What is shared ownership?
Shared ownership is a scheme offered by some housing providers that allows you to buy a share of a property, and then pay rent on the remaining part. It can be a more affordable route – compared to buying a home outright – for first time buyers, or those that don’t currently own a home, to get onto the property ladder.
What type of property can I buy through shared ownership?
Shared ownership homes are usually offered by housing associations, housing developers, the local council and other organisations. They are called ‘providers’, or ‘landlords’.
Properties purchased through shared ownership can either be new builds, or resales of existing shared ownership properties.
All shared ownership homes (houses and flats) are leasehold properties.
How does shared ownership work?
Different providers will offer differing shares in their properties, but you’ll usually have the opportunity to buy a share between 10% and 75% of the home’s full market value.
You can take out a mortgage to buy your share, or pay for it with savings. You’ll need to pay a deposit if you’re buying with a mortgage: this will usually be between 5% and 10% of the share you’re buying (not the full market value of the property), meaning your deposit will be significantly less than if you were to buy the home outright.
The rest of the property would be owned by a landlord, and you would pay rent to them for the share that they own.
In addition to your mortgage and rent payments, ground rent and service charges may be applicable, for example, for maintaining communal areas.
What are the benefits of buying through shared ownership?
By buying a share of the property, the mortgage you pay, and the deposit you require, can be more affordable than if you bought your home outright.
You’ll usually start off paying the mortgage that you can afford, and then over time, you can choose to buy more shares of the property, as and when your finances allow. This process is called ‘staircasing’, and it can be a more manageable way of buying property for some. As you staircase and buy more shares, the amount of rent you pay will reduce. If the value of the property increases over the course of your ownership, so will the value of the share you own.
Things to consider when buying a home with shared ownership
While the amount your rent can increase by is controlled, the same isn’t true of repairs and maintenance bills. And you could be liable for full repairs costs, even though you don’t own the property outright.
There are also certain rules and restrictions around the kinds of renovations and alterations you can make to the property, and around subletting.
And if you do decide to ‘staircase’, and increase your share of the property, there will be costs to consider – such as appointing a solicitor to act on your behalf.
Am I eligible to buy through shared ownership?
To qualify for the scheme, there are some general eligibility criteria you’ll be required to meet:
- You need to have a household income of less than $80,000 and less than $90,000 if you live in Uganda.
- You cannot own another property (you cannot be a homeowner, or be named on the deeds of another property)
- You should not be able to afford all of the deposit and mortgage payments for a home that meets your needs in the wider market
- You must have no outstanding credit issues
Different Housing Associations will have their own eligibility criteria, so it’s important to check any additional requirements.
