With a difficult housing market that continues to fluctuate, it is becoming harder than ever for first-time buyers to afford a home.

Paired with the cost of living crisis, and the reduced number of homes for sale, many are looking to consider shared ownership as their entry onto the property ladder.

If you are struggling to find a property that matches your needs at your budget, shared ownership offers an answer. It is seen by many as a stepping stone for those looking to exit the rental market and take their first step onto the property ladder.

Whilst it may be a step towards outright home ownership, that does not mean the decision is straightforward.

Shared ownership explained

Shared ownership schemes, typically overseen by housing associations, primarily cater to first-time buyers. These programs aim to facilitate property acquisition for individuals or families with lower incomes. This is achieved by allowing you to share ownership with others.

Shared ownership schemes enable individuals to secure a mortgage for a portion of a home rather than the entire property. For instance, opting for 25% shared ownership in a property valued at £200,000 necessitates only a £50,000 deposit and mortgage, with the remaining 75% subject to rent.

The choice of property is not limited; you can opt for a new build or an existing shared ownership property available for resale.

On new build sites, there are many properties that are often advertised as shared ownership as part of the government’s commitment to offering more affordable housing.

Positives and negatives of shared ownership

The key factor that often leads people to consider shared ownership is finances. With a shared ownership property, you can avoid having to take out a mortgage as large as you would require for a full property purchase.

In turn, your monthly costs towards mortgage repayments are much lower. It is an opportunity to get on the property ladder, and feel as though you are financially better off.

However, your financial position is important, and it is not as straightforward as it may seem. Costs and rates are liable to change and increase as time goes on. If markets change and your shared ownership home is reducing in value, you may end up feeling stuck in a home that you will not or can not sell your stake in.

Talking to a conveyancing solicitor in Portsmouth can ensure you have covered every eventuality before any paperwork is signed.

Is it a long-term decision?

It depends. If this home is just a temporary relocation, and you envision moving elsewhere soon, then a shared ownership property and the costs associated with the purchase are likely not worth your while. However, this will always depend on your financial situation and the property in question.

If you are looking for a long-term home, do not be put off by a shared ownership property. In the future, provided you keep up with rent and mortgage payments, you may be presented with a chance to purchase additional shares in the property. This is known as staircasing, and it allows your monthly payments and ownership percentage of the property to increase as you progress and can afford to invest more in your home.

When the time does come to move on, you can sell a shared ownership property at any time. If the value of your property has increased, you will benefit from the sale.

For example, a £200,000 property that has increased in value to £240,000, will see your 25% investment increase in worth from £50,000 to £60,000.

Considering shared ownership?

Shared ownership is much simpler when you can rely on a local property solicitor to help you along the way. Andrew & Andrew Solicitors provide timely, resourceful and cost-effective legal solutions, with a team that is experienced in meticulously handling every legal aspect of your purchase or sale.

We are here to help, whenever you are ready. To get started, please talk to our team.