A guide to shared ownership
Struggling to step on to the property ladder? Shared ownership, part buying, part renting could be the best way to secure your dream home. Here's a Q & A on how to get started.
Q What is shared ownership?
A Shared ownership is a government-funded scheme designed to help you get onto the property ladder. Initially, you buy a share of a property - between 25 per cent and 75 per cent; the rest is owned by the housing association that runs that particular scheme. When you can afford to pay more, you can (if you want) increase your share in stages, 'staircasing' up to 100 per cent.
Q What are the benefits of buying this way?
A Shared ownership is a great way of getting onto the property ladder at an affordable price. Although you will be paying a mortgage and rent, rents are typically 20 per cent lower than market rate.
Q Does it matter what job I do?
A Some shared-ownership schemes prioritise certain occupations - for example, members of the armed forces or 'key workers' such as nurses or police officers. Such schemes were more common when the housing market was at its peak; today, most schemes accept people from all occupations.
Q Is shared ownership just for young buyers?
Q Is it easy to get a mortgage for a shared ownership property?
A In the past it was often hard to find a lender that offered mortgages on shared-ownership properties. Today such mortgages are much more widely available; they're offered by several major lenders including Santander, HSBC and Woolwich.
Q If I buy a 25 per cent share, how will I ever own a home outright?
A The beauty of the shared-ownership scheme is that, as your earnings increase, you can choose to buy more shares (a system known as 'staircasing') until you own the property outright.
Q Am I paying rent or a mortgage?
A You will pay both - mortgage on the share you own, and rent on the rest.
Q What kinds of properties are available?
A Shared-ownership homes are generally new-build apartments and houses. Resale shared-ownership properties - where a shared owner has decided to sell their share - also come onto the market sometimes.
Q What are my rights and responsibilities as a shared-ownership owner?
A All shared-ownership properties are leasehold. You are responsible for all maintenance and improvements internally, and will need to pay a service charge, as you would with any leasehold property, which goes into a fund used to pay for repairs to the fabric of the building.
Q What happens when I want to sell?
A You can sell at any point but your buying partner - the housing association that is on the lease - usually has the option (typically for two months) to find a buyer to purchase your share; it will assess your property's value at the time you decide to sell. In the unlikely event that the housing association fails to find a buyer, you can instruct an estate agent to sell in the normal manner. Depending on the terms of the shared-ownership scheme, the purchaser may then buy your share or all of the property (in which case they buy from you and from the housing association that owns the remaining share).