Shared Ownership
Never heard of shared ownership before or are you confused about how it works? You might be surprised to learn that this form of home ownership has been available to homebuyers in England in various forms for over five decades.
With house prices rising all the time, shared ownership is an affordable way to buy your own home that is becoming increasingly popular. Homes North takes you through the ins and outs of shared ownership…
What is it?
Shared ownership is a form of home ownership usually offered by housing associations, not-for-profit companies across the country that specialise in providing affordable homes. Unlike typical home ownership where you buy a home outright, in shared ownership you only buy a percentage of a home and the housing association owns the other part of it.
How does it work?
The size of the starting share you can buy in a home is between 25% and 75%. You’ll pay mortgage on the share you own and pay a discounted rent to the housing association on their share. Although you technically only own part of the home, you are usually the leaseholder and so can treat it like your own home – it’s up to you to decide how to decorate it and decide when to sell it!
Can I eventually buy the house outright?
Yes! Over time you can usually increase your share in the property through a process known as “staircasing”. While a few housing associations cap the amount of shares you can buy, most of the time you can eventually own 100% of your home.
In 2018/19, shared ownership buyers in England purchased an initial share of 42% of their home on average, paying a deposit of £24,600. However, the deposit can be as little as about £5,000.
Who is it for?
Shared ownership is more affordable than traditional home ownership, making it ideal for people who do not want to rent but would otherwise not be able to afford their own home.
Because you only own part of the home, both the deposit you have to pay (usually between 5% and 10% of the share you’re buying in the home) and your mortgage are lower.
Because it is less expensive than buying on the open market, shared ownership is especially appealing for young adults looking to buy a home for the first time, people who have recently separated from their partner, or people who have retired and are looking to downsize home.
How popular is it?
Shared ownership is gaining in popularity all the time with many people looking to buy a home after the COVID-19 pandemic. A recent report found that the number of homes bought via shared ownership in England has gone up by 400% in the last five years to 17,021 last year!
As such, shared ownership homes are in high demand, with up to 10 people enquiring about each home in some parts of the country. You can usually choose the home you want to buy, but housing associations will consider your individual circumstances first.
Great! How can I find out more?
If you’re struggling to save money but are looking for a realistic route into home ownership, shared ownership might be the scheme for you.
If you want to find out more about shared ownership, please visit https://sharedownership.net/ or read on for Plumlife’s article about the benefits of shared ownership.
