Owning a home feels like holding the key to your dreams, where every corner tells your story and every wall shelters your future. High house prices and big deposits make it hard for first-time buyers. This is where shared ownership comes in. It’s a scheme that makes owning a home easier and more affordable.
Shared ownership lets you part-buy and part-rent a home. You buy a share of the property, usually between 25% and 75%. You then pay rent on the part you don’t own. For example, if a house costs £200,000 and you buy a 50% share, you will pay rent on the remaining £100,000.
However, to be eligible, you must meet some rules. Firstly, you must earn less than £80,000 a year (£90,000 in London) and not own another home. You also need to be a first-time buyer or unable to afford a property outright. This makes shared ownership an option for many who struggle to save for a large deposit.
How Shared Ownership Can Help You
1. Lower Costs
Shared ownership lowers the cost of buying a home. You only need a deposit for the share you are buying. For example, if you buy 25% of a home worth £180,000, your share is £45,000. If the deposit is 5%, you only need £2,250. This is much less than saving for a deposit on the full amount.
2. Step-by-Step Ownership
Shared ownership allows you to increase your share over time through staircasing. You can buy more of the home when you can afford it. This reduces the rent you pay. Over time, you can own 100% of the property, which can make it all yours.
3. Live Where You Want
Furthermore, shared ownership gives you a chance to live in areas that might be too expensive otherwise. For example, a home in a popular or high-cost location could become affordable if you are only buying a portion.
4. Build Equity
Additionally, renting does not give you ownership of anything. But with shared ownership, you own part of the property. If house prices go up, the value of your share could increase. This means you could make a profit when you decide to sell.
Challenges to Think About
While shared ownership has benefits, it’s not perfect. There are some challenges to consider.
- Shared ownership has extra costs. You may need to pay service charges for things like building maintenance and cleaning. If it’s a leasehold property, you will likely have to pay ground rent too. These costs can add up.
- If you want to sell your home, it might take longer than if you owned it outright. You may have to sell your share through the housing association. Sometimes, they have the first right to find a buyer. This can make the process slower and more complicated.
- Shared ownership properties usually come with rules. You may not be able to make changes to the home without permission. This could therefore include big things like knocking down walls or upgrading kitchens.
- Service charges and rent can increase over time. These costs are often linked to inflation. This means your monthly payments could become higher in the future.
The New Shared Ownership Model (2021 Update)
The government introduced a New Model Shared Ownership scheme for homes funded through the Affordable Homes Programme (AHP) between 2021 and 2026. Under this scheme, the minimum share you can buy has been lowered from 10% to just 5%, making it even easier to start your homeownership journey. Additionally, for the first 15 years, buyers can purchase extra shares in 1% increments with significantly reduced fees. These updates ensure shared ownership is more flexible and affordable, especially for first-time buyers looking for manageable steps toward owning their homes.
Alternatives to Shared Ownership
If shared ownership isn’t right for you, there are other options:
- The First Homes Scheme will get you a discount of at least 30% on new-build homes.
- Help to Buy Equity Loan (Wales) can help you borrow 20% of the home’s value from the government.
- London: Live rent-free while saving for a deposit.
The smaller deposit and lower monthly costs make it easier to get started. However, it’s important to consider the extra costs and restrictions before making a decision. By planning carefully and getting advice, you can decide if shared ownership is the right step for you. Thus take your time, explore your options, and take one step closer to owning your own home.
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