A quick guide to shared ownership

What is a ‘shared ownership’ scheme?

 The idea behind this scheme is to allow you to buy ‘a share’ of a property, with the rest paid as rent on the rest (at a reduced rate, on a monthly basis). It’s aimed mainly at first-time buyers who may only have a small deposit amount available and might be on a low income. The initiative is commonly run by housing associations (not-for-profit organisations). 

Commonly, the scheme is applicable to newly-built homes, but there will sometimes be properties which are being re-sold by housing associations.

  
The % share of a property that you buy can vary between 25% and 75%, and you would usually need to pay a deposit of at least 5%. The good news is that this 5% is of the share you want to buy, and not the total property price. The rest of your share can be paid for with a mortgage.

 
Shared ownership arrangements are UK-wide, but each country runs their scheme a bit differently – so it’s a good idea to check what the terms and conditions are for England, Scotland, Northern Ireland and Wales - individually. 

 
In England, all shared ownership properties are available on a leasehold basis. 

  
The rate of rent that you pay to the housing association is usually between 2.75% to 3% on the proportion that it owns.  
 

What are the pros and cons of the scheme?

As with most things, there are benefits and drawbacks of entering into this kind of arrangement. It may not suit everyone. 
Here are the main points you should consider when you’re weighing up whether it’s a good option for you or not: 
 

Pros 
 

• Depending on the initiative, you might find that it’s cheaper in the long run for you to embark on a shared ownership arrangement - rather than to continue renting. 
• You no longer have to be a ‘key worker’ - such as a nurse or teacher – in order to access a scheme (although, as before, military personnel still get priority). 
• It can enable you to get a foot onto the property ladder a lot more quickly, compared to trying to purchase a property outright - because you don’t need a large deposit, and you don’t need to arrange a mortgage for the entire property. 
• Once you’ve lived in your shared ownership property for a while, you would be able to buy a bigger share of the property (often called ‘staircasing’). 
• You’re still able to sell your home whenever you like, and you’ll also be able to benefit from any increase to the value of the property since you bought it. 
   

Cons

• Although the scheme is well-established and UK-wide, properties available may be in areas of towns or cities which you hadn’t exactly planned to move to. It means that you have to flexible and willing to fit in around where homes in the scheme become available. 
• As opposed to obtaining a regular mortgage, shared ownership mortgages can sometimes prove a bit more challenging to secure. 
• If the value of your property increases over time, this will likely make buying more shares in your home more expensive.  
• You’ll need to pay a fee on your leasehold property – even if it’s part of a shared ownership scheme. 
   

Can I apply?

As we’ve touched on above, schemes can differ a little from country to country – and this includes what makes you eligible to apply, and what might exclude you from being eligible.

Within England, shared ownership schemes are open to first-time buyers or to those who may have once owned a home – but can’t get back onto the property ladder in their current circumstances. It’s also open to people who are already living in a home which is part of the scheme, but want to move house.

 
If you rent a council property or a home from a housing association, you may be eligible to apply. And if your combined household income is less than £80,000 per annum (with £90,000 being the amount for London-dwellers), you may be able to access a scheme.

 
Aged 55 or over? Then you might be able to apply for a similar home ownership scheme - ‘Older People’s Shared Ownership’. And, if you have a long-term disability you might like to know more about the ‘Home Ownership for People with long-term Disabilities (HOLD)’ scheme. 

If you’re interested in applying, your first step is to find a local Help to Buy agent. You can do this by accessing the Government’s Help to Buy website.