Shared Ownership is an extremely useful tool in the arsenal of a First Time Buyer. There are many benefits to using a Shared Ownership scheme and I will try to cover as many as I can. Here we will be discussing homes purchased in England, there are separate schemes available in Scotland and Wales. There are also 3 different ‘Help to Buy agents’ depending on where you are in England.
Firstly, let’s start with, what is Shared Ownership? You can purchase new and resale shared ownership properties too. This means that you have a variety of choice available in your given search area. Shared Ownership means that you purchase a share of a property in conjunction with a Registered Provider, typically, this is a housing association. You can select from the outset the amount of share you wish to purchase as long as this meets a minimum share level (usually 25%). You will own the percentage share of the property on a leasehold basis and you will pay rent to the housing association for the share you do not own. The rent will be agreed and confirmed upfront when you decide your percentage share, so you will know what you will be paying, and there is a maximum amount by which this can increase per annum. There is also usually a service charge, again confirmed at the outset. Properties purchased in this way are always sold on a leasehold basis, even if a house. This is because the Registered Provider or Housing Association are the freeholders, and you have the right to live in the property for an agreed amount of time (set out in your lease, usually 99+ years). You will also be responsible for the upkeep of the property and its surroundings and there may be restrictions on what alterations you can make to the property.
By utilising Shared Ownership, you may be able to buy properties that would otherwise be outside your normal buying power or maybe in areas that you were previously unable to consider when looking at the open market. You also have the opportunity to staircase their share up to 100% ownership of the property which means that eventually you can own the property in full, if that’s what you choose. Alternatively, you may wish to leave everything as is and just pay your portion of the mortgage alongside the rent and service charge.
Another major benefit to this method of home ownership is the peace of mind that comes from owning a portion of the property. You cannot be told to leave the property like in conventional privately rented accommodation, at the whim of the landlord. As long as you keep up repayments on your mortgage, rent and service charges then you will remain in the property as long as you like.
You have the ability to sell on your Shared Ownership property in the future if you decide to move. This may be to be buy another Shared Ownership property or move elsewhere, for example. There will be rules surrounding how this property can be sold and more information regarding this can be found here.
In addition to the above, you will still need to budget for conventional home purchasing costs like valuation fees, legal fees and potentially other mortgage related fees. You will need to be approved by the Help to Buy: Shared Ownership scheme before you can offer on any properties, the process for this can be found on the website here.
Lastly, you can look at Shared ownership properties on the Government Help to Buy: Shared Ownership website which can be found here.
I hope that the above has given you more information with regards to Shared Ownership, but if you do have further questions or need someone to discuss mortgage options so that you may buy your own Shared Ownership property then please do get in touch.
Please remember, your home may be repossessed if you do not keep up repayments on your mortgage or any loan secured against it.
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