Interest in shared ownership schemes has surged across the UK as prospective homeowners seek alternative routes onto the property ladder. According to recent figures, approximately 250,000 people are currently using the Government-backed programme, with numbers expected to continue climbing.
Understanding Shared Ownership
Sam Fox, a leading mortgage expert from the UK Mortgage Centre, reports receiving dramatically increased enquiries about shared ownership arrangements. "Shared Ownership is a government-backed scheme designed to help people get on the property ladder when buying a home outright is financially difficult," Fox explained.
The fundamental principle allows purchasers to buy between 10% and 75% of a property's market value while paying rent on the remaining portion, which is typically owned by a housing association. This structure significantly reduces the required deposit and mortgage amount compared to purchasing a property outright.
Critical Costs to Consider
Fox emphasises the importance of calculating your total monthly commitment before proceeding with shared ownership. "Factor in rent on the remaining share, service charges, repairs, and insurance," he advises. Many buyers focus solely on their mortgage payments while underestimating these additional expenses.
Choosing an appropriate share size represents another crucial consideration. Purchasing too small a share can result in disproportionately high rental payments, while buying too large a share might overstretch your finances. Fox recommends selecting properties in areas with strong resale potential and checking build quality, service charges, and the landlord's management reputation.
Pros and Cons of Shared Ownership
Advantages
Lower deposit requirements make homeownership accessible to more people, particularly first-time buyers. The scheme also enables purchasers to access more expensive properties than they could otherwise afford. Homeowners benefit from equity growth on their owned share and gain a valuable stepping stone onto the housing ladder.
Disadvantages
Monthly costs can sometimes exceed traditional mortgage payments when combining rent, service charges, and mortgage repayments. Eligibility restrictions, including income ceilings and first-time buyer requirements, limit accessibility. The process of buying additional shares (stair-casing) or selling can be more complex than with standard ownership.
Furthermore, participants have limited property selection, often restricted to new-builds or specific shared ownership developments. Rent and service charges may increase over time, and homeowners typically require landlord permission for structural changes.
Fox concludes with essential advice: "Crucially, seek specialist advice. A professional experienced in shared ownership can help navigate mortgages, legalities, stair-casing, and resale." With proper planning and awareness of all associated costs, shared ownership can provide a viable path to homeownership for many UK residents struggling with traditional property purchase.
