Why Shared Ownership can replace Help to Buy
For anyone struggling to get a leg up on the property ladder, the end of Help to Buy probably wasn’t the news you wanted to hear. But as one door closes, another one opens. Providing an affordable route to the property ladder, Shared Ownership could be the perfect alternative for people who narrowly missed the Help to Buy window. For more information check out our guide on Shared Ownership vs Help to Buy.
Hearing about Shared Ownership for the first time? Time to get educated. Below is everything you need to know about the scheme that could fill the gap left by Help to Buy.
What is Help to Buy?
Help to Buy (also known as the Help to Buy Equity Loan) was a government-supported scheme that gave first time buyers a loan to boost their home-buying deposit. Providing a loan of up to 20% of the property value, this enabled first time buyers to buy a home with as little as a 5% deposit! Unfortunately, the deadline for Help to Buy properties closed in October 2022, while the scheme officially ended on March 31st 2023.
Shared Ownership is an affordable homeownership scheme that enables you to buy a share of your home and rent the portion that you don’t own. So, if you buy a 25% share of your home, you’ll be expected to pay subsidised rent on the 75% still owned by your housing provider. This is a great way to enjoy the perks of homeownership – decorating and furnishing as you please – without paying beyond your means!
What are the perks of Shared Ownership?
- It’s directed at first time buyers
- Saving up your deposit is easier
- A path to future homeownership
- More freedom of choice
- Long-term stability
It’s directed at first time buyers
The Help to Buy scheme may have come to an end, but that isn’t the end of the line for first time buyers. Shared Ownership was originally designed to make home-buying easier for those people who need it the most – to be eligible for the scheme, your maximum household income must not exceed £80,000 per annum, and £90,000 in London. However, this doesn’t rule out people who have bought a home before – as long as you are in the process of selling, or have previously sold your home, you can still take advantage of Shared Ownership.
Saving up your deposit is easier
The idea of spending an eternity to save a deposit is enough to put off most people buying their first property. But with Shared Ownership, you can make this extended timeline disappear! As you only need to buy a small share of your property (starting as little as 10% or 25%, depending on the scheme model), the deposit you pay is much less than a home on the open market.
Got your eyes set on a property that costs £350,000? With Shared Ownership, you can purchase a 25% share (£87,500), resulting in a 5% deposit of £4,375. So, if you want to get on the property ladder without saving up a small fortune, Shared Ownership could have your back.
A path to future homeownership
It might be called Shared Ownership, but don’t feel like you need to own just a share of your home forever. Should your financial circumstances change, Shared Ownership allows you to buy more and more of your home over time. ‘Staircasing’ is a process where you buy more shares of your Shared Ownership home, and subsequently reduce the amount of rent you need to pay! To find out more about staircasing, check out our guide.
More freedom of choice
While the Help to Buy government scheme helped thousands of people onto the housing ladder, there was a limit to the type of property you could buy – specifically new build properties. With Shared Ownership, there are no such limitations.
You’ll still get to choose from some of the best new build properties on the market, but many housing providers give you the option to buy resale properties too! Whatever your budget or preference – do you want something new or more traditional? – Shared Ownership offers first time buyers great freedom of choice.
Shared Ownership isn’t just a part-term solution on your road to homeownership. Unlike with renting an apartment, the money you spend helps you build equity in your home. In return for the fees you pay, you’ll also be able to enjoy the protection and support of your housing provider.
Looking for alternative home-buying options? Share to Buy is the go-to place for first time buyers trying to get a foot on the property ladder. Find your dream home today by checking out our available properties.