Shared ownership of a property happens when you cannot afford to buy a house outright. With a shared ownership you can purchase a share of the home and then rent the rest. Usually, you buy a shared ownership properties through a housing association.
How to become eligible for Shared Ownership Properties?
According to the UK government, you are eligible to obtain a shared ownership property when your household earns £80,000 a year or less; if you live in London, that amount goes up to £90,000. You also need to be a first-time buyer, or perhaps you used to own a house, but cannot afford to purchase another one right now. If eligible, you can buy a share of 25% to 75% of the property. You can use a deposit and a mortgage to complete the transaction.
If you are over 55 years of age, you can buy up to 75% of property by using the Older People’s Shared Ownership (OPSO). The good part about owning 75% or more of the property is that you will not need to pay rent on the rest. Physically challenged people also have the opportunity of owning up to 25% of the property by applying for the HOLD (home ownership for people with a long-term disability) scheme, when you need a ground-floor property, for example. Alternatively, up to 75% of the house by applying for the General Shared Ownership scheme.
Understanding Shared Ownership Properties
After becoming the owner, you can buy more shares of the house through a process called ‘staircasing.’ The costs of the purchase of a new share can vary based on the home market. You are likely to pay more than the first share if the prices of properties have gone up in your area or pay less than the first share when the home’s prices haven fallen. Supposing you want to sell your shares of the house, the rights to buy it first are with the housing association; they also have the rights of finding somebody to purchase your property.
Understand that shared ownership houses are always leasehold properties, which means you own the lease on the house for a fixed period. You might need to pay monthly for a service charge for the property as well.
Pros and Cons
There are advantages and disadvantages of shared ownerships. Buying additional shares as time goes on is a good thing or the fact that it is likely to be cheaper than renting. A downside to the purchase of a shared ownership is the fact that you have to buy where you find a housing association, and that might not always be your preferred location. Also if the property value increases you might not going to be able to staircase quickly as the shares will become more expensive.
There is no obligation or need to engage a solicitor to your purchase of a shared ownership property. However, they are professionals who can help you out with the purchasing, selling or even with the staircasing. It might be helpful to you using a specialist who knows more about all the legal work that needs enables you to get a shared ownership property.
Shared ownership properties gives people the chance of owning property, which is not an easy or cheap thing. The fact that is usually cheaper than renting is also a good point. Plus, you can end up buying the whole house while already living in it. Instead of just paying rent and trying to save for years to move to a house.