Shared ownership is an option for buyers who are struggling to save a deposit, as it means they can buy a share in a property rather than rent a home.
Shared ownership allows a buyer to purchase a stake in a property, generally from 25% to 75%. Rent will be paid for the remaining share which is owned by the developer or housing association. Very often, the rent charged is discounted, keeping costs low. However, the buyer still has to fulfil criteria for borrowing the amount required to purchase the agreed shares. If the property is leasehold, a service charge will also be payable each month.
Although a buyer may start by owning just a small share of the property, it is usually possible to purchase further shares in increments of 10%. As a buyer owns more of the property, the rent is reduced appropriately.
Prior to purchasing a share in a property, check that you will be able to buy 100% of the property, or whether there is a limit which can be bought. You may also want to consider whether there is a minimum percentage which can be purchased. As there will be extra costs involved in buying extra shares, it may be worth considering buying a larger percentage rather than smaller amounts, to minimise valuation costs and other expenses.
Prior to considering shared ownership, it is advisable to consult with a mortgage adviser, as they have studied to gain their CeMAP qualification and have the required knowledge.
