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Part rent part buy.

Former MemberFormer Member Posts: 1,876,323 The Mix Honorary Guru
What are peoples thoughts?

Thanks :D
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Comments

  • Former MemberFormer Member Posts: 1,876,323 The Mix Honorary Guru
    Depends on the deal really. Personally I think they're a waste of time, trapping people into paying rent and a mortgage.
  • Former MemberFormer Member Posts: 1,876,323 The Mix Honorary Guru
    Con, you have to pay all repairs and rent and they are normally overpriced.
  • Former MemberFormer Member Posts: 1,876,323 The Mix Honorary Guru
    It really depends on your situation. It's perfect for people who can afford the mortgage but not a huge deposit, and want to have a stake in their house or flat. My boyfriend and I bought our flat last year through Genesis Homes. We have a 25% share and are paying about £500 per month in rent and £250 in mortgage (although we're actually also overpaying by £250 because that makes more sense than saving at the moment). So that's around £750 per month for a lovely 2 bedroom flat in London which is ours and certainly nicer than any we'd be able to rent for that money.

    In terms of negatives though service charge is high (although has been reduced when everyone complained) and Genesis Homes are a bunch of total incompetants, so I'd suggest avoiding them, but in general we couldn't be happier.

    Yes, maybe it may have made a bit more sense to pay the waiting game and wait until we could afford a decent deposit, but my boyfriend and I were living with his mum and he was desperate to have a place of his (our) own before he hit 30, and saw rent as money down the drain. So it's worked out well for us, but you should do a lot of research before you take the plunge.
  • Former MemberFormer Member Posts: 1,876,323 The Mix Honorary Guru
    From the schemes I've seen, it looks like you get all the disadvantages of buying without many of the benefits. And vice versa.

    I would especially beware of those new build schemes where you a buy 75% now and the rest in ten years. They're shifty as owt.
  • Former MemberFormer Member Posts: 1,876,323 The Mix Honorary Guru
    It's all down to where you're living, IMO. In London, it's pretty much the only option to get onto the property ladder for a lot of people.

    Simply put - those people not living in London are very unlikely to grasp just how expensive property is here.
  • Former MemberFormer Member Posts: 1,876,323 The Mix Honorary Guru
    The problem is that you're not really getting on to the property ladder in any meaningful sense. You own part of the property and therefore have the responsibilities of being the owner. But you don't own enough of it to do anything with it. You can't sell it without permission and in most of these new developments you can't even paint the interior without permission.

    I understand how much property costs in London but the obsession with getting onto the property ladder at all costs is why so many people are up to the eyeballs in debt.
  • Former MemberFormer Member Posts: 1,876,323 The Mix Honorary Guru
    Kermit wrote: »
    The problem is that you're not really getting on to the property ladder in any meaningful sense. You own part of the property and therefore have the responsibilities of being the owner. But you don't own enough of it to do anything with it. You can't sell it without permission and in most of these new developments you can't even paint the interior without permission.

    I understand how much property costs in London but the obsession with getting onto the property ladder at all costs is why so many people are up to the eyeballs in debt.

    Yup - not disputing that, but honestly, for what the figures worked out, it would have been out a lot cheaper than purely renting for one I was looking at with my girlfriend. I am not eligible, as I already own, but Emilia was interested. We eventually decided against it, and went for something different.

    Some people hate the thought of renting, and so if this works out cheaper AND they get to own a bit of the property, then why not?

    It's all about what people are wanting.


    Edited to add - I thought I would quantify the figures:

    Rent on a similarly sized/specced place was around £300-350/week

    Part ownership = approx £350 for the mortgage and £400 for the rent per MONTH.

    So, per calendar month the costs would have been:

    Renting: £1300 - 1500/month
    Part ownership: £750 (approx) per month. There were the service charges on top (standard for a modern apartment block) which were an extra £150 a month which you won't pay when renting, but still, that would have been a £400-600 difference every month.

    You simply can't argue with those figures, and even though you certainly don't have the full freedom of owning something fully, for some people the saving and the thought of owning something will be more than enough (and rightly so, IMO!).
  • Former MemberFormer Member Posts: 1,876,323 The Mix Honorary Guru
    Yeah but you also get all the repair bills
  • Former MemberFormer Member Posts: 1,876,323 The Mix Honorary Guru
    The repair bills *should* be minimal though as they are nearly always newly built flats and therefore covered by a builders guarentee thing fort the first few years.

    However i would say that if you can possibly possibly do so buying outright is your best plan even if it means living in a tiny flat in a crap area for a few years - as you will end up with more money at the end of the day - especially as many party buy part rent places seem to be costed far higher than they might actually be worth when you come to sell - and then you own hardly any of it so even if the price of your flat has gone up in value you will only realise 25% of that gain which means that if you need to move somewhere larger in future you might find it really hard to do so.

    You also have minimal opportunity for adding value to your property as well - for example we almost doubled the value of our first flat in 3 years by turining it from a studio into a small 1 bedroomed flat and the house we now own has more than doubled in value in the last 5 years - even taking into account the recent downturn in housing prices.
  • Former MemberFormer Member Posts: 1,876,323 The Mix Honorary Guru
    g_angel wrote: »
    Edited to add - I thought I would quantify the figures:

    Rent on a similarly sized/specced place was around £300-350/week

    Part ownership = approx £350 for the mortgage and £400 for the rent per MONTH.
    ...
    You simply can't argue with those figures

    I'm skeptical about getting a mortgage at that sort of rate for any long period of time. My mortgage is for a similar amount as a London-region part-purchase and I'm not paying that amount. It might be great as a 12-month introductory offer but not in any long-term way.

    Plus, as has been pointed out, you have the repair bills and associated costs of being the majority owner.

    Especially at the moment, I think buying without proper costings is a mistake. If you're renting and you lose your job, housing benefit kicks in immediately. It can be 12 weeks or longer for assistance on a mortgage and things with housing benefit are complicated hugely on part-purchase arrangements. I've seen too many people, before the recession hit, who've been stung on these deals.
  • Former MemberFormer Member Posts: 1,876,323 The Mix Honorary Guru
    Kermit wrote: »
    I'm skeptical about getting a mortgage at that sort of rate for any long period of time. My mortgage is for a similar amount as a London-region part-purchase and I'm not paying that amount. It might be great as a 12-month introductory offer but not in any long-term way.

    Plus, as has been pointed out, you have the repair bills and associated costs of being the majority owner.

    Especially at the moment, I think buying without proper costings is a mistake. If you're renting and you lose your job, housing benefit kicks in immediately. It can be 12 weeks or longer for assistance on a mortgage and things with housing benefit are complicated hugely on part-purchase arrangements. I've seen too many people, before the recession hit, who've been stung on these deals.


    Actually, this wasn't on any crazy introductory offer - the amount you would be buying equated to £62,500 (25%) and with a 15% deposit (which my girlfriend has) the payments were at the higher end of the scale (I costed that in).

    To agree with Wyetry - indeed, the repair costings should be minimal, and you are covered by the initial guarantees. Kind of a non-factor, really, as you would end up paying the same repairs as if you bought out right.

    I also agree that if you can afford to buy outright, it is by far the better option, but many simply can't.

    I'll be quite straight with you - the place we were looking at was a very large (850 Sq Ft) apartment and was priced at £250,000. No way on earth is that overpriced for London. Zone 2. There would be no way in hell I would allow my partner to buy into something I would consider to be a rip off. Some will possibly be overpriced, but not all. :)
  • Former MemberFormer Member Posts: 1,876,323 The Mix Honorary Guru
    Kermit wrote: »
    The problem is that you're not really getting on to the property ladder in any meaningful sense. You own part of the property and therefore have the responsibilities of being the owner. But you don't own enough of it to do anything with it. You can't sell it without permission and in most of these new developments you can't even paint the interior without permission.

    I presume that must vary from scheme to scheme. I think we're certainly allowed to paint and decorate it. We could sell it whenever we want, but it would have to be through Genesis Homes unless they fail to sell it within 4 weeks (I think; can't remember the time-frame), in which case we can sell it through any normal estate agents.
  • Former MemberFormer Member Posts: 1,876,323 The Mix Honorary Guru
    This was what we looked at:

    http://issigonis.westpointw3.com/
  • Former MemberFormer Member Posts: 1,876,323 The Mix Honorary Guru
    i think they are a bad idea.

    my friend has just bought a flat in leeds (out of all places - when it comes to selling, it will probably never sell because there are SO many that aren't being sold) and she's got a 75% mortgage and a 25% loan from barratts for the deposit. she has to pay the 25% deposit over 10 years.

    it basically means that she can't move for 10 years until it is paid unless she finds the money to pay it off early.

    i can't see her 1. having the money to pay it off or 2. wanting to live there for 10 year so she's pretty much stuck there now!
  • Former MemberFormer Member Posts: 1,876,323 The Mix Honorary Guru
    i think they are a bad idea.

    my friend has just bought a flat in leeds (out of all places - when it comes to selling, it will probably never sell because there are SO many that aren't being sold) and she's got a 75% mortgage and a 25% loan from barratts for the deposit. she has to pay the 25% deposit over 10 years.

    To be fair that is a slightly different set up from shared ownership....
  • Former MemberFormer Member Posts: 1,876,323 The Mix Honorary Guru
    i guess so yeah. sorry!
  • Former MemberFormer Member Posts: 1,876,323 The Mix Honorary Guru
    g_angel wrote: »
    I also agree that if you can afford to buy outright, it is by far the better option, but many simply can't.

    I think you slightly missed my point. In my opinion if you can't afford to buy outright you should rent. Owning 25% of something is neither use nor ornament and just makes things a whole lot harder if something goes wrong.
  • Former MemberFormer Member Posts: 1,876,323 The Mix Honorary Guru
    Kermit wrote: »
    I think you slightly missed my point. In my opinion if you can't afford to buy outright you should rent. Owning 25% of something is neither use nor ornament and just makes things a whole lot harder if something goes wrong.

    But if the whole deal actually works out (significantly!) cheaper to part own?
  • Former MemberFormer Member Posts: 1,876,323 The Mix Honorary Guru
    Very interesting. We have decided to wait a year an a half anyway! X
  • Former MemberFormer Member Posts: 1,876,323 The Mix Honorary Guru
    g_angel wrote: »
    But if the whole deal actually works out (significantly!) cheaper to part own?

    Around here I've really not seen any deals that are significantly cheaper than renting. The rents charged tend to be simply a proportion of the market rent (i.e. if they own 75% of the property they charge you 75% of the market rent) and with the LIBOR back over 5% the cheap mortgage deals are harder to find too.

    The property market in London is different because rents are sky high, but I've not seen any deals that are any good.

    It's not as bad as people buying their council house on sub-prime mortgages though. That just makes the baby Jesus weep.
  • Former MemberFormer Member Posts: 1,876,323 The Mix Honorary Guru
    Kermit wrote: »
    Around here I've really not seen any deals that are significantly cheaper than renting. The rents charged tend to be simply a proportion of the market rent (i.e. if they own 75% of the property they charge you 75% of the market rent) and with the LIBOR back over 5% the cheap mortgage deals are harder to find too.

    The property market in London is different because rents are sky high, but I've not seen any deals that are any good.

    It's not as bad as people buying their council house on sub-prime mortgages though. That just makes the baby Jesus weep.

    Aye - I know what you're saying. The figures I posted as an example are genuine though - the rent paid was 2% of the outstanding equity = £3750/annum.

    Certainly it will be less attractive Ooop North, but in London it can make sense :)

    Sub-prime = :eek2:
  • Former MemberFormer Member Posts: 1,876,323 The Mix Honorary Guru
    i think they are a bad idea.

    my friend has just bought a flat in leeds (out of all places - when it comes to selling, it will probably never sell because there are SO many that aren't being sold) and she's got a 75% mortgage and a 25% loan from barratts for the deposit. she has to pay the 25% deposit over 10 years.

    it basically means that she can't move for 10 years until it is paid unless she finds the money to pay it off early.

    i can't see her 1. having the money to pay it off or 2. wanting to live there for 10 year so she's pretty much stuck there now!

    Does she also realise that she won't pay 25% of the price now (probably quite cheap) but 25% of the price either when she sells it, or in ten years, whichever comes first, which will almost definitely be more?

    Builders are scoundrels.
  • Former MemberFormer Member Posts: 1,876,323 The Mix Honorary Guru
    g_angel wrote: »
    Sub-prime = :eek2:

    Had one client last year who was paying 11%. On a mortgage. For a council house.

    He gave up a secure tenancy (i.e. you can only get kicked out if you set in on fire) for that.

    Taken in by the 'property ladder' bullshit hook line and sinker.
  • Former MemberFormer Member Posts: 1,876,323 The Mix Honorary Guru
    Kermit wrote: »
    Had one client last year who was paying 11%. On a mortgage. For a council house.

    He gave up a secure tenancy (i.e. you can only get kicked out if you set in on fire) for that.

    Taken in by the 'property ladder' bullshit hook line and sinker.

    Holy hell crap!! :shocking: :shocking: :eek: :crazyeyes :mad:

    That's just plain stupid.
  • Former MemberFormer Member Posts: 1,876,323 The Mix Honorary Guru
    That's the level of financial literacy we have in this country. You have the greedy estate agent and the greedy IFA selling products that are completely unsuitable. But people seem to think that if someone will lend them the money then they can afford it.

    Nothing else explains the rise of Shite House, a shop I (and half the people I speak to from CABx) would quite cheerfully petrol bomb.
  • Former MemberFormer Member Posts: 1,876,323 The Mix Honorary Guru
    Kermit wrote: »
    That's the level of financial literacy we have in this country. You have the greedy estate agent and the greedy IFA selling products that are completely unsuitable. But people seem to think that if someone will lend them the money then they can afford it.

    I can't argue with that - it's a shocking state of affairs.
    Nothing else explains the rise of Shite House, a shop I (and half the people I speak to from CABx) would quite cheerfully petrol bomb.

    Unfamiliar with this place, but doesn't sound great!
  • Former MemberFormer Member Posts: 1,876,323 The Mix Honorary Guru
    Yes i've no idea what shope he is talking about either - but i'm feeling currently quite smug that the husband and i decided to not move to a bigger house like most of our brothers/sister in laws but to stay put in our not exactly small 3 bedroomed terrace house and pay of our mortgage quicker so fingers crossed i should be mortgage free within the next 10 years.
  • Former MemberFormer Member Posts: 1,876,323 The Mix Honorary Guru
    g_angel wrote: »
    Unfamiliar with this place, but doesn't sound great!

    A shop called Bright House. A bit like Argos except everything is on credit, typical APR in the region of 30-40%. There's loads of them about but, bizarrely, they're never in wealthy areas.

    For all those who whinge about benefit claimants with plasma tellies, they've all got them from Bright House.
  • Former MemberFormer Member Posts: 1,876,323 The Mix Honorary Guru
    Flippin heck thats awful - but yes financial literacy even amongst people who are well educated is shockingly bad - I remember everyone at university rushing out to buy giant electrial items the day that their loans came through
  • Former MemberFormer Member Posts: 1,876,323 The Mix Honorary Guru
    That's not the worst. Got a catalogue through the door last week for 'Buy as you Watch'. You have a little box attached to your telly and if you don't put the money in you can't watch it. Typical APR 59.9%.

    The best I've seen was a company called Log Book Loans. Payday advances secured on your car, a snip at 399% APR.
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