Understanding Shared Ownership: A Path to Homeownership

Owning a home is a dream many of us share, but financial constraints often make it seem unattainable. However, shared ownership schemes offer a glimmer of hope for prospective homeowners. This innovative setup has made owning a home a reality for people who previously thought it impossible.

What is Shared Ownership?

Shared ownership is a unique housing scheme that allows you to purchase a portion of a property - typically between 25% and 75% - and pay rent on the remaining share. 

These schemes are primarily offered by housing associations and are designed to help individuals who cannot afford to buy a house outright on the open market.

As Ben Pett, a solicitor from MJP Conveyancing, rightly puts it, "Shared ownership offers a lifeline to individuals who want to own a home but are unable to do so because of financial constraints."

The Benefits of Shared Ownership

One of the primary advantages of shared ownership is its lower upfront costs. Since you're only purchasing a part of the property, the deposit required is significantly less than it would be if you were buying the property outright. This makes homeownership more accessible for people with limited savings.

Another advantage is that shared ownership schemes allow you to live in your own home, paying a mortgage and rent that combined is often less than the market rate for renting a similar property outright.

The "Staircasing" Process

An integral part of shared ownership is the "staircasing" process. Over time, if your financial situation improves, you have the option to buy a larger share in the property, eventually owning it outright. This process is known as "staircasing".

However, the cost of increasing your share will depend on the property's value at that time, which could have risen since your initial purchase. This potential increase in value is something to keep in mind when considering shared ownership.

Eligibility Criteria

Eligibility for shared ownership schemes typically depends on a variety of factors, including income level, employment status, and whether you are a first-time buyer. Some schemes are specifically targeted at key workers such as teachers and nurses, or older people looking to downsize.

Potential Drawbacks

Like all homeownership models, shared ownership isn't without its potential drawbacks. For example, if the property value decreases, the portion you own will also decrease in value. Additionally, some people find the staircasing process to be expensive, especially if property prices rise significantly.

Conclusion

In summary, shared ownership is an excellent avenue to homeownership for those who may otherwise struggle to get on the property ladder. It offers lower upfront costs, the possibility of owning a home despite financial constraints, and the opportunity to increase your ownership over time through the staircasing process.

While there are potential drawbacks to consider, the benefits of shared ownership make it a viable option for many prospective homeowners. As always, it's important to carefully consider your options and seek professional advice before making any major property decisions. Remember, owning a home might be closer than you think!

We are here to help so feel free to call us on 01603887067 or email: ben.pett@mjpconveyancing.com