Since the 1970s, house hunters have been turning to shared ownership as a clever way to get on the property ladder.
But despite the popularity of shared ownership, there are still a surprising number of myths and misunderstandings about it.
Discover the truth about shared ownership and why it could be a great option for you.
Shared owners can have owned a home before
Myth: it’s only for first-time buyers.
Fact: shared ownership is for anyone.
It doesn’t matter whether or not you’ve owned a home before, as long as you don’t own a home right now.
The main criteria are:
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- earning less than £80,000 a year (£90,000 in London)
- not currently owning a home
- having a good credit rating
- having at least a 5% deposit of the mortgage.
Shared ownership properties are high quality
Myth: shared ownership properties are lower standard.
Fact: shared ownership homes are built to the same high quality as any home.
Not only are they equally as good, but they are often included in new private developments. There’s absolutely no reason to think you won’t be getting a high-quality property when you decide to buy with shared ownership.
Shared ownership is different from shared living
Myth: you have to share your home with a stranger.
Fact: only shared owners live in their home.
Shared ownership has nothing to do with who you live with – it refers purely to the ownership of the property. For example, you could own 50% and rent 50%.
This means you can buy the percentage of the home you can afford and pay a subsidised rent on the remaining amount to your housing association. The share you don’t own can’t be given to another person.
So, you’re in charge of who you live with, and you won’t end up living with someone you don’t know.
Shared owners can decorate their homes
Myth: you need permission to decorate your home.
Fact: shared owners can paint and decorate as they want.
Shared owners don’t need their landlord’s permission for anything other than structural changes, so are free to paint and decorate.
However, before you knock down walls or make major changes, check the details of your lease and talk to your housing association to make sure this is allowed.
You can use shared ownership to buy 100% of your home
Myth: you can’t buy the rest of your home.
Fact: shared owners can buy as many shares as you want.
As a shared owner, you can use a system called staircasing to gradually increase the percentage of your home that you own. You can do this whenever you want all the way up to owning your home 100%. So you can buy more of your home to suit your funds and budget.
Not only is staircasing possible, it’s encouraged. We recommended you staircase your way to full ownership as part of a long-term plan.
Shared ownership homes are available for big and small households
Myth: shared ownership only offers small city flats.
Fact: shared ownership homes come in all shapes, sizes and locations.
Shared ownership homes are available in all parts of the country and come in a wealth of shapes and sizes. From studio apartments, one and two-bedroom flats, to three and four-bedroom houses, there’s something for everyone.
Shared ownership can save you money
Myth: it’s expensive and a waste of money.
Fact: shared ownership can be cheaper than renting – and you’ll own part of your home.
Many people don’t realise that amount needed for monthly payments on your shared ownership property could be smaller than renting privately.
This is because the amount of rent you pay is subsidised and is typically much lower than the cost of a private rent on a similar home. Plus, your mortgage repayments are only for the share of the property that you own. If you were to own outright, your monthly payments would be much higher.
The added benefit is that you also end up owning a share in your home – something not offered by private renting. And although your mortgage payments will go up as you buy more shares in your home, your rent will go down.
How shared ownership works
If you buy a home outright for £400,000, you need a minimum 5% deposit of £20,000. The remaining 95% would be your mortgage – £380,000.
If you buy a 25% share through shared ownership, the “total” price is £100,000 instead of £400,000. So, you need a 5% deposit of £5,000 and a mortgage of £95,000.