3 ms·

Is it common in the UK to put down large sums of money on real estate you'll never own outright? What sorts of rights does he have to sell, sublet, etc.? What s

by pc86 5y ago

Is it common in the UK to put down large sums of money on real estate you'll never own outright? What sorts of rights does he have to sell, sublet, etc.? What sort of guarantees does he have that his rent will truly be 75% of the market rate and not just increase to 100% over time? The whole thing sounds about as financially responsible as putting a large down payment on a leased car.

ealexhudson 5y ago
It's relatively new. The basic idea is to bridge the gap between rental and home ownership: you don't need as big a mortgage to buy a share of a property, and you can benefit (proportionately) from any capital gains from the increase in value of the property. In that sense it's potentially more beneficial and opens up access to the property market; in practice it seems to help push up demand and therefore prices. In recent years it has arguably been too lucrative to be a landlord which has pushed back against home ownership and pushed up values; that's changing a little bit. Shared ownership schemes are a band-aid over a more general problem.
- bsenftner 5y ago
  That general problem being financial literacy. These sound like terrible financial deals.
- Nursie 5y ago
  > in practice it seems to help push up demand and therefore prices All of these schemes do that, because they address the housing market from the government-preserving invariant condition of "We can't ever let the market drop, we'd be voted out in a second" So they come up with schemes and financial products to allow more people to access home ownership in some form or other without impacting property values. See also stamp-duty holidays. More or less by definition these things increase demand and push house prices up further. It's insanity. It's also massively to my benefit as a homeowner who is about to leave the UK...
- fy20 5y ago
  It's worth mentioning the purpose is to provide low income families - there is a limit on how much your family can earn to be eligible - an opportunity to own a property that they otherwise could not afford. That limit is £80k (£90k London) which puts you well into the middle class though. There's no way someone working in a supermarket and supporting a kid on their own would ever be able to afford something like this.
ivanbakel 5y ago
>Is it common in the UK to... It's not "common", but it's becoming increasingly necessary for some as prices rise far beyond what most people can afford, even on a high-interest mortgage. You're far more likely to see it in Central London than anywhere else in the UK, though. Do people want to do it? No. It's a situation forced on people by property owners and the housing market. "Financial responsibility" can't be everyone's first priority when talking about housing.

by pc86 5y ago

ealexhudson 5y ago

It's relatively new. The basic idea is to bridge the gap between rental and home ownership: you don't need as big a mortgage to buy a share of a property, and you can benefit (proportionately) from any capital gains from the increase in value of the property. In that sense it's potentially more beneficial and opens up access to the property market; in practice it seems to help push up demand and therefore prices. In recent years it has arguably been too lucrative to be a landlord which has pushed back against home ownership and pushed up values; that's changing a little bit. Shared ownership schemes are a band-aid over a more general problem.

bsenftner 5y ago
That general problem being financial literacy. These sound like terrible financial deals.
Nursie 5y ago
> in practice it seems to help push up demand and therefore prices All of these schemes do that, because they address the housing market from the government-preserving invariant condition of "We can't ever let the market drop, we'd be voted out in a second" So they come up with schemes and financial products to allow more people to access home ownership in some form or other without impacting property values. See also stamp-duty holidays. More or less by definition these things increase demand and push house prices up further. It's insanity. It's also massively to my benefit as a homeowner who is about to leave the UK...
fy20 5y ago
It's worth mentioning the purpose is to provide low income families - there is a limit on how much your family can earn to be eligible - an opportunity to own a property that they otherwise could not afford. That limit is £80k (£90k London) which puts you well into the middle class though. There's no way someone working in a supermarket and supporting a kid on their own would ever be able to afford something like this.

ivanbakel 5y ago

>Is it common in the UK to... It's not "common", but it's becoming increasingly necessary for some as prices rise far beyond what most people can afford, even on a high-interest mortgage. You're far more likely to see it in Central London than anywhere else in the UK, though. Do people want to do it? No. It's a situation forced on people by property owners and the housing market. "Financial responsibility" can't be everyone's first priority when talking about housing.