Getting on the housing ladder with shared ownership
Less than 1% of all households currently living in shared ownership homes in England. Despite the fact that it’s not a widespread ownership model, shared ownership offers buyers several benefits. In this article, JP Goldman walks you through the key considerations and factors to consider when it comes to shared ownership.
What is shared ownership?
Shared ownership is commonly referred to as ‘part buy, part rent’, and it allows people to buy a share of a property and pay a subsidised rent on the remaining share. To purchase a share in a property, you’ll require a smaller deposit and mortgage, making it more affordable for prospective buyers to get on the property ladder. For starters, if you are looking to purchase a shared ownership property in England, your maximum household income must not exceed £80,000 (£90,000 in London).
Shared ownership properties are leasehold. The terms and conditions often give you the ability to buy further shares in the property over time and also give the shared owner the opportunity to take on full responsibility for certain property costs. To learn more about shared ownership models, please contact us.
Why should you consider shared ownership?
Affordability is a major factor. Currently, you’ll need 5% of a property’s value to secure a mortgage. As the average house price increases across all regions in England, it can be more difficult to own property. More specifically, the average house price in London as of November 2021 was £519,934. In the North West, the average house prices is £197,797.
In light of higher house prices, younger generations, are having a harder time saving for their first home. The average deposit paid by a sole first-time buyer in 2021 was £61,100, according to Barclays.
Shared ownership allows you to pay a smaller deposit and subsidised rent payments, giving prospective buyers quick access to the property ladder.
Weighing the pros and cons of shared ownership
While there are several advantages of shared ownership, there are also several risks to be aware of.
First, buyers can have full responsibility for the service charges – meaning that you’ll be responsible for repairs in addition to rent and mortgage payments. Additionally, you could potentially lose your home if you fall behind on rent payments. There are also restrictions on subletting and selling your property.
Shared ownership gives first-time buyers the opportunity to purchase a share in a new build or resale property. For more information about shared ownership, including how our conveyancing solicitors can help you with your purchase or sale, please contact JP Goldman now.