shared ownership: an alternative to traditional home ownership

Shared ownership, an alternative to traditional homeownership, offers a viable solution for individuals struggling to enter the property market due to high property prices and mortgage costs. This arrangement enables prospective homeowners to purchase a portion of a property, typically between 25% and 75%, while paying rent on the remaining share.

The deposit required for shared ownership is significantly lower, usually around 5% to 10% of the share being purchased, compared to the deposit needed for full home ownership. For example, buying a 25% share of a £300,000 home would require a deposit of £3,750, compared to £15,000 for the full property.

As you live in the property, you have the option to increase your ownership percentage through a process called 'staircasing,' thereby reducing your rent as your ownership stake grows. However, you may still need to pay ground rent and service charges for shared spaces. Stamp duty can typically be deferred until your ownership share reaches 80%.

Shared ownership schemes apply to both new build properties owned by housing associations and existing homes through resale schemes, offering various property types such as apartments, houses, and bungalows. While primarily targeted at first-time buyers or those facing challenges in obtaining a traditional mortgage, the scheme imposes income restrictions.

To be eligible for shared ownership, household incomes must typically be £80,000 or less outside London and £90,000 or less within London. Additionally, lenders will assess your credit score, and you must provide a deposit of at least 5% of the property share you're buying.

Advantages of shared ownership include accelerated homeownership, affordability, flexible ownership, and diverse property options. However, there are disadvantages, including leasehold status, service charges, selling restrictions, and potential additional costs over time as you purchase more shares in the property.