Shared ownership is a great way for all kinds of people to afford their own, new home at a fraction of the price.
How does it work?
- The shared ownership scheme allows you to purchase a share of a property and is usually part-funded by a mortgage.
- The size of the share that you can buy is between 12.5% and 75% of the value of the property, dependent upon your individual circumstance.
- Shared owners pay a monthly rent on the remaining share that has not been purchased to the housing association.
- For example: you may wish to purchase a 25% share of a property. The remaining 75% share will be owned by the housing association and you will pay a reduced rate of rent on this share.
- Once you have moved in and you can afford to buy a larger share in the property e.g. 10%, 25% then in most cases you can keep doing so until you own 100% of the property outright - this is known as ‘staircasing’.
Who is it for?
- Households whose income is less than £60,000 per year
- People who are unable to buy a property outright on the open market without assistance e.g.
- Up to four people can become joint owners but all joint applicants must individually and jointly meet the eligibility criteria.
What are the benefits of buying a shared ownership home?
- Buying a shared ownership property can be cheaper than renting.
- The scheme is open to all kinds of people not just first time buyers or key workers.
- A smaller deposit is required than with an outright purchase.
- You only need to secure a small mortgage.
- Small mortgages represent less risk for you and the mortgage company.
- The rent on the share that you don’t buy will be subsidised.
- As your income increases, you can choose to buy more shares in the property.
- Some schemes enable you to purchase 100% of the shares.
- Shared ownership properties are available throughout the UK so if you are re-locating there could be a property development available.
- All the properties are either brand new or refurbished to a quality standard.
- Whatever your personal circumstance, your feet will firmly be on the first rung of the housing ladder.
- As the property market begins to rise again the value of your property could increase.
What costs should I consider?
The initial costs of a shared ownership home are as follows:
- Property survey
- Legal fees
- Stamp duty
- Mortgage arrangement fees
- Removal costs
What are the running costs?
- Mortgage repayments
- Council tax
- Service charge
- Heating, lighting, water bills
Remember you will also need to allow for every day essential items e.g. food, clothes, etc.