How shared ownership can be the staircase to owning a home
Shared ownership is now an established part of the UK’s housing landscape and accounts for an increasing proportion of new-build affordable housing.
These schemes are basically a cross between buying and renting, and are mainly aimed at first-time buyers. They can offer a win-win situation for those looking to get onto the first rung of the housing ladder who can often feel priced out of the property market.
In essence, shared ownership involves a buyer purchasing a share of a home (typically between 25% and 75%) whilst a housing provider – usually a housing association – retains ownership of the remaining share. Buyers usually obtain a mortgage to purchase the share they buy, and pay rent on the share they don’t own at a reduced rate. What is particularly attractive is the option that exists to buy a bigger share in the property at a later date, a process known as ‘staircasing’.
You should be eligible to buy a home through a shared ownership scheme if your household income is £80,000 or less outside London and £90,000 a year or less in London. People with long-term disabilities and those aged over 55 are also eligible, although with Older People’s Shared Ownership, you can only buy 75% of your home, but once you own 75% you won’t pay rent on the remaining share.
You will also need to be a first-time buyer or a previous homeowner who cannot afford to buy now. Alternatively, you will need to be renting from a council or housing association.
What are the benefits
- With house prices remaining high, these schemes provide welcome access to property ownership.
- You can buy a share in a home with as little as a 5% deposit.
- Staircasing’ means you have the opportunity at a later date to buy a bigger share of your home until you own 100% of it.
- Buying using shared ownership can work out cheaper than simply renting or paying a mortgage on the whole property.
- You can sell whenever you want to, and you’ll benefit from any rise in the value of your share of the property. Alternatively, you can buy the remaining share and then sell the whole property.
Taking legal advice
Buying a shared ownership property is not as straightforward as other property purchases, so it pays to instruct a solicitor who has experience of dealing with this type of scheme. The housing association concerned will provide a Memorandum of Sale to your solicitor or conveyancer, and they will be able to explain how it all works in detail.
They will cover important points such as how shared ownership schemes operate (and schemes vary from provider to provider), the implications of a shared ownership mortgage, what rights you have to acquire a further share of the property at a later date, and whether you will be liable for stamp duty on your purchase.
Homes under shared ownership are always leasehold (although if you purchase 100% through staircasing, then you may be able to acquire the freehold if you’re buying a house) so your solicitor will also check out the terms of the lease on your behalf.
If you’re considering buying a property in this way, then do get in touch. We have in-depth experience gained in over a decade of dealing with shared ownership schemes, offer fixed fees, and have already helped over 850 people get onto the property ladder using this route. To find out more, please contact Sheri-Anne Mizon, Partner and Head of Residential Property (Loughton) by calling 0203 871 0007, or by emailing her at Sheri-Anne.mizon