The basic idea of the Shared Ownership schemes are that the buyers can purchase a share of the property using savings or a mortgage, and pay rent on the remaining amount.

By owning larger shares of the property, the rent price comes down, and more shares can be bought whenever the buyer would like to.

This gives a freedom to buy as much of the property as the buyer wants, or to continue paying rent in order to build up their savings. Buyers should be aware however that these Shared Ownership schemes are leasehold schemes, so they will be responsible for financing repairs or improvements.

Buying Shares

The buyer has to purchase between 25% and 75% of the property in the Shared Ownership schemes by taking out a mortgage, buying a council house or from a housing association. The government will own the remaining 25% – 75%, and charge rent on that percentage.

It is possible for the buyer to purchase more shares in the house at any point after becoming an owner, but the price of the shares is dependent on the property prices in the area. The house will have to be valued before a new share can be bought in order to work out the price, but beware as the buyer will be responsible for paying the valuation fees.

Eligibility

The people targeted for these Shared Ownership schemes are those with a household income under £60,000 a year, first time house buyers (or buyers who used to own a house but now do not and cannot otherwise afford to) or those who rent from a council or from a housing association.

Selling

If the buyer owns 100% of the property by the time they wish to move, they can sell the home off themselves. However, for 21 years after fully owning the property, the housing association who shared the ownership have a right to buy it first. If they refuse the offer, the house may be sold on the open market. This is known as ‘first refusal’ and must be kept in mind.

Advantages of Shared Ownership Schemes

  • Buyers only have to buy a portion of the property’s overall value (25% – 75%)
  • Can buy more shares to lower rent price
  • Alternative routes for buyers with disabilities
  • Helps first time buyers to purchase their first homes
  • Can work towards owning 100% of the property

Disadvantages of Shared Ownership Schemes

  • Buyer has to pay for valuation fees
  • Alternative routes for buyers with disabilities
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