A West Midlands housing association is promoting its shared ownership offering by appealing to parents who are ready for their children to fly the nest.
The ‘Parent Power’ campaign launched by Bromford is encouraging parents who are “tired of finding dirty cups and plates left in bedrooms, of fighting for the bathroom and of overflowing washing piles” to consider shared ownership as a viable home buying option for their children.
“Many of us at Bromford are parents of older teenagers and young adults and can relate to frustrations of finding wet towels on the bathroom floor, and coming home to find all the lights have been left turned on,” director of sales and marketing, Catherine Jarrett said.
“Shared ownership is the perfect way for older children to unlock their own front door and make the move to a place they can truly call theirs, and for parents to reclaim their space. We're calling for parents to take back the remote, and let us at Bromford be the shared owner instead," Jarrett said.
Shared ownership is a more affordable way for first time-buyers to access the property ladder by allowing the purchase of a leasehold property for a lower deposit with a rent paid on the remainder.
Under the scheme, homebuyers pay a mortgage on the share they own and pay rent on the remaining share, meaning only a smaller deposit is required.
Don't make an emotional decision
West Midlands based adviser, Richard Bishop said it is great to see housing providers promoting the concept of shared ownership in the locality.
But Bishop, the managing director of PFEP Wealth Management, said it is important that people make sure they are fully aware of what they are signing up for before making any decisions.
“Taking on shared ownership does require some thought and any potential buyer should be aware of the differences between a conventional full outright purchase,” he said.
“Mortgages for share ownership can be more expensive than traditional lending products, as the lender perceives there to be increased risk.
“One of the main considerations for any potential purchase using share ownership is additional costs, which could include ground rent and further legal fees if they wish to further increase their stake, referred to as staircasing.”
Bishop pointed out that it is important to remember that every time staircasing takes place, the buyer will incur, valuation, legal, mortgage and possibly stamp duty fees.
“Often share ownership is offered on new build property which carries an inbuilt premium, much like buying a new car - once purchased there is an immediate reduction in the value,” he added.
“This could lead in the short term to negative equity, if the buyer wanted to move again in say three years.”
But once all of these factors are taken into consideration, Bishop believes shared ownership is a great opportunity for buyers with limited deposits and incomes.