With house prices rising, many people find it hard to buy their first home. Shared ownership is an alternative option that can help. It allows people to buy a share of a home and pay rent on the part they do not own. This article explains how shared ownership works and how it can help people who want to own a home.
What is Shared Ownership?
Shared ownership, sometimes called part buy, part rent, is a way to buy a home by purchasing a share of it. This share is usually between 10% and 75% of the property. A housing developer owns the rest of the home. You then pay rent on the part you do not own.
There are many myths about shared ownership, but it is a useful scheme that can help people move buy a home. The process is simple and easy to understand, and it is well worth considering.
How Does Shared Ownership Work?
Below is a simple guide to how shared ownership works:
- Eligibility and Application: To apply for shared ownership, you must meet certain rules. You usually need to be a first-time buyer or someone who owned a home in the past but no longer does. You will need to apply through a housing developer. Plus, you need to provide details about your finances.
- Financial Assessment: Your finances get checked to see what you can afford. This looks at your income, savings, and any debts you may have.
- Find Your Property: When you apply, you must choose a specific property. Shared ownership homes are available in many areas. The developer can help you find a home that is suitable.
- Buying a Share: Once your application is approved, you can buy a share of the home. You will usually need a mortgage for this share. Most buyers can choose to buy more shares later through a process called ‘staircasing’. As you buy more shares, the rent you pay goes down.
Benefits of Shared Ownership
Shared ownership offers several clear benefits:
- An Affordable Way to Buy: You need a smaller deposit because you only buy part of the home. This can make it much easier to get started, especially for first-time buyers.
- Lower Monthly Costs: Shared ownership can cost less each month than renting privately. This is because the rent you pay on the part you do not own is often lower than private rent for a similar home.
- Flexibility to Buy More Shares: Shared ownership lets you buy more of your home over time, if you can afford to. This increases how much of the home you own and reduces the rent you pay. The rules for staircasing can vary depending on the development and the home.
Shared Ownership Makes Buying a Home Easier
Shared ownership is a good option for people who want to take their first step onto the property ladder. It offers a clear path to homeownership with lower deposits and monthly payments and the chance to own more over time.
If you would like to learn more about shared ownership, you can contact Sanctuary’s sales advisors by emailing newhomes@sanctuary.co.uk.