Shared Ownership

JOJOC

Hi
Im thinking of goin down the route of shared ownership and was just wondering if anyone else has gone down this route and if its hard to buy the council out?
Also would i pick the house or would the council pick it?
Does it make better sense to go the shared ownership route if you cant afford to buy on the open market at the moment or should we just wait and see how the market goes?

Thanks and sorry for all the questions!!!

The_Conductor

JOJOC wrote:

Hi
Im thinking of goin down the route of shared ownership and was just wondering if anyone else has gone down this route and if its hard to buy the council out?
Also would i pick the house or would the council pick it?
Does it make better sense to go the shared ownership route if you cant afford to buy on the open market at the moment or should we just wait and see how the market goes?

Thanks and sorry for all the questions!!!

To be perfectly honest- irrespective of whether you can afford to buy on the open market at the moment or not, now- is most probably a bad time to buy. If you are able to buy on the open market- I would suggest that the affordable housing scheme, rather than the shared ownership route, would most probably be the best course of action- as you can get tied into particular mortgage lenders with possibly over-optimistic initial valuations.

So- I would personally advise renting at the moment- seeing how the market goes, and all the while putting a little aside towards your deposit for when you do enter the market.

Dandelion6

You can use shared ownership to buy a property of your own choice (if you can find one cheap enough; there's a limit on how much you're allowed to spend/borrow) or you can use it to buy a property you're offered on the affordable housing scheme, if you don't earn enough to get a proper mortgage from a bank.

It ends up costing you quite a bit in the long run and if you have any hope of getting a proper mortgage in the next couple years you're probably better off waiting.

K_P

I can't really advise what the best route is for you. I'll just give you a few bits of info I do know about the scheme.

For one thing, it doesn't have to be a 50/50 split. You can get a mortgage on up to 75% of the property or as little as 25% (I think... my figures might be a bit off). You pay rent on the portion the council owns. The rent is based on your income - generally 15%. So if your income goes up, so does your rent. You pay your mortgage as normal on the portion you own. If you have any half decent income though, this isn't going to work out vastly cheaper than a mortgage payment. It will probably be a bit cheaper, but largely comparable with mortgage payments.

The interesting thing about shared ownership is that when you buy the council out of their portion, you buy out what they originally paid. So let's say you go 50/50 on a €400k property. Mortgage on your €200k half, rent on their €200k half. 5 years down the road, you want to buy them out. Even if the property is now worth €500k, €600k or €1m, you can buy their share for €200k, ie, what they originally paid for it.

That was a fantastic deal for a lot of people over the last 10 or 15 years who were able to buy out half shares in houses worth a fortune for a pittance. With fallling prices though, who knows how this will pan out over the next few years?

By the way, this info is based on the Dublin City Council Shared Ownership Scheme. Other councils might differ a bit. The best thing to do is probably visit your local council office and get as much info as you can. Good luck.

starky

JOJOC wrote: »

Hi
Im thinking of goin down the route of shared ownership and was just wondering if anyone else has gone down this route and if its hard to buy the council out?
Also would i pick the house or would the council pick it?
Does it make better sense to go the shared ownership route if you cant afford to buy on the open market at the moment or should we just wait and see how the market goes?

Thanks and sorry for all the questions!!!

Well to be honest, I got shared ownership approval on the off chance that I may get an affordable housing unit and it was a rather measly amount. I have since been offered an affordable place and the EBS have (provisionally) offered me the same amount as a full mortgage. So I don’t really see the advantage of it, at least in my case to be honest.
A full mortgage for 200K if you can get it will always be a better option then a shared ownership loan for the same amount, as it will cost much less.

Fair enough if I got offered a higher shared ownership loan then a bank would lend me, but they are both the same, and with a full EBS mortgage you don’t ever have to worry about the “rent” part of the loan, which is basically the 50% interest only element that you end up having to buy out.

Smccarrick is correct though in saying that you would be mad to buy on the open market right now, I would not be buying only for the fact that I am getting a fair whack of a discount, and I may me out of the eligibility bracket for AF soon (AF not the open market)

So my advice would be to go ahead submit your shared ownership application, which took about 2 months for me, and see what kind of a loan they offer you.
You don’t have to ever actually take it. In addition to applying for a shared ownership loan I would recommend the DCC Affordable housing scheme too, the €50 covers both applications for DCC anyway, and again you don’t ever have to apply for a house, or indeed if you are offered one in a draw you can turn it down with our penalty, I did in the last lot of draws, although I think other councils may have rules on turning down properties, you would have to check that out.

I know its very controversial (AF) on this forum and while it suites me to buy on it at the moment It most certainly will not suit everybody looking to buy there first place but its pretty much the only way I would ever be able to buy a place in the DCC area by my self. It was either AF or emigration, looks like I will be staying here now though. :-)

If you put your name down for both of these schemes you are at the very least giving your self extra options for getting your first place, as well as saving and maybe picking up a bargain in another few years on the open market.

clawsthefirst

smccarrick wrote: »

I would suggest that the affordable housing scheme, rather than the shared ownership route, would most probably be the best course of action- as you can get tied into particular mortgage lenders with possibly over-optimistic initial valuations.

I beg to differ completely! i did shared ownership and bought them out within 9 months so I was able to go with any lender on the market i wanted. With affordable housing you can't remortgage/change lender without having to pay back the clawback. Equally if you wish to sell up and move-affordable housing- you pay the clawback. With shared ownership, yes i was tied to a dublin city council mortgage for 9months but now the place is soley mine to do what I want with- no clawback. Plus with shared ownership you may choose to rent out the place, affordable housing you can't.

starky

clawsthefirst wrote: »

I beg to differ completely! i did shared ownership and bought them out within 9 months so I was able to go with any lender on the market i wanted. With affordable housing you can't remortgage/change lender without having to pay back the clawback. Equally if you wish to sell up and move-affordable housing- you pay the clawback. With shared ownership, yes i was tied to a dublin city council mortgage for 9months but now the place is soley mine to do what I want with- no clawback. Plus with shared ownership you may choose to rent out the place, affordable housing you can't.

Some Fair Points made here, but there are no properties any where in The DDC area that I would personally live in that I could buy for the amount of a shared ownership loan

I agree that you are tied to an affordable house, but to buy the place I am getting I would need a mortgage of about 500k, so I would need to be earning 80-90k. I simply could not afford to buy that on the open market by myself. I don’t mind being tied to it however, as its in Dublin 2 and it’s a grand size. 70 sqm. In 10/15 years I can sell it on and buy where ever I want at that point. The important thing is I am never going to have to worry about a commute to work; I am going to have a realistic mortgage that I can afford, and first and foremost I will have somewhere to live long term, i.e. a home, I am not looking to buy/tradeup/buy/tradeup etc, and not looking to make a quick buck.

As far as renting goes, you can rent out a room in an affordable place under the rent a room scheme, although I think I will be able to manage with out having to do this., I am sure you can do the same with an house bought on the open market using shared ownership, but I am not sure that you can rent out the whole property while DCC still have a share in it, although I don’t know this for sure.
Also I know it’s a bit of a pain that you can’t switch lenders at the moment but I would hope that in time this will change. Remember that the whole AF housing thing is still relatively new and does have some flaws and teething problems. I appreciate that I am getting a big discount, and that the extra discount is being given to me in order for me to secure my first home, So re mortgaging is not going to be an option anyway. The only thing I am losing out on by not being able to switch lenders at the moment, is access to more competitive rates from other lenders.

OP - I think that the main thing is to consider all the options, have a look at all the routes to securing a property, familiarise yourself with the ins and outs/pitfalls with all the options then try and think about how your personal situation may develop over the next 5/10/15 years and make your decision based on what best suits you. Remember you will only ever be a first time buyer so think long and hard about price/location/scheme before you do take the plunge, as stamp duty bills there after are horrific ..

colsku

starky wrote: »

As far as renting goes, you can rent out a room in an affordable place under the rent a room scheme, although I think I will be able to manage with out having to do this., I am sure you can do the same with an house bought on the open market using shared ownership, but I am not sure that you can rent out the whole property while DCC still have a share in it, although I don’t know this for sure.

As far as I know, you are not allowed to rent out the whole of your Affordable house/apartment while the council still own part of it. In the case that they do allow you to rent the whole thing out, they will not allow you to offset this time against the clawback, which is fair enough.

Like you said, it is possible to rent out a room under the rent-a-room scheme. However, I've been offered a one-bed apartment and wonder is it possible to use the rent a room scheme on this, by virtue of the fact you are actually renting out the whole apartment (as there's only one room!). A bit of a grey area, so I'd appreciate if anyone knows about this or has any experience renting out a one bed.

I'd be willing to sleep on the couch if it meant bringing some much needed cash in!

starky

colsku wrote: »

As far as I know, you are not allowed to rent out the whole of your Affordable house/apartment while the council still own part of it. In the case that they do allow you to rent the whole thing out, they will not allow you to offset this time against the clawback, which is fair enough.

Like you said, it is possible to rent out a room under the rent-a-room scheme. However, I've been offered a one-bed apartment and wonder is it possible to use the rent a room scheme on this, by virtue of the fact you are actually renting out the whole apartment (as there's only one room!). A bit of a grey area, so I'd appreciate if anyone knows about this or has any experience renting out a one bed.

I'd be willing to sleep on the couch if it meant bringing some much needed cash in!

That is actually a very interesting question. I never really thought of it before. I know the bank will not take into account rent a room income on a one bed place, for mortgage purposes. It seems logical that you are entitled to a tax break on the rent a room income, so I suppose in theory you could actually do it. I don’t know how practical it would be though :-)
As the main down side to an affordable unit is having to stay in it long term, which by the way I have no problem with, I figured I had to get it right first time. I selected the area and amount of bedrooms with the next 10-15 years in mind. Most of my choices in the last DCC draw were all two beds. So I would advise people that are thinking about trying for a DCC place to think very carefully about size and location when they are selecting potential properties, because if you get selected and proceed to a sale you will have to live there for a very long time!

sydthebeat

sorry for ressurecting an old thread but im looking for some advice please.

We are currently local authority tenents in a 3 bed 900sq ft semi-d. We would qualify for both shared ownership and affordable housing. Problem is theres 6 of us, myself, my wife and 4 kids. Our LA does not have/forsee having 4 bed affordable housing at any time in the future. As i work in the 'residential estate design' area i know they only ask for 3 bed or smaller when houses are proposed for affodable/social under section V. We applied for affordable housig and that was basically the end product.

We were advised to go down the shared ownership route, but ive very little info on it. so my questions would be:

1. what is the maximum value of house we could apply for?
2. Is there actually any money available for this scheme in the current climate?
3. As its easy to get refused for a mortgage in my position, what variables do the council take into account when assessing payback capabilities?
4. has anyone else gone down this route and how accessible do they find the local authority/DoEHLG?

Thank you in advance for any help

Weyhey

Each Council is different so you need to contact them directly.

I did hear that not many people were taking up SO anymore because the monthly payments were more than an ordinary bank mortgage. I think that was when banks were falling overthemselves to give loans, now it's getting harder and harder to get a mortgage I think that will all change again as it will be the only way for a lot of people to get on the property ladder. I did shared ownership and yes my monthly payments were more but i would have never been able to buy a house otherwise. South Dublin CC were great to deal with.