Shared Ownership is an affordable home ownership scheme designed for people who can’t afford to buy a home outright on the open market. We have explained this scheme below in more detail including some frequently asked questions.
Shared Ownership gives first-time buyers and those that don’t own a home, the opportunity to purchase a share in a new build or resales property. The individual pays a mortgage on the share that they own, and pays rent to a housing association on the remaining share.
Because the person only needs a mortgage for the share they are purchasing, the amount of money required for a deposit is usually a lot lower compared to the amount needed to purchase the property outright.
The purchaser has the option to increase their share during their time in the property and this process is known as ‘staircasing’ and in some cases you can staircase to 100%. When this happens, the shared owner will no longer pay any rent, just their mortgage plus any additional costs such as service charges or ground rent.
Why should you buy a Shared Ownership property?
Shared Ownership is for people who would like to own their own home but can’t afford to buy on the open market. Shared Ownership costs are usually lower than other housing options for a number of reasons:
- The rent is less than the rate charged on the open market.
- You can start with as little as 25% share in some cases.
- Your deposit will be 5-10% of the price of the share, not of the full market value of the whole property.
- Stamp Duty Land Tax (SDLT) can generally be deferred until your share reaches 80%.
Many new developments have to include a percentage of housing dedicated to Shared Ownership homes, so they can often be found in private developments. This can help to put affordable housing in popular, sought-after areas.
What do I own when I purchase a Shared Ownership property?
Effectively you are buying a leasehold house or flat and this will be either a new build or resale home. As you can’t afford to buy the home outright, you are paying rent on the portion that you can’t afford.
Am I eligible for Shared Ownership?
The general eligibility criteria for Shared Ownership is:
- You must be at least 18 years old.
- Outside of London your annual household income must be less than £80,000.
- In London, your annual household income must be less than £90,000.
- Shared Ownership purchasers are often first-time buyers but if you do already own another home, you must be in the process of selling it.
- You should not be able to afford to buy a home suitable for your housing needs on the open market.
- You must show you are not in mortgage or rent arrears.
- You must be able to demonstrate that you have a good credit history and can afford the regular payments and costs involved in buying a home.
- You should have savings or be able to easily access at least £4,000 to cover the costs of buying a home (this is a guideline figure – the actual amount may vary).
- You will also need access to the deposit amount required. For Shared Ownership, this will usually be 5-10% of the equity share you are buying.
Please note: You should always check the eligibility required with the housing association selling the property, as they may have specific criteria.
How do I buy a Shared Ownership property?
First of all, we would advise you to check that you are eligible and also check with the housing association and local borough as they also have terms that need to be met.
Search for Shared Ownership properties and register your interest and contact housing associations for viewings.
When you have chosen the property, you will need to have the required deposit and get a Shared Ownership mortgage. We can help you obtain a Shared Ownership mortgage, by calculating how much you may be able to borrow.
For more information about Shared Ownership or to talk to us about a Shared Ownership mortgage, please get in touch.
*Please note: Your home maybe repossessed if you do not keep up repayments on your mortgage.