Shared ownership

Shared ownership schemes are a combination of buying and renting. The idea behind shared ownership is that the occupier has a share in the ownership of a property, usually between a quarter and three-quarters, and then they rent the part that isn’t owned at a reduced rate. There is the option of buying a bigger share in the property at a later date.

Most of the homes available for shared ownership are newly built, but some are properties being re-sold by housing associations. All shared ownership homes in England are offered on a leasehold only basis.

Shared ownership schemes are aimed at people who don’t earn enough to buy a home outright, mainly first-time buyers. This could also include key workers such as nurses, teachers and police officers, as well as those aged 55 and over, or people with special needs.

Prospective applicants should speak to the local council’s housing team or housing association to find out whether the scheme is available and if they are eligible. Not all mortgage lenders will provide a mortgage for shared ownership, and applicants may need to undergo strict affordability checks by the lender, as well as being able to provide a deposit.

Prospective applicants must be sure they will be able to afford all the costs of home ownership; including mortgage fees, moving costs, stamp duty, insurance, repairs, maintenance and, if it’s a flat in a block, the service charge. Despite only owning a share of the property, the responsibility for the maintenance costs lies with the occupant.

There are a number of other government-backed schemes to help homeowners including; help to buy, shared equity and right to buy.

It is important to note that shared ownership and shared equity schemes are different. With shared ownership, only a part of the property is owned albeit with an option to buy more. Whereas, with shared equity the property is owned from the start but a proportion of its value must be repaid when it is later sold, equivalent to the proportion of government equity taken for the purchase.

Read about shared equity here.

--Money Advice Service