What is Shared Ownership?

Shared Ownership gives first time buyers and those that do not currently own a home the opportunity to purchase a share in a new build or resales property, The purchaser pays a mortgage on the share they own, and pays rent to a housing association on the remaining share. Because the purchaser only needs a mortgage for the share they are purchasing, the amount of money required for a deposit is a lot lower when compared to the amount that would be required when purchasing outright.

The purchaser has the option to increase his share during their time in the property via a process known as ‘staircasing’, and in most cases can staircase all the way to 100%, thereby owning the property outright. snared ownership properties are always leasehold.

Why buy a Shared Ownership home?

Shared Ownership is essentially for people who would like to own their own home but cannot afford to buy on the open market. The cost of ownership is reduced by:

  • The rent is less than the rate charged on the open market and usually charged at 2.75% of the property value per annum,
  • You can start with a little as 25% share in some cases,
  • Your deposit can be 5% of the price of the share, not of the whole property.
  • Stamp duty land tax (SDLT or simply ‘stamp duty’) can generally be deferred until your share reaches 30%.

Shared Ownership properties can often be found in private developments as the provision of a certain number of Shared Ownership units will often be required as a part of the planning permission for a development, This can put affordable housing in the heart of some prestigious postcodes.

When I part-buy/part-rent my home, what am I buying?

Effectively you are buying a leasehold house or flat. that may be either new or a resale. However, as you cannot presently afford to purchase outright, you are paying rent on the portion that you cannot afford.

You have the option to buy further shares, up to and including 100% ownership when you are able to do so.The price of buying further shares will be based on an independent valuation at the time that you purchase the further share.

What are the eligibility rules for Shared Ownership?

There are some general eligibility requirements that anyone wishing to buy a Shared Ownership home must meet. The general eligibility criteria for Shared Ownership is as follows:
  • You must be at least 18 years old
  • Outside of London your annual household income must be less than £80,000
  • In London your annual household income must be less than £90,000
  • You should generally be a first time buyer, i.e. you don’t already own a home. If you do already own, you must be in the process of selling it
  • You should not be able to afford to buy a home suitable for your housing  needs on the open market
  • You must show you are not in mortgage or rent arrears
  • You must be able to demonstrate that you have a good credit history (no bad debts or County Court Judgements) and can afford the regular payments and costs involved in buying a home

You should have savings or to be able to easily access at least £4,000 to cover the costs of buying a home. This is a guideline figure – the actual amount you need will depend on the Help to Buy option you choose

In most cases you will also need to have enough savings or be able to easily access a minimum 5-10% of the equity share you are buying, as a deposit.

Please note: You should always check the eligibility required with the housing association selling the property, as they may have specific criteria.

How to buy a Shared Ownership home

Getting started with Shared Ownership is not as complicated as people might think. First of all. you should check if you are eligible. Please note that in addition to the general eligibility rules, some Housing Associations and boroughs have their own terms regarding priorities and affordability. These will be made clear on each property listing.

Through Share to Buy you can find suitable Shared Ownership properties, show your interest for properties and contact Housing Associations for viewings.

When you have chosen a property, you will have to make sure you have the required deposit and get a mortgage. Helpfully, each property available for sale on our website includes a budget calculator which gives you an indication of the monthly cost you may have to pay.

Share to Buy specialist mortgage team can also help you find a mortgage for your new Shared Ownership home.  Visit our mortgages pages to compare and apply for Shared Ownership mortgages.