What is Shared Ownership?
You’ve probably heard about shared ownership to help get first-time buyers on the property ladder, but you’re not quite sure how it works. This is our quick guide to help you decide if it could work for you.
Shared Ownership is a part buy/part rent scheme.
You buy a share of the property and pay rent at a reduced rate on the share that you don’t own.
You can buy between 25% and 75% of a property and have the option to increase your share of the property in the future.
What are the benefits?
- A smaller deposit based on your share. For example, if you buy a 30% share of a property for £82,500, a 10% deposit will be £8,250.
- Lower monthly costs – subsidised rent means the combined monthly cost of your mortgage and rent can work out cheaper than if you had bought the property outright with a mortgage alone. However, watch out for hidden additional service charges.
- Home ownership – you will own part of the value of your home, an investment in your future.
What can I buy?
Most of the homes available for Shared Ownership are new builds; some are properties being sold by housing associations.
Start your search here:
The Share to Buy website https://www.sharetobuy.com/ – a national property portal, also listing Help to Buy, rental and other affordable home ownership properties.
Homes for Londoners https://www.london.gov.uk/what-we-do/housing-and-land/homes-londoners/search/
Am I eligible?
Shared Ownership schemes are aimed at people who don’t earn enough to buy a home outright.
They vary from country to country; in England:
- You must be a first-time buyer or used to own a home but cannot afford one now.
- Have a combined household income of less than £80,000 (in London it is less than £90,000)
- Military personnel are given priority over other applicants. Some local authorities may also have their own priority groups based on local needs.
You can find details for the schemes in Wales, Scotland and NI here:
How do I apply?
You’ll need to contact the Housing team at your local council or housing association to find out if the scheme is available in your area.
If it is, you’ll need to find out if you can get a mortgage, find a lender that will lend on a Shared Ownership property and then go through the normal processes involved in applying for a mortgage.
Do the math! Make sure you can afford all the costs involved in buying and owning your own home. It’s not just the mortgage; you need to consider mortgage and solicitor fees, moving costs, stamp duty, insurance, property maintenance fees and more!
Are there any drawbacks?
All shared ownership homes in England are offered on a leasehold only basis. That means you buy the property for a fixed period (usually 99 or 125 years) when the lease ends the property returns to the person or company that owns the freehold.
But the important thing to remember is that Help to Buy Shared Ownership is a stepping stone to owning your first property. Check out our Shared Ownership Pros and Cons for more info.