People have got all sorts of strange ideas about shared ownership.
From having fears that you will be forced to live with a complete stranger, to having little or no say on which property you buy, there are lots of things people tend to worry about.
However, Homefocus is here to separate the myths from the facts to help you find out more about how shared ownership could work for you.
I’ll only be able to buy a tiny starter flat
Some shared ownership homes may be starter homes, but they’re not tiny... You can expect the same standards of space, storage and eco-efficiency as in any typical new-build, so you’re not going to lose out.
It must be cheaper to rent than buy!
Really? We think that if you can put a deposit together (at only 5% of the share you are buying), then shared ownership can work out cheaper.
You’ll pay a mortgage on the share you buy and a subsidised rent on the share owned by the Registered Provider (usually a housing association), so it generally works out less per month than private rent or buying your home outright.
You have to be a first-time buyer to use it
Shared ownership is designed for first-time buyers, specifically those that can’t stretch to buying the home they need without a little leg up on the ladder. But there are exceptions to the rule – if you’ve previously owned a home but can’t afford to buy one now, if your current home is unsuitable, if you have a long-term disability or if you’re aged 55 or over you could qualify for shared ownership too.
You need huge savings
You will need to have enough to cover legal fees, removal costs and of course, a deposit. That’s the case when buying any home. But with shared ownership, the deposit you need is only 5% of the price of the share you’ll be buying – not the full price of the home.
It’s hard to get a mortgage like this
It’s no harder to get a mortgage for a shared ownership property than it is for any other. Not every lender offers shared ownership mortgages, but if you have a good credit rating and use a specialist mortgage advisor (SMA), then you should be fine.
You have to share a home with someone?
No, not unless you want to! Plenty of people do buy their shared ownership home with a friend and there’s no reason why you can’t bring in a lodger to live there with you. But it’s the ownership you share with the Registered Provider, not the living space.
There’s loads of repetitive form filling
Not necessarily: and remember, the result is being able to find a home of your own. You will have to register with a Help to Buy agent – see helptobuy.gov.uk to find your local agent.
And many mortgage companies or financial advisers offer online forms to make the process even more convenient, avoiding physical paperwork and postage delays.
You’re told how much you can afford and what share to buy
But that’s a good thing! The Homes England assessment which you will be guided through is based on affordability, so you don’t overstretch yourself financially and try to borrow more than you can pay back.
You have to live or work in the area you want to move to
That’s no longer the case in every area! There may well be a pecking order for certain properties, but any first-time buyer within the earnings threshold may be able to apply for shared ownership.
I earn too much
You may quality for shared ownership if you have an annual household income of less than £80,000 (or £90,000 in London). If you earn or receive in other benefits more than this, check with a Help to Buy agent to see if you’ll still qualify for shared ownership.
It’s too complicated
Buying any property is complicated. That’s why there’s a whole industry of conveyancing solicitors and SMAs. Fortunately, some specialise in shared ownership transactions.
It’s hard to sell when you want to move
Shared ownership reflects the market. When the market is good, it’s good for all properties but when it’s not great it’s not great for shared ownership too. The one difference is that your Registered Provider will have the first opportunity to find you a buyer. When the market is good, they’ll have a ready-made list of those people wanting to buy, and in difficult times they will let you open up your sale to estate agents after a few weeks.
• If you think shared ownership is an option for you, see helptobuy.gov.uk and register with a local agent.