What to consider when buying a shared ownership property

In today’s market, it can be difficult to get a foothold on the property ladder. House prices have more than tripled since the late 1970s, and although salaries have also increased, wages have generally lagged behind in the ever-expanding housing bubble. The discrepancy means that more people are finding themselves in rented accommodation or looking for alternative ways to buy a home.

Step forward, shared ownership.

What is shared ownership?

Shared ownership schemes are aimed at people who do not have enough income or savings to buy a property outright.

Instead, would-be purchasers are allowed to buy a percentage of a home ranging from a quarter up to 75% – with rent payable to either a housing association or private developer on the remaining share.

There is always the option to buy further ‘portions’ of the property at a later date. This is known as ‘staircasing’, with each increment decreasing the amount of rent owed.

The schemes tend to be offered on new-build properties, although some housing associations do sell on older homes on a shared ownership basis.

It is important to note that shared ownership schemes are run slightly differently in Northern Ireland, Wales and Scotland.

What are the disadvantages of shared ownership?

Shared ownership in England is offered on a leasehold, rather than freehold basis. This means that ownership only lasts for a fixed term and the land a property stands on does not belong to you.

In many cases, this means that the landlord (and in the case of shared ownership, this may be a housing association or private developer) can charge maintenance costs. As well as factoring in mortgage payments and rent, owners need to be aware that these maintenance fees may rise in the future.

In addition, some providers may place restrictions on the staircasing process. In some cases it may be possible to buy 100% of the property, but in others there could be a ceiling and only a certain number of increments allowed.

A conveyancer will be able to check the fine print so you will be able to make an informed decision when it comes to weighing up the pros and cons of shared ownership.   

Talk to a Solihull solicitor for advice

If you are looking for Solihull solicitors who can help with any aspect of conveyancing including shared ownership, call us on get in touch to request a consultation.