation.
Thanks. My objective is Given there's uncertainty over future inheritance, I'd look to explore this option if available.
If you end up with a decent inheritance, you can buy for cash/small mortgage in a good/slightly cheaper area.
Can't see the benefit in shared ownership if there's a risk of not being able to staircase relatively quickly to buy out completely.
Wish you the best in this difficult situation.
Edited by PH.sausages on Friday 6th May 22:57
1. To protect myself from further rises in the housing market making a future purchase more and more difficult
2. Build capital as opposed to spending taxed income on rent
Secure tenure isn't really an issue, my landlord is a large private estate with a good reputation, and no plans to change my rental status. However rental costs are subject to annual review and linked to the wider market; which is also reflecting the increase in property prices recently. i.e. Rent will only go up.
So the value is £280k and you're buying £100Ks worth. So you'll own 5/14ths of the house, and pay rent on the remaining 9/14ths. So you own about 35.7% of the property.
A couple of things to check.
1. Although you only own about 36%, do you have to pay 100% of the insurance costs and maintenance/repairs?
2. If the value of the property goes down, do you still own 36% of the reduced value, or is there a clause that says their stake is always worth £180K. So if the value dropped from £280K to £200K, would you own a £72K stake, or just a £20K stake, with them still owning £180K. Does your percentage stay at 36%, or would it drop to 10% so they could retain their value.
A couple of things to check.
1. Although you only own about 36%, do you have to pay 100% of the insurance costs and maintenance/repairs?
2. If the value of the property goes down, do you still own 36% of the reduced value, or is there a clause that says their stake is always worth £180K. So if the value dropped from £280K to £200K, would you own a £72K stake, or just a £20K stake, with them still owning £180K. Does your percentage stay at 36%, or would it drop to 10% so they could retain their value.
TwigtheWonderkid said:
So the value is £280k and you're buying £100Ks worth. So you'll own 5/14ths of the house, and pay rent on the remaining 9/14ths. So you own about 35.7% of the property.
A couple of things to check.
1. Although you only own about 36%, do you have to pay 100% of the insurance costs and maintenance/repairs?
2. If the value of the property goes down, do you still own 36% of the reduced value, or is there a clause that says their stake is always worth £180K. So if the value dropped from £280K to £200K, would you own a £72K stake, or just a £20K stake, with them still owning £180K. Does your percentage stay at 36%, or would it drop to 10% so they could retain their value.
Good suggestions, thanksA couple of things to check.
1. Although you only own about 36%, do you have to pay 100% of the insurance costs and maintenance/repairs?
2. If the value of the property goes down, do you still own 36% of the reduced value, or is there a clause that says their stake is always worth £180K. So if the value dropped from £280K to £200K, would you own a £72K stake, or just a £20K stake, with them still owning £180K. Does your percentage stay at 36%, or would it drop to 10% so they could retain their value.
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