Inspire Legal, leading solicitors in Scarborough, explore shared ownership.
Are you dreaming of owning your own home but finding the prospect daunting due to hefty deposits and mortgages? Shared Ownership might just be the answer you’ve been looking for. This government-backed scheme offers a practical solution for first-time buyers, existing shared ownership homeowners, or former homeowners struggling to re-enter the property market.
Shared Ownership allows you to purchase a share of a property from a housing association, a non-profit-making organisation committed to providing affordable homes. This unique arrangement means you only need a smaller deposit and mortgage, making homeownership more accessible. While you own a part of the property, you’ll be required to pay rent on the share you don’t own, along with monthly service charges and ground rent. It’s worth noting that all Shared Ownership properties are leasehold, including houses, which is a distinct feature of this scheme.
When you enter the Shared Ownership scheme, you decide the stake in the property you can afford, typically starting with a deposit of at least 5% of your share. You then secure a mortgage to cover the remaining portion and pay rent on the part you don’t own. The beauty of Shared Ownership lies in its flexibility. Through a process known as staircasing, you can increase your share in the property as your financial situation improves, eventually reaching up to 75% ownership, or in some cases, even 100%, depending on the housing association’s policies.
In April 2021, the government introduced an updated version of Shared Ownership, set to be available on homes for sale from 2022 onwards. This new iteration promises improved terms, making it even more accessible for aspiring homeowners. To find out if a home qualifies for the new version, simply inquire with the housing provider.
Like any scheme, Shared Ownership has its pros and cons. On the positive side, it enables you to buy sooner, is affordable for those with lower incomes, and allows gradual ownership increase. It’s applicable to both new-build and existing properties. However, it’s crucial to be aware of the leasehold nature of these properties, as well as additional costs like service charges and potential limitations on selling outside the Shared Ownership scheme.
Navigating the world of homeownership can indeed be overwhelming, but Shared Ownership provides a clear, attainable path for many, helping you step confidently into the realm of property ownership without the financial strain.
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