A guide to shared ownership

It might not seem the ideal way of getting on the property ladder but for more and more young people, it is the only way to make the move.

Getting a foot on the property ladder has become increasingly difficult for first time buyers and as a result, shared ownership is becoming more and more popular.

“It is the only option for some young people, so it is not surprising that the scheme has been expanded,” explains Robin Innis of Rolfe East in West London.

Here is OnTheMarket‘s guide taking you through everything you need to know about the scheme.

What is shared ownership?

Under shared ownership you buy a share of a property – between 25 per cent and 75 per cent – from a housing association.

You then pay the housing association an ‘affordable rent’, which is significantly less than a commercial rent, on the portion of the property you do not own.

There is a set of eligibility criteria for shared ownership schemes. First time buyers qualify but if your household is earning more than £80,000 a year, or £90,000 a year in London, you are not eligible.

Can I enter into shared ownership if I have previously owned property?

Even if you have owned property in the past, you could still be eligible for a shared ownership scheme in certain circumstances, for example, if you are recently divorced.

Over 55s can take advantage of the OPSO scheme (older people’s shared ownership scheme). The scheme can also be used by couples wishing to move to a larger property after having children.

How to the financials of shared ownership work?

You will need to put down a deposit – usually 10 per cent – on the share of the property you have decided to buy. You will also be liable for stamp duty, conveyancing fees and other costs associated with home ownership.

You should be able to take out a mortgage, subject to the normal credit checks by the lender on your shared ownership property, just as you would on a property you had bought outright.

What type of properties can be purchased via shared ownership?

Properties available through the shared ownership scheme are leasehold and, in most cases, are new build or relatively new developments in a cluster of other shared ownership properties.

You may have to pay service charges for the maintenance of the common parts on top of your rental and mortgage payments.

Would it be possible to one day own a shared ownership property outright?

Once you have a foot on the property ladder through the shared ownership scheme, you can steadily increase your stake in the housing market by increasing the proportion of your property which you own outright.

By a process known as ‘staircasing’, you can theoretically increase your share from 25 per cent to 50 per cent to 75 per cent until you own the property outright.

If you do get to own your home outright, you can sell it at your discretion – although the housing association must be given first refusal. Otherwise if you decide to move but still own only a share of the property, the housing association will put it up for resale and find a buyer.

What is the biggest positive about shared ownership?

The single biggest attraction of shared ownership is financial. You will be able to get a foot on the housing ladder sooner than you otherwise would have done.

You are also likely to find yourself in a community of like-minded people who have chosen the shared ownership option for the same reasons.

What is the biggest negative about shared ownership?

On the downside, because you do not own the property outright, you will not be able to make the kind of alterations that you might want without the permission of the housing association, which acts as your landlord.

You will be part-owner and part-tenant without the independence that comes with outright ownership.

The shared ownership scheme will not suit everyone and you will need to do your sums carefully before taking the plunge, just as you would if you were buying a property outright. But for Generation Rent, it offers an exciting alternative path to home ownership.

sharetobuy.com has lots more information on shared ownership.

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