If you are unable to afford all of the deposit and mortgage payments for a home that meets your needs, you may be able to get shared ownership…
Shared Ownership Explained
Shared ownership is when you buy a share of a property and pay rent to a landlord on the remaining portion of ownership.
The share you can buy is usually between 25% and 75%, though you can buy some homes with just a 10% share. You can pay for this share with your savings or take out a mortgage for the amount. You will also have to pay a deposit, which tends to be 5-10% of the share you’re buying.
Some people using shared ownership do something called ‘staircasing,’ where they buy more shares in their home in the future. Therefore, they slowly increase their ownership of the property. This corresponds with lower rent payments, as rent is based on the landlord’s share- the more you own, the less the landlord owns, so the less rent you owe.
What Home can I Buy with Shared Ownership?
- A new build home
- An existing home via a shared ownership resale scheme
- A home that meets your specific needs, such as a ground floor flat if you’re disabled
Eligibility
To qualify for shared ownership you must:
- Have an annual household income below £80,000 (or £90,000 if in London)
- Be unable to afford deposit and mortgage payments for a home that meets your needs
One of the following must also apply:
- You’re a first-time buyer
- You used to own a home but can no longer afford to
- You are forming a new household (e.g, after divorce)
- You are an existing shared owner and want to move to a different property
- You own a home and want to move but cannot afford a new home that meets your needs (e.g, wheelchair friendly)
The Process of Ownership
When buying a shared ownership home, you must have formally accepted an offer for the sale of your current home. This is referred to as Sold Subject to Contract (STC).
You should have written confirmation of the sale agreed (called memorandum of sale). This should include the price and your intention to sell.
You must have completed the sale of your current home on or before the date that you complete the process of buying your shared ownership home.
Older People’s Shared Ownership (OPSO)
OPSO is a form of shared ownership available to those age 55 and over. You can buy an initial share in an OPSO home between 10-75% of its market value.
The concept is the same as with the general shared ownership scheme. However, with the OPSO scheme, you can only buy up to 75% of the home. Once you own this 75%, you do not pay rent on the remaining 25% share.
Just like with the general shared ownership scheme, you must have a household income of £80,000 or less (or £90,000 or less if in London) and one of the following must apply to you:
- You’re a first-time buyer
- You used to own a home but can no longer afford to
- You are an existing shared owner and want to move properties