SHARED OWNERSHIP

For many aspiring homeowners in the UK, the dream of owning a property can seem out of reach amidst rising house prices and stringent lending criteria. However, there's a lesser-known avenue to homeownership that's gaining traction – shared ownership. In this blog post, we'll explore what shared ownership is, how it works, and its benefits and considerations for prospective buyers.

What is Shared Ownership?

Shared ownership is a government-backed scheme designed to help people, particularly first-time buyers, get onto the property ladder. It allows individuals to purchase a share (usually between 25% and 75%) of a property, paying a mortgage on the share they own and a reduced rent on the remaining share. The initial share is purchased with a deposit and a mortgage, and buyers have the option to gradually increase their ownership share through a process called "staircasing."

How Does Shared Ownership Work?

Here's a simplified overview of how shared ownership works:

Find a Shared Ownership Property: Prospective buyers can browse shared ownership properties listed by housing associations or developers. These properties are typically new-build or resale homes.

Assess Affordability: Buyers must meet certain eligibility criteria, including income caps and being unable to afford to buy a home on the open market. They'll need to undergo a financial assessment to determine affordability.

Purchase a Share: Once approved, buyers can purchase a share of the property using savings and a mortgage. The share they buy will depend on their budget and the options available for the property.

Pay Mortgage and Rent: Buyers pay a mortgage on the share they own and a reduced rent (usually at a below-market rate) on the remaining share owned by the housing association or developer.

Staircasing: Over time, buyers have the option to purchase additional shares in the property, increasing their ownership percentage. This can be done in increments until they own 100% of the property, at which point they no longer pay rent.

Selling the Property: If buyers decide to sell their shared ownership property, they can do so through a process known as resale. The housing association or developer usually has the right of first refusal to find a buyer.

Benefits of Shared Ownership:

Lower Deposit: Shared ownership typically requires a smaller deposit compared to buying a property outright, making it more accessible for first-time buyers.

Reduced Monthly Costs: Monthly mortgage payments and rent on a shared ownership property are often lower than renting a similar property privately or paying a full mortgage on a comparable home.

Opportunity for Homeownership: Shared ownership provides a pathway to homeownership for individuals who may struggle to afford to buy a home on the open market.

Stability and Security: Unlike renting, shared ownership offers greater stability and security, allowing individuals to put down roots and build equity in their home.

Considerations for Prospective Buyers:

Eligibility Criteria: Buyers must meet certain eligibility criteria, including income caps and being unable to afford to buy a home on the open market.

Additional Costs: In addition to mortgage payments and rent, buyers should budget for other costs such as service charges, maintenance, and ground rent.

Limited Choice: The availability of shared ownership properties may be limited, particularly in certain areas or for specific property types.

Staircasing Costs: Buyers should consider the costs involved in staircasing, including legal fees, valuation fees, and potentially higher mortgage payments.

Is Shared Ownership Right for You?

Shared ownership can be a steppingstone to homeownership for individuals who are struggling to get onto the property ladder through traditional routes. However, it's essential to carefully consider your financial situation, long-term goals, and lifestyle preferences before committing to shared ownership.

In conclusion, shared ownership offers a viable path to homeownership for many aspiring buyers in the UK. By providing lower upfront costs, reduced monthly payments, and a pathway to increasing ownership over time, shared ownership opens doors to homeownership that may otherwise remain closed. If you're ready to take the first step towards owning your own home, shared ownership could be the key to unlocking your property dreams.

Reach out to our friendly team for further advice and guidance.