Shared Ownership Week - Busting the myths of Shared Ownership

This week (21 - 27 September) is Shared Ownership Week, and here at WhatHouse?, we'll be celebrating the week by sharing with you everything we know about Shared Ownership.

A survey has revealed that only 60% of the public understand how easily a Shared Ownership scheme can help them glide onto the property ladder.

The survey is part of a report by Aster Group which calls on the government to do a better job of promoting and demystifying Shared Ownership. Shared Ownership has the potential to help millions of people onto the housing ladder if the government pays attention to its recommendations.

In the meantime, we’ve teased out the most worrying misconceptions about Shared Ownership laid bare by the report, to help keep you out of the other 40%!

You can get a Shared Ownership mortgage from a mainstream bank or building society

Type ‘Shared Ownership’ into Google and you’ll probably be taken to the Help to Buy website. This may lead you into thinking that Shared Ownership is a government product and is directly linked to Help to Buy. It isn’t.

Only half of those surveyed were aware that banks and building societies offer Shared Ownership mortgages.

“Seeking a Shared Ownership mortgage once meant going to a specialist provider,” says Kelly McCabe, managing director at TMP The Mortgage People. “Today, while not every lender has entered the market, deals are now offered by several major high-street brands including Halifax, Leeds, Woolwich, TSB and Santander. Of all of the Shared Ownership applicants we see at TMP, six out of 10 have their mortgage approved – so availability of finance is no longer the bottleneck it once was.”

Not only that, but as you are only buying a share in the property the deposit you’ll need is much smaller. The biggest barrier to Shared Ownership is a lack of understanding, not affordability or finance.

You can earn up to £80,000 and still qualify for Shared Ownership

Just 1% of respondents knew that, outside of London, the maximum income threshold per household to qualify for a Shared Ownership scheme is £80,000. Almost one in four thought that the tenures were only available to those who are already social housing tenants.

In fact, anyone who does not currently own property can access a Shared Ownership scheme if household earnings are less than £80,000 (£90,000 in London).

Shared Ownership can lead to outright ownership – but it doesn’t have to

Shared Ownership is a blend traditional home ownership and renting; it offers the best of both worlds. Although less than half of respondents knew that you can eventually own 100% of a house through Shared Ownership, you can end up owning your property in the same way as a traditional owner does.

However, home ownership isn’t for everyone. Shared Ownership does not need to be a means to full home ownership – it can provide a sustainable and secure home for those who never want to become owner-occupiers. For many, it may be a lifelong choice that is more suitable and more affordable than either owner-occupation or renting.

You do not share your home with another person

The name is somewhat misleading. Shared Ownership means you buy a share of your home and rent the rest. The space is all yours. You can buy bigger shares if and when you want to through a process known as ‘staircasing’. At no point do you share the property with someone else.

Only half of respondents in a second survey of 2,043 British adults knew that Shared Ownership does not mean living in your home with another person. Worryingly, 18 to 24-year-olds were the most likely to think that this was the case.

Case study

Charlotte Barnes, 23, and Tom Wilmore, 24, wanted to take their first step on the housing ladder and buy their own home. But with high prices around Weymouth, they struggled to find the right home for them within their budget on the open market.

Initially planning to pursue a traditional mortgage the couple found that they were limited to properties worth under £160,000 in an area where the average property price is £210,000.

After chancing upon a three-bedroom terrace just five minutes walk from Weymouth town centre at an open house one weekend, the couple bought a 40% share of the £260,000 property with a deposit of only £5,299 through a Shared Ownership scheme.

Charlotte says: “It’s so difficult to get a mortgage for a house in Weymouth and on our income we could only really get one on a property at the bottom end of the scale – and we would still have needed to pull together a £16,000 deposit. For something we really wanted, it would’ve been more like £21,000.”

Shared Ownership meant Charlotte and Tom could focus on the features they wanted in their house rather than simply what they could afford. The result was a new home that they are making their own while building up equity.