Unlike full owners of leasehold properties who are unhappy with the firm running their block, shared owners cannot exercise the “right to manage” their building – it will always be run by the housing association. Another downside is that you could potentially lose your property if you fall behind on rent payments.
How much rent do you pay on a 50 shared ownership?
For example: if you wanted to buy a 50% share of a property worth £200,000 the equity you would pay rent on is £100,000. If you divide the unsold equity by 100 and multiply by 3 you will get the total rent payable per annum. Just divide this by 12 to get the monthly rent payable!
What is the downside of shared ownership?
What are the disadvantages of Shared Ownership? Because Shared Ownership properties are always leasehold, ground rent may apply and you must pay this in full no matter what size share of the property you own. Therefore, the price you pay per share will rise with house prices the longer you wait.
What happens if you lose a shared ownership case?
The court made a possession order and Richardson lost the property. In practice, this means that shared ownership is just a tenancy, with an expensive downpayment for an option to buy the whole property at a later date.
Are there any problems with shared ownership of houses?
There are other problems that, though not unique to shared ownership properties, occur more often with them. For example, frequently the housing association will itself only lease a number of flats in a block built by a developer, which it then sub-leases to people on a shared ownership basis.
How does share ownership work in real estate?
The arrangement, a typical one, was that she paid rent on the other 50%. There was the usual staircasing option, by which Richardson could opt to pay more for a greater share, up to owning outright with 100%, but, again not uncommonly, she had not exercised this.
Are there any legal protections for shared ownership?
People who buy part of a shared ownership property find they have few legal protections compared with home owners or tenants. Shared ownership is being positioned by housing charity Shelter and others as the future of home ownership for low- and middle-income households, and as a means to encourage investment in home building.
