A GUIDE TO SHARED OWNERSHIP AND STEPPING ONTO THE PROPERTY LADDER

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Mar 31, 2017

House hunting on a tight budget and struggling to find that perfect dream home? There are several options available out there for people just like you, from saving for years to the help to buy scheme (see more here) to loaning off parents. Shared Ownership is, of course, another way a house can be brought and in recent times is becoming increasingly popular. You may have heard of Shared Ownership before but may not know what it is, so…

What’s exactly is Shared Ownership?

It is a part buy, part rent government backed scheme which allows usually allows first-time buyers to purchase anywhere between 35-75% share of a new home and pay rent on the remainder. An ideal scenario would be if you’ve found the perfect home, it is slightly over budget and you can’t afford to take out a mortgage on the full asking price. Like a normal property purchase, you will still need a deposit, normally something around 5% of the property value.

What’s involved?

Let’s say you can only borrow a mortgage of £150,000 due to your own personal circumstances (income, the size of deposit etc.) and the house you want costs £250,000. Going down the route of Shared Ownership would allow you to buy half of the property and the organisation you’re buying from would own the other half. You would then pay a small monthly rent on the 50% share you don’t own and put forward a deposit of 5%, this leaves a maximum mortgage level of 45% (£112,500)

You can then ‘staircase’ the share you have in the property and buy more shares or even buy outright as your go on.

Who’s Eligible?

Shared ownership supports buyers would otherwise struggle to buy a home on the market. You must be a first-time buyer, in permanent employment, live and work locally or have family connections in the area you wish to buy. You must have a household income of up to £80,000.

There are also specific schemes available to older people and people with disabilities. Briefly, in order to be applicable to the Older People’s Shared Ownership, you must be aged 55 or over. If you have a long-term disability, Home Ownership for People with Long-Term Disabilities (HOLD) can help you buy any home that’s for sale on a Shared Ownership basis.

What costs are involved?

As well as the 5% deposit, you will also need to pay a reservation fee, mortgage valuation/survey, and conveyancing fees and stamp duty – much like a normal buy. Other costs that may be involved consist of moving home – for example, hiring a removal firm.