The housing market remains challenging, making it harder for first-time buyers to purchase a home. Combined with rising living costs and fewer homes available, many people are now looking at shared ownership as a way to get on the property ladder.
If you are finding it difficult to buy a property within your budget, shared ownership could be the answer. Many people see it as a stepping stone out of renting and into home ownership.
Whilst it may be a step towards outright home ownership, that does not mean the decision is straightforward.
Shared ownership explained
Shared ownership schemes are usually run by housing associations and are aimed at first-time buyers. These programmes help people and families with lower incomes to buy property by sharing ownership with others.
With shared ownership, you can get a mortgage for part of a home instead of the whole property. For example, if you choose 25% shared ownership on a property worth £200,000, you only need a £50,000 deposit and a mortgage. You then pay rent on the remaining 75%.
You can choose from new build properties or existing shared ownership homes that are being resold, and talking to a local estate agent can give you greater clarity on what you are considering buying and what is on the market.
Many new build developments include shared ownership properties as part of government plans to provide more affordable housing, and may offer further incentives to secure sales on their new homes.
Positives and negatives of shared ownership
The main reason people consider shared ownership is money. With a shared ownership property, you do not need to take out as large a mortgage as you would for buying a whole property.
This means your monthly mortgage payments are much lower. It gives you a chance to get on the property ladder and feel financially better off. However, your financial situation matters, and things are not always simple. Costs and rates can change and go up over time. If the market changes and your shared ownership home drops in value, you may feel trapped in a home where you cannot or will not sell your share.
Speaking to a conveyancing solicitor in Portsmouth can help you prepare for every possibility before you sign any paperwork.
Is it a long-term decision?
It depends. If this home is just temporary and you plan to move elsewhere soon, then a shared ownership property and its costs are probably not worthwhile. However, this always depends on your financial situation and the property itself. If you want a long-term home, do not rule out shared ownership.
In the future, if you keep up with rent and mortgage payments, you may get the chance to buy more shares in the property. This is called staircasing, and it means your monthly payments and ownership share of the property increase as you can afford to invest more in your home.
When you are ready to move on, you can sell a shared ownership property at any time. If your property has gone up in value, you will benefit from the sale. For example, a £200,000 property that rises in value to £240,000 will see your 25% investment grow from £50,000 to £60,000.
Considering shared ownership?
The first steps in considering shared ownership are 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.