Shared Ownership gives buyers the opportunity to purchase a share in a new build or second-hand property. The purchaser pays a mortgage on the share they own and pays rent, typically to a housing association, on the remaining share. As the purchaser only needs a mortgage for the share they are purchasing, the amount of money required for a deposit is a lot lower when compared to the amount that would be required when purchasing outright.
The purchaser normally has the option to increase their share during their time in the property via a process known as “staircasing”. In most cases, the purchaser can “staircase” their way to 100% ownership.
Shared Ownership is essentially for people who would like to own their own home but cannot afford to buy on the open market. The cost of ownership is reduced because:
- Rent is less than the rate charged on the open market.
- You can start with a little as 25% share.
- Your deposit is 5% of the price of the share, not of the whole property.
- Stamp duty can generally be deferred until your share reaches 80%.
- Shared Ownership properties can often be found in private developments meaning affordable housing can be found in a wide range of locations
There are some general eligibility requirements that anyone wishing to buy a Shared Ownership home must meet namely:
- 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.
- Normally need to be a first-time buyer or not currently own another property.
- Show you are not in mortgage or rent arrears.
- Be able to demonstrate that you have a good credit history.
- Have savings to cover the costs of buying a home (survey, legal fees etc.)
- Have at least a 5% deposit of the share value you are purchasing.
When considering Shared Ownership as an option towards property ownership, the first step is to check the eligibility criteria. In addition to the above, it is likely that the Housing Association will have some of their own terms regarding affordability and priority. For example, recently in Lechlade, there was a requirement to already be a resident within the local area.
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