If you’ve never considered looking to buy a shared ownership home, then the next five minutes could well change all of that. Shared ownership offers affordable home ownership to first time buyers and families alike. At a stroke, it can put first-time buyers and modest-income families on the property ladder, which they would never have considered in the first place. While traditional routes to property buying require investors to have a massive early outlay on a deposit and income to match, shared ownership comes in from a different direction. Shared ownership has been used as an option by some 40,000 first-time buyers, and the UK government is encouraging more people to consider this route with a £7 billion pot of aid to boot.
What is Shared Ownership?
Shared ownership schemes flourish throughout the country and are often overseen by authorised and regulated affordable housing trusts. They are touted as solutions to local housing problems. A first-time buyer can buy a share – between 25 and 75 per cent – of a property. This can be obtained by turning to the likes of dedicated shared ownership portal, Property Booking, for advice on how to finance the move. The other share of the property, for example, usually owned by housing associations, is rented at a much lower rate than the market average.
When a buyer has enough finances behind them, and the time is right, they can step up their investment and buy a bigger share of the property. This is otherwise known in the property business as ‘staircasing’. When they buy the full 75 per cent of their share, then they won’t have to pay rent on the rest of the property.
Who can apply?
Local ownership properties and the housing associations that manage them often have conditions that apply to those that can apply. These often include first-time buyers or those that previously owned a home but can’t afford one now; and those that are renting from housing associations.
Schemes may well apply priorities to particular groups, such as those that are military personnel, have localised roots to an area, or, for example, have a long-term disability. Applicants will need to be earning a minimum of £20,000 or have a combined household income of no more than £80,000. For London, the top threshold is £90,000.
Shared Ownership v Right to Buy v Help to Buy
Three common phrases all aimed at helping an investor afford to buy a home, but all confusingly different in their own ways. While shared ownership is buying a property shared, Right to Buy is the opportunity that allows a tenant who rents from a local housing association to buy their home at a discount price.
Help to Buy is a government equity loan scheme that helps investors to buy new-builds, with the buyer having to raise a deposit of 5 per cent. Those that are looking at shared ownership need to be sure that their shared ownership mortgage is properly regulated by the financial authorities.
Can older people apply?
Shared property ownership is not just the reserve of the young.Increasing numbers of older people are investigating the shared ownership route. If they are aged 55 and over, or are unable to afford a property, then they can apply to the Older Person Shared Ownership (OPSO) scheme. Conditions apply similar to other shared ownership schemes.
Benefits of Shared Ownership
Investors will only have to raise a deposit which is a percentage of the share they can afford, not the whole of the property and they will be exempt from Stamp Duty if the value of the property is under the minimum threshold. With a smaller outlay, buyers can look at larger homes and the monthly mortgages and rent will be less than the private sector.
Looking to buy in London?
Living and working in the capital? Then there are many shared ownership properties available to consider from one- and two-bedroom apartments to larger homes for families. Take a look at property portfolios from Property booking, for example, to discover the nearest property near you. Alternatively, london.gov.uk/homes – a portal operated by Property Booking for the London Mayor’s office offers information about ownership properties. Wherever you live, having a shared of a property can be just as rewarding as owning a property outright.