Shared Ownership Can Help You Get A Foothold On The Housing Ladder

Says Property Journalist Sharon Dale.

Work took my sister to London and to a series of tiny, ridiculously expensive rented studio flats that ate up a large chunk of her salary.

Meanwhile, I stayed in the north and was on the second rung of the property ladder with a chunk of equity in my two-bedroom cottage.

Buying seemed like a distant dream for her until she discovered shared ownership. She could just about afford a small deposit on half of a small, one-bedroom council flat in the then unfashionable Bethnal Green.
She put in an offer for the 50 per cent share, persevered through the bureaucracy of buying from the local authority and got the keys after almost a year of waiting. 
That investment gave her a leg up on to the property ladder and the good news for anyone considering this option is that it is a lot quicker and easier than it used to be. The government has recognised the value of part ownership and actively promotes it through its Help to Buy: Shared Ownership scheme.

This offers you the chance to buy a share of a property, between 25 per cent and 75 per cent of the home’s value, and pay rent on the remaining share. 

You can buy a newly-built home or an existing one through resale programmes from housing associations. You’ll need to take out a mortgage to pay for your share of the purchase price or fund this through your savings. 

Not everyone is eligible but the criteria is generous. You can buy a home through Help to Buy: Shared Ownership in England (Scotland, Northern Ireland and Wales have their own schemes) if you are a first-time buyer or if you used to own a home but can’t afford to buy one now. 

Your household must earn less than £80,000 a year or less outside London or £90,000 a year or less in London. Shared ownership mortgages exist, although not all lenders offer them. Once you have your home, you can increase your share in it if you can afford to…. this is known as staircasing. 

However, if you want to make improvements or structural changes you may have to seek permission from your fellow shareholder and, when and if you come to sell the property, the housing association has the right to buy it first. It also has the right to choose a buyer – unless you’ve reached the top of the staircase and own 100 per cent of the property.

These are minor issues – the main problem is that shared ownership properties are in fairly short supply. Plus they may not be in the area you’d ideally want to live. This means you may have to sacrifice location until you have built up enough equity to move on.

A quick sweep on the Help to Buy agents’ site recently showed a three-bedroom townhouse in Knottingley, near Wakefield, on a mixed tenure development by WHD. A 50 per cent share is £57,500 with monthly rent payable on the remaining share of £131.77 plus building insurance and management fee.  

In High Wycombe, Thames Valley Housing has a number of apartments up for shared ownership. Prices start at £60,000 for a 25 per cent share of a two bedroom flat with rent of £394.79 a month and a monthly apartment block service charge of £148.96.

In London and for applicants living and working in the south east only, there is a one-bedroom flat at Quebec Quarter in Southwark. Prices are from £123,750 for a 25% share. On top of that there is rent at £525 per month and a service charge of £274 a month. For many that is still unaffordable, although costs can be halved if you buy with a partner. The developer emphasis that the response to the shared ownership homes has been “overwhelming”.

The message is be prepared.

Do your sums and your homework and make sure you can get a mortgage. This will put you in prime position for the best homes on offer.


Publish date: 15/09/2017

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