Publisher Alabaster

The Pros And Cons Of Shared Ownership

The Pros And Cons Of Shared Ownership

Shared ownership of property is a great route to take if you want to get onto the property ladder. However, before you jump at this chance, you should look at the pros and cons of this. Understanding the pros and cons of shared ownership will ensure that you make an informed decision regarding this type of investment of your funds.

The Pros

The primary benefit of shared ownership is the fact that you will be able to get onto the property ladder as an owner-occupier. This brings long-term stability, but without the overstretching of your finances that a full purchase would create. Additionally, you will not have to provide as large a sum as you would if you were buying outright.

Shared ownership will also decrease the monthly repayments that you have to make to your mortgage. As you are not asking for a large mortgage, you will find that the monthly payment is lower than what you would pay as rent. There is also the benefit that mortgages are more accessible with shared ownership even if you are on a lower wage.

The last benefit that you should consider is the security on tenure that comes with this. This security is unlike what you have with a private rental as you can live in the property for as long as you wish. As long as all the payments are made each month, you will not have to leave until you are ready.

The Cons

While there are a number of benefits to shared ownership, there are also a number of drawbacks. The primary drawback is the fact that not all lenders will offer mortgages for shared ownership. This means that you have to look harder for a mortgage, but it is important to note that this has been changing over recent years.

Another drawback is the fact that the property you purchase will be leasehold only. There are some properties that can become a freehold, but this will need to be agreed with the housing provider. The problem is that this will increase the costs of your ownership and might make this a less attractive offer.

The last drawback that you need to consider is the restrictions that could be placed on any home improvements that you want to complete. While you are able to internally decorate the property, the housing provider may bar you from certain home improvements. You will generally have to get permission before you make any structural changes to the property.

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Why Are There So Many Empty Luxury Homes In London?

The Belize building is located on London’s Old Street, one of the most expensive and fashionable districts in the United Kingdom.

An apartment there can cost more than the US $ 1.5 million.

And those who want to take one for rent, have to be prepared to pay about the US $ 3,000 per month.

But five years after it was finished, the building is half empty.

Local authorities confirm that 42% of the apartments in the building do not report a permanent occupant.

And officials blame a phenomenon known as “buy to leave.”

Wealthy investors, often foreigners, buy properties and leave them empty.

They do not even bother looking for tenants for their properties, says reporter Justin Parkinson of the BBC.

What is the logic?

The phenomenon of empty luxury homes contributes to a worrying trend in the United Kingdom. Although the country faces a severe housing deficit, in England alone, there are 610,123 vacant houses.

And, why would the owners have left those properties unused?

The mayor of London, Boris Johnson has criticized some owners for using houses as “gold bars in the sky,” but adds that imposing restrictions on investment in the city could be a mistake.

For most people, wasting the opportunity to collect massive amounts of rent money from their properties may sound like an expression of financial inconsistency.

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They Do Not Want “Second Hand”

But property expert Henry Pryor thinks differently. In fact, it ensures that the owners who leave their homes empty are being very calculating.

The cost incurred in leasing it, including the deterioration of the home, may exceed what is collected by the rent, he warns.

And, in the upper segment of luxury housing, many buyers are willing to pay more for the immaculate house.

“Some buyers do not want to live in a second-hand site; it’s the same as if they were buying a Rolls-Royce or an Aston Martin,” he says. “This applies even when they are buying a site that is five years old.”

Not all empty houses in London are luxury properties, explains the Empty Homes charity.

Many reflect everyday economic problems.

For example, the lack of money for the renovations that are required to rent the house.

Or when the property has been inherited by multiple owners, who need time to decide what to do with it, says Justin Parkinson of the BBC.

Immune to fines

Many warn of the adverse effect it has on the quality of urban life in an area when many homes are unoccupied.

Local authorities in England can charge an additional 50% in property tax to owners of empty houses for more than two years.

What is not necessarily going to convince the most affluent investors to act.

They also have the power to impose purchase orders on real estate.

For example, in 2009, in the very posh London district of Kensington, the authorities recommended the compulsory purchase of a house on a street where many properties are worth more than the US $ 1.5 million.

The measure was taken six years after the authorities were warned of a plague of mice in the area.

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