Pros & Cons Of Co-Ownership Housing

What Are The Positive & Negatives Of Co-Ownership Housing?

We’ve had a lot of interest in co-ownership housing since we first launched it 2 years ago with 3, 4-bedroom homes in Kirkbride Rd, Mangere Bridge. The First Home Buyer’s Club has been working with YouOwn (formerly Co-Own) ever since and have been successful in helping more than 2 dozen families into their first home.

However as co-ownership is not widely known as a form of home ownership in New Zealand, some looking to buy their first home have their doubts about its credibility.

So in the interests of presenting these facts, so first home buyers can assess it as an option for themselves, here are the pros and cons of co-ownership housing.

Pros Of Co-Ownership Housing:

Co-Ownership gets you on the property ladder as an owner-occupier without over-committing yourself.
YouOwn is a passive owner; it is your house to do what you wish.
The deposit is lower at 5% compared to 20% when buying a house on your own.
Your monthly repayments are cheaper than a low equity loan.
The occupancy charge does not change for five years and is then indexed by the change in the value of the house.
After 5 years you can increase the amount of the house until you own 100%.
The amount you pay to increase your ownership is set by independent valuation (usually your lender’s valuer).
You can sell your house on the open market.
You can rent your house out.

Cons Of Co-Ownership Housing:

Not all lenders offer home loans for Co-Ownership. However, YouOwn works with both KiwiBank and BNZ for co-ownership home loans.
The selection of houses is limited to new builds.
If the value of the house goes down, the value of your share goes down.
You pay 100% of the rates and insurance.
You can’t sell your house in the first five years unless your circumstances change.
You pay for the valuation.

Co-Ownership In Brief:

Co-Ownership gives you the opportunity to buy the house at an affordable price and be on the home ownership ladder.
You purchase a 75% share of the property, YouOwn invests the other 25% of the purchase price.
You get all the benefits of ownership without having to fund the entire purchase price.
Your house is on its own title.
There is a charge for the co-ownership share, this is payable monthly and does not change for five years.
You buy what you can afford now and the rest when you are able to.

Criteria For Co-Ownership Housing:

Combined household income of $110,000+
Deposit from savings and/or KiwiSaver of at least 5% of the purchase price.
Be a New Zealand Citizen or Permanent Resident.
Have a clean credit history.
Little or no debt (less than $15,000)
Comfortable with repayments on a mortgage of $500,000 or greater (we can help you determine if you are able to should you decide to proceed with the opportunity).
Be buying the property to live in.