What is Shared Ownership?
Shared Ownership properties have certainly become a more attractive option over the last few years due to the struggle many people and families face to save the deposits needed to purchase a property outright.
In this blog, we take you through everything you need to know about this scheme and whether it's the right option for you.
What is Shared Ownership?
Simply put, shared ownership schemes are a blend of buying and renting a property. Mainly aimed at first-time buyers (but not exclusively), a shared ownership scheme allows you to buy a percentage share of a property, with a housing association owning the remaining share.
The main goal of the scheme is to help people who are otherwise unable to buy a suitable home to become homeowners.
How does it work?
As we mentioned above, the shared ownership scheme allows you to buy a share of a home instead of having to fund its entire cost. Depending on your circumstances and what you can afford, you can buy either a 25%, 50% or 75% share of a property.
The remaining share is owned by a housing association. For example, if you buy a 25% share, the housing association will own a 75% share.
You will pay a mortgage payment on the share that you own, whilst paying rent for the share you don’t own at a reduced rate. This payment to the housing association is known as an occupancy charge.
Even though you don't own your home outright through shared ownership, because you're living in the home, you're responsible for any other costs a homeowner would be expected to pay.
These include:
- mortgage payments
- factors costs
- insurance (home contents / building)
- repairs and maintenance
- council tax
- heating, lighting and water bills
- fixtures and fittings
As we mentioned above, when you enter a shared ownership agreement, you will buy either a 25%, 50% or 75% share in the home.
Once you have been living in the property for a year, you will have the option to increase your share in the property. This is called 'staircasing'. This would mean your occupancy charge would decrease and your mortgage payments would increase.
Who can buy a shared ownership property?
Different housing associations will have different application criteria and priorities when deciding who is eligible to purchase a shared ownership property.
However, generally speaking, priority will be given to:
- council & housing association tenants
- people with disabilities
- low income families
- first time buyers with limited housing alternatives
Selling a Shared Ownership property
When it comes to selling a shared ownership property, you can do this at any time, but you have to tell the housing association in writing that you want to move.
However, if you haven't 'staircased' to 100% ownership, there will be certain restrictions to adhere to, which can usually be found in your lease agreement with the association. This is to ensure the properties remain available to people in need of affordable housing.
Our property team has experience when it comes to buying and selling shared ownership properties. If you would like more information, don't hesitate to get in touch and see how we can help.