In the UK, many people are struggling to find a home or property that they can afford to buy. This is due in part to the cost of living increasing, and of course, due to fewer homes being available for sale.

If you are struggling to find a property that matches your needs within your budget, shared ownership is one option to consider.

Shared ownership 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, you must weigh the benefits and potential negative impacts of such a significant financial commitment.

What is shared ownership, and how does it work?

Shared ownership schemes are usually operated by housing associations and are primarily aimed at first-time buyers. These programmes are designed to help individuals with lower incomes get onto the property ladder by requiring a smaller deposit and sharing ownership with a housing provider.

In simple terms, shared ownership allows you to purchase a percentage of a property, rather than buying it outright. For example, if you opt for a 25% share of a property valued at £200,000, you would need a mortgage and deposit for just £50,000. The remaining 75% of the property, valued at £150,000, would be rented from the housing association.

There are no restrictions on the type of property you can buy through shared ownership. You may choose a new-build home or an existing shared ownership property being resold. Your initial share is purchased using a shared ownership mortgage and a deposit.

The advantages and disadvantages of shared ownership

The main benefit of shared ownership is that it reduces the amount you need to borrow through a mortgage, making monthly repayments more manageable. This can provide a valuable stepping stone for those who are struggling to save while paying rent.

However, it is important to assess your financial situation carefully before entering into a shared ownership agreement. Costs, including rent and service charges, can rise over time. If the value of your property does not increase at the same rate, you may find yourself tied to a deal that no longer suits your needs. Speaking to a conveyancing solicitor in Portsmouth can help ensure you fully understand the implications before signing any agreements.

Considering the long term

Over time, and provided you maintain your mortgage and rent payments, you may have the option to purchase additional shares in the property. This process, known as staircasing, allows you to increase both your ownership stake and your monthly financial commitment as your circumstances improve.

You are free to sell your shared ownership home at any point. If the value of the property has increased since your purchase, you will benefit from the appreciation. For example, if your £200,000 home rises in value to £240,000, the value of your 25% share will increase from £50,000 to £60,000.

Thinking about shared ownership?

Andrew & Andrew Solicitors provide timely, resourceful and cost-effective legal solutions for all your conveyancing needs, including shared ownership homes.

Our team meticulously handle every legal aspect of your purchase or sale, leaving you free to enjoy your new home.

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

Andrew & Andrew Solicitors proudly serve clients across Hampshire from our Portsmouth, Emsworth, and Wickham offices.