OVER the last 15 years or so, shared ownership has really moved from a specialist niche to an increasingly mainstream and common housing option for today’s hard-pressed first-time buyers.
Simply put, it involves buying part of a home – typically from a housing association – and paying rent on the rest. The portion purchased is usually between 25% and 75%. The part-owner has the option to increase the share of the home they buy, all the way up to 100%, in a process known as ‘staircasing’.
All shared ownership properties are leasehold and are typically newbuilds.
Because you are paying a mortgage only on the portion of the property purchased, the deposit is much less of a hurdle. Generally, it’s 5% of the price of the portion bought. The rent, meanwhile, is less than the rate that would be charged in the open market.
To be eligible, prospective shared ownership buyers need to be 18 or over, have a household income of up to £80,000 (outside London), and they must be unable to buy a home that meets their needs on the open market.
For further information check out HM Government Help to Buy website
Help to Buy: Equity Loan
This is a loan from the Government covering up to 20% of the cost of a newly built home. It’s a leg up for first-time buyers and those moving home, meaning they only need a 5% deposit and a 75% mortgage to buy the property. Loan fees are only charged after the first five years of ownership.
Help to Buy: ISA
The Government pays first-time buyers a bonus to boost their savings for a deposit. For every £200 they save, the Government adds £50 up to a maximum bonus of £3,000. This would boost ISA savings of £12,000 to £15,000.
For further information check out HM Government Help to Buy website
The aim of the Rent to Buy scheme is to give working households the ‘breathing space’ they need to save up for a deposit to go on and buy their own home.
It does this, as the name suggests, by letting homes at intermediate rents – that is they are higher than local social rents but lower than the average charged in the private rented market.
Typically aimed at first time buyers, it can also apply to certain other groups, such as people returning the market following a relationship breakdown.
For further information check out Home Owners Alliance website
