A Guide to Shared Ownership

Getting onto the property ladder can be daunting and with prices on the increase it seems impossible for first time buyers.
You may be struggling to find your dream home on a restricted budget but there are several options out there now for house hunters. Save for a few years, accept a loan from your parents or purchase with friends. Another option which is becoming increasingly popular is buying through Shared Ownership. It's a phrase thrown around a lot in recent times but do you actually understand what 'Shared Ownership' is?

What is it?
Shared Ownership is part buy and part rent. Its a government backed scheme which allows first-time buyers to purchase a 25-75% share of a new home and pay rent on the remainder. 

Who can apply?
Shared Ownership supports a household that earns £80,000 a year or less outside London, a household that earns £90,000 a year or less in London, If you're a first-time buyer, you used to own a home but cant afford to buy one now or you are an existing shared owner looking to move. 

With Shared Ownership you can buy a new build home or an existing one through resale programmes from housing associations. Depending on the housing associations criteria, you may have to live or work locally, have family connections in the area you want to buy in or be in permanent employment to qualify for the purchase. These requirements can vary depending on which housing association owns part of that property. 

The Process
You've found your dream home, and it costs £200,000 but you can only borrow a mortgage of £100,000 because of your income and the size of your deposit. Depending on the organisation you are buying from, they would allow you to buy half of the property and they would own the other half. You would pay a monthly rent to the organisation on their half and a monthly payment on your mortgage. If you're putting down a deposit of 5% you will be left with a 45% mortgage share. 

Depending on what organisation owns the other half, you may be able to buy more of the property or even buy outright as your circumstances change. Some companies will be open to this, where as some will state that the share you are purchasing is a fixed share and can never be purchased in the future. 

What to do next 
If the property is up for sale with an agent, book a viewing and make an offer. They will be liaising with the organisation who owns a percentage of the property and will help you with what to do next. Usually in this case the percentage is fixed and advertised on the details.

When getting your Mortgage in Principle remember to inform your lender or mortgage broker that you are looking to purchase a Shared Ownership property. Agents will want to know they are aware before accepting an offer from you. 

In other cases applicants can fill out a form on the Help to Buy website and contact any local sales teams at different organisations in the area which may be offering properties for sale through Shared Ownership like Circle Housing.

The Costs
Obviously you will be putting down a deposit and this could be anything from 5% to 25%, you may need to pay a reservation fee if buying a new build, potentially a mortgage valuation fee, survey, legal fees and your stamp duty. Remember, when buying a lease hold property, you may have upfront Service charge and ground rent costs that are payable to the previous owner. 
Lastly, don't forget to factor in the general costs of moving home, like hiring a removal van, purchasing new furniture, paying for home insurance and your TV license.