Posted 13 September 2015 by Keith Osborne
What is shared ownership?
Shared Ownership is a government-backed scheme designed to help people who cannot afford a home at full market value to get on the property ladder by buying a fraction of a property and paying a subsidised rent on the remainder. It is sometimes referred to as 'part-buy/part-rent'.
How does shared ownership work?
Buyers can start by buying between 25% and 75% of the full value of the property and pay proportional rent at about 80% of the market rate on the rest of the property. The total payment of a Shared Ownership mortgage and rent will be more affordable than paying a mortgage on the whole property.
Purchasers have the opportunity to buy further shares in their home later on (a process known as 'staircasing'), as and when they can afford to.
Who can buy a property through Shared Ownership?
There are some criteria that you'll have to meet to be considered for Shared Ownership. The scheme is aimed at first-time buyers who are unable to buy a suitable home on the open market, or those returning to homeownership, for example finding their own home after the break-up of a relationship.
There is a maximum household income level of £71,000 per year when trying to buy a one- or two-bedroom home, and of £85,000 per year when looking for a home of three bedrooms or more. Buyers must also be 18-years-old or over. You'll need to earn at least £21,000 a year if you're applying as a couple.
Priority will be given to certain applicants, for example council and housing association tenants who would vacate a rented home by buying, people who would address particular regional housing needs and serving military personnel.
The buying process
1. The steps to buying a home through Shared Ownership are similar to those when buying a property on the open market
2. Reserve the property
3. Undergo an identity check
4. Receive an offer to buy under Shared Ownership
5. Undergo a financial interview with an independent mortgage advisor
6. Appoint a solicitor to undertake the legal processes
7. Receive a memorandum of sale on the property
Find a suitable property, you can use our dedicated Shared Ownership search page.
Points to consider
You'll be responsible for paying 100% of the ground rent and service charge on your Shared Ownership apartment no matter what percentage you own.
When you come to 'staircase' to own a larger proportion of your home, you will have to budget for additional valuation and legal costs and also pay additional stamp duty on the new share.