Shared Ownership schemes are increasingly popular among aspiring homeowners in the UK. According to the BBC, there are currently over 200,000 such properties in England alone. Could it be the best way for you to get one foot on the property ladder? Today we examine the advantages of Shared Ownership schemes and consider the alternatives if you don’t quite feel ready.
How does Shared Ownership work?
Shared Ownership schemes enable buyers with a deposit of five to ten per cent to purchase a stake worth up to 75 per cent in a property from a housing association, paying rent on the remainder. Shares can begin at as little as 25 per cent of the property, although starting shares vary across development and depend on affordability. Buyers can then increase their share during their tenure at the property if they so wish. This is called staircasing, and generally entails buying at least an additional ten per cent in one go.
In order to partake in a Shared Ownership scheme, your household income needs to be less than £80,000 (or less than £90,000 in London). You will also need to be either an existing Shared Ownership homeowner, a first-time buyer or a previous homeowner who cannot currently afford to buy a new home outright. It’s also good to be aware that Shared Ownership properties are leasehold: occupants are required to pay a service charge for the maintenance of any communal areas.
Shared Ownership schemes: the advantages
The benefits you could be afforded in a Shared Ownership scheme are varied and numerous.
Flexibility
If your personal or financial circumstances change in the future and you come into more funds, you can staircase to full ownership of the property. Remember, though, that if you wish to do so then you’ll be required to seek a valuation of the property and to purchase additional shares at the current market rate.
Initial affordability
You can buy a share of a Shared Ownership home with a relatively affordable mortgage and a deposit as small as just five per cent the value of the property.
The property can be sold on your behalf
If you wish to sell your Shared Ownership home, you need to inform the housing association, but they can then attempt to find a buyer on your behalf before the house is put on the open market.
A brand-new home in a prime location
Shared Ownership of a new-build property will generally entail setting up home in a desirable location of your choice. You don’t have to live in the local area to be eligible, and such properties often come with warranties against build defects. You may also benefit from lower energy bills.
Are the any potential pitfalls with Shared Ownership schemes?
As long as you practice due diligence when researching Shared Ownership schemes, you shouldn’t encounter too many issues. It’s always good to be aware of any that could arise, though.
Service charges
Service charges are required for the maintenance of communal areas. These are flat fees which don’t reflect the percentage of your ownership of the property.
Letting
Should your financial or personal situation change and you find yourself wishing to let the property, you’ll need the permission of the housing association to do so.
What are the alternatives to Shared Ownership?
Shared Ownership schemes aren’t the only way for aspiring homeowners to get on the property ladder.
Home Reach is a Shared Ownership scheme on new builds offered by heylo housing, one of the UK’s premier home ownership programmes. Here at Home Reach, we believe that home ownership shouldn’t be shrouded in jargon, exclusivity and hidden fees. That’s why our agents the UK over are ready to help you take proactive steps to actually getting a foot on the property ladder. Get in touch with Home Reach today and find the house you never thought you’d call home.
