Defining Shared Ownership
Shared Ownership, sometimes known as part-buy, part-rent, is a housing scheme that allows individuals to purchase a share of a property while renting the remaining portion from a landlord or housing association. This arrangement is often designed to help first time buyers or those with limited financial resources in taking those first steps on the property ladder.
How Shared Ownership works
Selecting a property
Prospective buyers interested in Shared Ownership will typically choose a property within a designated development.
Mortgage and rent payments
The buyer will secure a mortgage to cover the cost of their share, and they will also pay rent on the share owned by the housing association or developer. It's worth noting that the rent paid is often below the market rate.
Determining share percentage
Buyers can purchase a share of the property, usually between 25% and 75%, depending on their financial capacity. The remaining share is owned by a housing association or developer.
Staircasing
Over time, buyers have the option to increase their share in the property through a process called staircasing. This allows them to buy additional shares and, in some cases, eventually own the property outright.
Benefits of Shared Ownership
Affordability
Shared ownership provides an affordable entry point into the property market, making homeownership achievable for individuals who may struggle to buy a home independently.
Lower deposit requirements
Buyers can benefit from lower deposit requirements compared to purchasing a property outright, making it easier for them to get on the property ladder.
Stability
Shared ownership offers a more stable housing situation compared to renting, providing a sense of security and permanence.
How to qualify for Shared Ownership
Shared Ownership is available for first time buyers, but it’s open to other people too. There are other boxes you’ll need to tick - for example, your household income must be £80,000 or less, or £90,000 or less if you live in London.
You’ll only need a mortgage for the share you’re going to buy. You will have to pay rent to the landlord for the portion of the property that they own.
For example, if you want to buy a 25% share of a £200,000 property under Shared Ownership with a 5% deposit:
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Your share of the property would be £50,000
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Your deposit would be £2,500
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Your landlord’s share would be £150,000
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You would need a mortgage of £47,500.
Disclaimer:
- This information on Shared Ownership applies to England. There are different rules in Scotland, Wales and Northern Ireland.
Important information
Your home may be repossessed if you do not keep up repayments on your mortgage.
There may be a fee for mortgage advice. The actual amount you pay will depend on your circumstances. The fee is up to 1% but a typical fee is 0.3% of the amount borrowed.
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