Buying houses continues to become more difficult for younger people. With a complex housing market that shows no sign of abating 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, usually managed by housing associations, are designed primarily for first-time buyers. These programs aim to make property ownership more accessible for individuals or families with lower incomes by allowing them to purchase a share of a property rather than the entire home.

Through shared ownership schemes, buyers can obtain a mortgage for a portion of a property. For example, choosing a 25% share in a property valued at £200,000 would require a deposit and mortgage for only £50,000, while rent would be paid on the remaining 75%.

There is flexibility in property selection, as buyers can choose either a new build or an existing shared ownership property available for resale.

On new-build developments, many properties are marketed as shared ownership as part of the government’s initiative to provide more affordable housing options.

Positives and negatives of shared ownership

The primary reason many people consider shared ownership is financial. With a shared ownership property, you do not need to secure as large a mortgage as you would for a full property purchase.

As a result, your monthly mortgage repayments are significantly lower, offering an affordable way to get onto the property ladder and potentially improve your financial situation.

However, it is essential to carefully consider your financial position, as shared ownership is not always as straightforward as it appears. Costs and rates can fluctuate over time, and if property values decrease, you may find yourself in a situation where selling your share becomes difficult or less profitable.

Consulting with a conveyancing solicitor in Portsmouth can help you understand all potential outcomes and ensure you are fully informed before signing any paperwork.

Is it a long-term decision?

That 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 seeking a long-term home for you or your family, do not dismiss the idea of shared ownership. In the future, as long as you consistently meet your rent and mortgage payments, you may have the opportunity to purchase additional shares in the property. This process, known as staircasing, enables you to gradually increase both your ownership percentage and your monthly payments as your financial situation improves and you are able 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 provides 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.

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