How to get on the property ladder #2 Shared ownership

If the idea of renting or buying with others doesn't appeal to you, and buying your own place is out of reach, consider the option of shared ownership. Shared ownership allows you to buy a share of your home, and pay a small amount of rent on the portion you do not own.

Monthly repayments are generally lower and, as a result, shared ownership schemes are getting the attention of many people who want to get on to the property ladder.

Candidates for shared ownership

The shared ownership scheme is an option available for first-time buyers who are unable to afford a property outright, and key workers. For a key worker to be considered, they must have a combined household salary of less than £60,000.

The list of key workers eligible for the scheme is updated regularly, so check often to see if your profession has been added to the list.

How it works

If you meet the requirements, your first point of contact should be your local council's housing department, or a housing association in your area. The council or housing association can provide more information about schemes that are suitable for your needs, and also handles all applications. 

It's quite common for people to buy shares worth 50%, but how much you buy depends entirely on you. The remaining shares usually belong to a housing association or a private scheme.

It can be useful to compare property prices, so that you make an informed decision on which area is most suitable for you. Not all areas have shared ownership schemes, so you may have to look further than your preferred area.

First-time buyer 

First-time buyer Carolyn purchased a 25% share nine months ago, and is glad to have made the decision to become a shared owner. "I didn't have much money for a deposit but it wasn't required on a scheme like this, which was a big weight off my mind as legal fees and stamp duty alone came to over £12,000. I was able to get a 25% share of a great property. It is a fantastic way for first-time buyers to get on the property ladder and increase the value of their investments."

'Staircasing'

Shared ownership allows you to buy further shares in the property through a process called staircasing. Any additional shares that are bought will be sold at the current market value; bear in mind that you will most likely have to pay a higher rate for shares in the future.

However, regardless of what percentage of shares you own, you have all the rights and responsibilities of any other homeowner as a shared ownership homeowner.

For those unable to get on the property ladder as a result of rising property prices and inflation, shared ownership is an inviting scheme.

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