Shared Ownership is an increasingly popular housing scheme in the UK, providing a path to homeownership for many who may otherwise struggle to step onto the property ladder. In this article, we will delve into what Shared Ownership is, its benefits, and potential drawbacks.
What is Shared Ownership in the UK?
Shared Ownership, also known as part-buy, part-rent, is a government-backed scheme designed to help people own their homes. It allows you to purchase a share (usually between 25% and 75%) of a property from a housing association and pay rent on the remaining share. You have the option to increase your ownership over time, a process known as “staircasing,” until you own the property outright.
Is it a Good Idea to Buy Shared Ownership?
Shared Ownership has several advantages:
Affordability: It often requires a lower deposit and mortgage than buying a property outright, making it accessible for many first-time buyers.
Stability: You have the security of homeownership without the full financial commitment. You can live in the property and make it your own, unlike renting.
Staircasing: The ability to increase your share in the property over time can lead to full ownership, allowing you to benefit from any potential increase in the property’s value.
Government Support: The government provides support and incentives for Shared Ownership, such as Help to Buy.
What Are the Disadvantages of Shared Ownership?
While Shared Ownership offers many advantages, there are also some drawbacks to consider:
Ongoing Costs: Besides the mortgage, you’ll need to pay rent on the share owned by the housing association and cover other expenses like service charges.
Limited Choice: Shared Ownership properties are not as widely available as traditional properties for sale, which might limit your location options.
Staircasing Costs: Increasing your ownership share often incurs additional costs, including valuation and legal fees.
Resale Restrictions: Housing associations usually have the first right to buy back your property if you decide to sell.