Shared ownership is one that’s government-backed as a government-backed scheme that enables first-time buyers to buy property.
It’s designed for those who cannot afford the full market value and instead, purchase a share of a property, anywhere between 10-75% ownership, while paying a reduced rent on the remainder.
This effectively lowers deposit requirements, making it a more affordable and accessible option for many. Here’s everything you need to know if you’re a beginner to shared ownership as a first-time buyer.
The Key Aspects of Shared Ownership
When it comes to shared ownership, there are some key aspects worth knowing about. These include the following:
Ownership and rent
You should buy a share via mortgage or savings, and also pay subsidised rent on the rest to a housing association or a local council.
Staircasing
You can also buy more shares over time. This is a process called staircasing, eventually owning 100% of the home.
Property type
These homes are always leasehold, but you can own the freehold once you’ve hit 100% ownership of the property.
Costs
In addition to mortgage and rent, you may end up paying a monthly service charge for maintaining communal areas.
How to Be Eligible and the Requirements
So, how do you become eligible for shared ownership? What are the requirements?
- Income- Your household must earn £80,000 a year or less outside of London. For inside London, it’s £90,000.
- Status – You must be a first-time buyer, a former homeowner who can’t afford to buy now or already a shared owner who is looking to move.
- Rent/Mortgage – You must pass a financial assessment to prove that you can afford the payments required.
Advantages and Considerations
There are considerable advantages that come from shared ownership, as well as considerations to make before committing to such a type of property purchase.
With shared ownership, a lower deposit will be required for the share being purchased. This is usually around 5%. You’ll gain the benefits of homeownership, such as benefits from any increase in the property’s value, for example.
However, you are responsible for all maintenance and repair costs, though under the new model, landlords may be able to contribute to some repairs for the first ten years.
How to Start the Process
To start the process, there are a few steps to take to make this affordable home buying work for you.
1. Check your eligibility
You’ll need to confirm that you fit the criteria on the official government website, where there’s a Shared Ownership guide, providing all the necessary details on eligibility.
2. Find a home
Finding a home is the next step. You can find eligible properties via the Share to Buy website.
3. Seek financial advice
Finally, consult a broker who has experience in shared ownership to understand the affordability you have, as well as the monthly costs that would come as part of shared ownership status.
Hopefully, with this help, you’ll be able to explore the option of shared ownership if it’s the right fit for you.