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A Guide to Shared Ownership

By: Barry Scott

With house prices still out pacing income and First Time Buyers (FTB) struggling to save the deposits then another option might be shared ownership.

The difference between this and a conventional mortgage is you only purchase a percentage of the property, the remainder you pay rent on to the housing association.

So how does this work?

You must have a minimum of 5% deposit and can purchase from 25% of the property value.

The remaining % you will be charged rent on which is payable to the housing association.

What are the advantages to this scheme?

  • The property must be purchased through a housing association
  • You can purchase from 25% of the property value
  • It helps more buyers get into property ownership
  • Stamp duty not usually payable unless over threshold
  • You can apply to purchase further % of the property normally in increments of 20%-25%.(this is called staircasing)
  • As you purchase more your rent reduces by the same %

What are the disadvantages to this scheme?

  • You do not own the property fully.
  • You will pay rent at the rate set by the housing association
  • Rent will most likely increase yearly with retail prices index
  • Each % you wish to purchase will mean a new mortgage application and may incur costs for legal and valuation
  • Some housing association properties may not permit full ownership
  • You have to obtain permission to do any home improvements

Why not check out full details on our Buyers Guide or call us on 01473 462288 to see how we can help you.

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