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Half Share or Renting

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  • Half Share or Renting

    Here's the gist:

    Sold house back in '94 but due to circumstances beyond my control have been out of the market ever since. To date, I have paid c£95k in rent.

    My current rent £475, which is cheap for the area I live but then again it's above a shop and not that great decor wise. But, it's cheap and not too unpleasant. However, I have been given notice to quit by end of January 13 as the landlords are retiring and selling the whole 'unit'.

    Rental costs for other properties in the desired areas are c£575-£600pm.

    A week after being given notice, I was given the option of half share on a £150k half share ground floor flat via Housing Association.

    Although I am in a position to look at buying these are the criteria I have been through with mortgage advisor:

    - I can only get a mortgage over 12 years due to retirement age approaching.
    - I have 15% deposit towards my £75k share. Mortgage quotes on the balance = c£567pm so/12 years. Rate fixed for 2 years.
    - Buying costs c£1100
    - Housing Association charges
    Rent = 156pm at current rate. Increase due Apri 13.-
    Service Charge = £40pm at current rate. Increase due April 13.
    - Lease has 119 years to run.
    - Built 2004

    Things to consider (courtesy of advisor and HA rep)

    1. Rent/service charges will rise at RPI plus 1% pa. To the layman that's c3%.
    2. Mortgage may increase along with HA charges. So, given short term of part ownership salary/property prices etc may not keep ahead of charges so I could end up worse off year on year compared to a deal over 20 year or longer period.
    3. It is unlikely I wil ever own the full 100% share or even increase my 50% share.
    4. I cannot sub let unless in exceptional circumstances.
    5. Can be difficult to sell shares.
    6. I take a £6000pa pay cut in 2014, which is a net drop of c£340pm. At this time, rent/charges etc will have gone up by around 6% based on HA advice.
    7. GF flats are less popular on open market.
    8. Comparing current rental with half share charges

    Rent: £600 (max)pm
    Half Share: £567 + £156 + £40 = £763.

    I will thus have more disposable income even allowing for year on year increases.

    On the plus side!!:
    9. I will finish owning at least 50% of something compared to 100% of nothing.
    10. The flat is linked to a small ver 55 retirement development (I'm not there yet!). Corner plot with one flat above, one next door. Own entrance with 'next door' leading to single rise stairs to two flats. The area is quite exclusive with a 2 bed property in the complex currently on the market for £300k. Thus, the agent doesn't think it will be difficult to re-sell. There is already a lady wanting the flat but I have first refusal.

    The mortgage chappie was very negative concerning the flat, leasehold, diffulties getting decent rates on shared properties etc. I am meeting with the HA next week to go through the 'small print', eg those extra maintenance charges that can appear year on year.

    Has anyone else ever been in this position or know someone with a similar tale to tell?

    I am tempted to buy but renting and having more spare cash to enjoy is appealing.

  • #2
    Re: Half Share or Renting

    im a first time buyer and i did look at these part buy things and they amount i would have being paying (rent+mortgage repayment) would be equivalent to the amount id be paying if i took out a mortgage for 100% of the property value. There was also the no subletting and the probable difficulty when it comes to selling. This does not appeal to me