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Home > Insights > News > Property > Are you a first time buyer struggling to get on the property ladder? Have you considered Shared Ownership?
Shared ownership has allowed many people to take their first step on the property ladder, by allowing you to buy a share of the property (between 25% and 75%) and pay rent on the remainder. As time goes by, you can purchase more shares. This is known as staircasing and ultimately you will buy the Landlord out.
A smaller deposit and mortgage will be required, allowing those on low income to purchase a house. Sounds too good to be true? Well, there are more elements to consider before jumping in. In order to purchase on a shared ownership basis, you must either be a first time buyer or previous homeowner who cannot afford to buy now. You must also fulfill the Landlord’s eligibility requirements which includes a cap on household income. Whilst you own a percentage of the property, you will also be required to pay rent on the remaining share. There may also be an obligation to pay service charge and ground rent. These additional costs must be seriously considered, particularly if you are purchasing with the assistance of a mortgage, as you will also be making monthly mortgage payments and paying the usual household bills on top of these costs and the rent. However, shared ownership is often considered cheaper than renting alone.
There will also be restrictions on what you can do with the property which are contained within the shared ownership lease, for example, you are likely to be required to obtain the Landlord’s permission in writing before you make any structural alterations to your home. There will also be restrictions when you sell your home. It is likely that the Landlord will have the right to buy back the property before it is marketed, and in some cases, this will apply even if you have staircased in full and own 100% of the property.
It goes without saying that Shared Ownership has some fantastic benefits in that it allows first time buyers to get on the property ladder. If you are thinking about purchasing a property under a shared ownership scheme and would like further details, please contact Stacey Jackson on 01270 613910.
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