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 have had enough of looking around for a property to buy, the good news is that there is still an option for you in the form of a shared ownership scheme.
For most people, shared ownership can provide a valuable stepping stone out of the rental market and onto the property ladder. It can also be the first step towards you owning your own home, but as with most things that involve such a large financial investment, you will need to consider the advantages and potentially the disadvantages of this option.
At Andrew and Andrew, our conveyancing solicitors Emsworth will always be happy to help buyers who are looking to invest in a shared ownership scheme. We can explain the process to you, as well as help you find a home which is suitable for your budget.
In the following brief and simplified guide, we break down what shared ownership is, and our conveyancing solicitors Emsworth answer common questions that we receive about this option from our clients.
What is shared ownership?
Shared ownership schemes are typically run by housing associations and, according to our conveyancing solicitors Emsworth, they are usually only available to first-time buyers. This allows you to take out a mortgage on a portion of the home rather than the whole home, such as 75% and for you to pay rent on the remainder. The benefit of this is that you do not need to have a mortgage which is as large as it would be if you were buying the entire home.
Can you buy the rest of the property?
Many clients are curious to know if they can purchase the rest of the property once they have begun shared ownership, and the answer is yes. This is a process known as staircasing and allows you to increase your share of the property up to 100 %. It is usually only done if your finances improve, but you can usually do it at any time during the tenancy and can do so up to a maximum of 3 times. Each time you ‘staircase’, the housing association will carry out a property valuation based on market prices, meaning you may have to pay slightly more than you did when you began the shared ownership.
Stamp duty and shared ownership
While most first-time buyers do not pay stamp duty, this exemption doesn’t always apply to shared ownership. You can pay it on the full value of the home upfront with shared ownership, or you can pay it on the portion you are buying. If you choose to pay it on the portion you are buying, you also have to pay the stamp duty every time you staircase and buy a bigger share of the property.
Selling a shared ownership home
Selling a shared home is in essence the same as selling a home that you fully own. In general, the only true difference is you must give the housing association the control to find a buyer. You will receive a share of the sale price in proportion to the percentage of the property that you own.