Property can be expensive and not everyone can afford to buy outright.
Shared ownership schemes provide a realistic way for those unable to raise a full deposit or mortgage to get on the property ladder, and build up equity on a flexible basis in a property co-owned with a housing provider.
These schemes are normally administered by registered social landlords or housing associations, but are also sometimes offered private developers. You buy a share (initially, between 25% – 75%) of the property with a mortgage, and pay rent on the remaining share. Because you only need a mortgage on the share you are purchasing the deposit you require is lower. You can increase your share over time in a process known as ‘staircasing’ until you eventually own 100% of the equity.
Eligibility depends on the housing provider’s criteria but generally you must:
- Have household income less than £80,000
- Not currently own a property, although you are allowed to have owned one in the past
Shared ownership properties are always leasehold, rather than freehold, and your lawyer will advise you on the terms of the lease and the implications of the scheme generally . These schemes are legally more complicated than a normal house purchase and the stamp duty liability can be treated differently. It is crucial that you instruct a lawyer who understands the process and can handle your transaction expertly.
We have significant experience in advising clients wanting to buy shared ownership properties, and have helped many people get on the property ladder. We have particular expertise where the property is on a new residential development.