What is Shared Ownership and Is It Right for You?
Shared ownership is a government scheme introduced to help people get onto the property ladder. It can be an affordable way for people to buy a home, and potentially a great option for those who cannot afford a property outright. In this blog post, we will look at what shared ownership is, how it works, and whether or not it might be the right option for you.
What is shared ownership?
Shared ownership is a great way to help you get onto the property ladder without purchasing a home outright. With shared ownership, you buy a share of the house between 10% and 75%, with the remainder owned by your landlord, e.g. a housing association.
You will then pay rent to your landlord for the share they own, as well as monthly ground rent and service charges towards any communal areas. It’s an affordable way of owning a property and provides some financial security. This makes it one of many routes worth considering when buying your first home.
How do you buy your share?
Depending on the company selling the shared ownership, you can buy between 10% and 75% of the property. To purchase your desired share, you may need a 5-10% deposit up front to secure the property. To buy the rest of your share you can use savings, or get a mortgage.
Additionally, there’s always the option for ‘staircasing’, which means that you can purchase more shares in the future. If you do this, your rent payment will be based on the landlord’s remaining share, so the payment will reduce the bigger the share you own.
What type of homes can you buy?
Through shared ownership, you can purchase a new-build home or an existing property through a shared ownership resale scheme. If you have specific needs, such as a long term disability, these can be accommodated, e.g. if you need a ground floor flat.
Housing associations, local councils, and other organisations provide these homes, always on a ‘leasehold’ basis.
Who is eligible for shared ownership?
If you’re considering buying a property using the Shared Ownership scheme, then it’s important to know the eligibility requirements first. To be eligible for Shared Ownership, you must be at least 18 years old and have an annual household income of less than £80,000 outside of London or £90,000 in London.
Buyers are usually first-time buyers, but if not, you will need to demonstrate that you are in the process of selling your original home, as well as being unable to buy a suitable property on the open market.
Additionally, you will also need to provide evidence that there is no history of mortgage arrears or bad credit, plus that you can afford the regular payments and associated costs involved with buying a home.
Getting help with shared ownership
Here at Downton and Ali, we are experts in shared ownership and regularly help eligible customers to take advantage of it. If you are considering this option, contact us today to chat about how it works or if you have found a property you would like to buy and want to know if you’re eligible.
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