Introduction to Shared Ownership

For many people, the dream of owning their own home can seem impossible, especially for those who are first-time buyers. This is where Shared Ownership comes in. Shared Ownership is a government-backed scheme that helps first-time buyers and those who cannot afford to buy a home outright to get onto the property ladder. In this article, we will explore how Shared Ownership works, who is eligible, and the advantages and disadvantages of this scheme.

How does Shared Ownership work?

Shared Ownership is a scheme that allows you to buy a share of your home, usually between 25% and 75%, and pay rent on the remaining share to a housing association. You will need to take out a mortgage to buy the share of the property that you can afford, and you will be responsible for paying the mortgage, as well as rent on the share of the property that you do not own.

Over time, you can buy more shares in the property, a process known as "staircasing." As you buy more shares you pay less rent, until eventually, you may be able to buy 100% of the property and become the sole owner.

Who is eligible for Shared Ownership?

Shared Ownership is available to people who meet certain criteria. To be eligible for Shared Ownership, you must:

• Be at least 18 years old
• Have a household income of less than £80,000 (or £90,000 in London)
• Not able to afford a home suitable for your housing needs in the open market
• Have a good credit history and be able to afford the regular payments.

Advantages of Shared Ownership for first-time buyers

There are many advantages of Shared Ownership for first-time buyers. Some of the most significant advantages include:

• Lower upfront costs: Since you only have to buy a share of the property, the upfront costs of buying a home are significantly lower.
• Ability to get on the property ladder: Shared Ownership allows you to get on the property ladder even if you cannot afford to buy a home outright.
• Flexibility: Shared Ownership allows you to increase your ownership share over time, which can give you more control over your home.
• Reduced monthly costs: Rent on the share of the property that you do not own is usually lower than the mortgage payment you would make on the entire property. This is because there is a government imposed rent cap.

Disadvantages of Shared Ownership for first-time buyers

While there are many advantages to Shared Ownership, there are also some disadvantages. Some of the most significant disadvantages include:

• Limited choice of properties: Shared Ownership properties are often limited, and you may not be able to find a property in the area you want to live.
• Higher monthly costs: Although the rent on the share of the property that you do not own is lower than a mortgage payment, you will still have to pay both, which can be higher than paying just a mortgage payment.
• Restrictions on what you can do with your home: Shared Ownership properties often come with restrictions on what you can do with your home, such as subletting or making major alterations.
• Mostly New Builds: Shared Ownership properties are mostly in newly developed blocks, so if that’s not what you’re after then the scheme may not work for you.

How to buy a Shared Ownership property

If you are interested in Shared Ownership, the first step is to contact a Housing Association that offers shared ownership properties. They will be able to give you more information about the properties they have available and the eligibility criteria. Alternatively, you can find listings on websites such as ShareToBuy.