Is Shared Ownership Worth It?

Article by: Plumlife

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Shared Ownership is becoming much more popular with first time buyers and those who can’t afford to purchase a property outright. Around 202,000 households in England currently live in Shared Ownership properties, and a rise in house prices, rent, and the cost of living, means the scheme is in more demand than ever. The idea of a cheaper entry onto the property market is an attractive one, but you need to make sure Shared Ownership is right for you. So, is it worth investing in Shared Ownership? 

Deciding whether Shared Ownership is right for you depends on your circumstances. Your required deposit amount will be smaller and you will have lower monthly payments on a mortgage, but there are a number of other aspects to consider. 

Read on to find out more about investing in Shared Ownership and what you might need to consider.

What Is Shared Ownership?

In short, the ‘Shared Ownership’ scheme helps you buy a property that meets your needs if you can’t afford the usual deposit and mortgage payments. You’ll buy a share of the property and pay rent on the remaining amount you don’t own.

This share will be a percentage of the home’s full market value, typically between 25% and 75%, with a landlord owning the remaining portion. You’ll also pay extra charges each month, including ground rent and service charges. 

You can read about Shared Ownership in more detail in our helpful blog: “Buying Schemes For First Time Buyers”.

Pros And Cons Of Investing In Shared Ownership

Like any home buying scheme, Shared Ownership has its pros and cons, and should be considered on an individual basis. There is no ‘one size fits all’ answer to whether this is the right scheme for you, so you’ll need to carefully assess each aspect and decide if it’s suitable for your budget, lifestyle, and future plans. 

Below, we’ve outlined some of the benefits and drawbacks of the scheme, which could impact your decision to invest in Shared Ownership.

What Are The Benefits of Shared Ownership?

• Lower Initial Investment: Your deposit and mortgage is based on the share you’ll purchase, not the entire market value of the home. This means that the upfront cost of buying a Shared Ownership property is significantly smaller than a traditional purchase. You’ll be able to start the process with a lower savings amount, meaning you may be able to become a homeowner quicker. 
• Affordability: The rent payments on a Shared Ownership property are often lower than those found in the private sector. You can also choose to delay the payment of Stamp Duty until you own 80% or more of the home, avoiding what is often considered the biggest cost of ownership. 
• You can find out more about the costs involved in Shared Ownership and how they compare to buying outright here.
• Potential For Future Growth: Through a process called ‘staircasing’, you can buy further shares in your home over time, up to full ownership. You can also make profit on your home if you decide to sell, as the market value of the property can increase over time too. 

Take a look at the positive aspects of the Shared Ownership scheme in more detail by reading our helpful blog: “What Are The Benefits Of Shared Ownership?”

What Are The Drawbacks Of Shared Ownership?

• Rent Payments: In addition to your mortgage, you will also be required to make monthly rent payments, unless you’ve staircased to 100% ownership. You will have the option to buy further shares and increase your ownership which will in turn lower your rental payments. Please note, rent is typically reviewed annually in Shared Ownership properties. 
• Maintenance Costs: You’re responsible for the repair and maintenance costs of your home, regardless of what percentage you own. Your landlord might be responsible for some of the costs, if your contract outlines an ‘initial repair period’. 
• Permission for Certain Changes: You can paint, decorate, or refurbish a Shared Ownership property. For example, you can replace a kitchen or bathroom without permission from your landlord. However, if you’re looking to make structural changes, you might need written permission from your landlord. 
• Staircasing Costs: There are a number of additional costs associated with the staircasing process. Your budget will need to factor in surveyor reports, solicitors, and Stamp Duty, among other things. 

Who Should Consider Shared Ownership?

Shared Ownership is usually ideal for first time buyers, or those who don’t currently own a home. This scheme is a great choice for those who can’t afford the deposit and mortgage payments on a home that meets their needs. You may also want to consider Shared Ownership if you live in a high-cost area.

There are a number of requirements that must be met for you to be eligible for Shared Ownership. After checking if you qualify, you’ll then want to move onto the details of the scheme and see if it’s suitable for you. 

Find out more about who Shared Ownership is suitable for by reading this Plumlife blog.

What Are The Alternatives To Shared Ownership?

Shared Ownership isn’t your only option when it comes to purchasing a home, especially if you’re a first time buyer. These include:

• Lifetime Individual Savings Accounts (LISAs)
• Rent To Buy

Read more about the alternatives to Shared Ownership in our blog: “Buying Schemes For First Time Buyers”.

Is Shared Ownership Worth It?

Shared Ownership can mean the upfront costs of buying a home are significantly smaller than those of a traditional purchase. However, there may be increased costs in the long term and you may be more restricted in the building work you can do to your home. 

Deciding whether Shared Ownership is right for you  is entirely dependent on your personal circumstances. You’ll need to consider whether it’s the right fit for your budget, lifestyle and future plans. Making sure Shared Ownership is suitable for you in the long term is the most important decision when looking into the scheme. 

We’ve put together everything you need to know about Shared Ownership in our information hub, or you can check which properties you could afford with our calculator.

Why Choose Plumlife?

Here at Plumlife, we’ve been making home ownership easier for over 20 years. We have a number of properties available, and our helpful team is on hand to help you find something that suits your needs, budget and lifestyle.

Get in touch with Plumlife Homes today!

FAQs

Can I Sell My Shared Ownership Property?

Yes! You can sell your property at any time, with the process depending on how much of a share you own. You can either advertise on the open market, or give your housing association ‘first refusal’. 

Take a look at our blog to find out more: “Can You Sell A Shared Ownership Property And Buy Another?”

How Long Does It Take To Staircase In Shared Ownership?

The staircasing process can take up to three months, depending on the legal complexities involved. You’ll need to get a current market valuation, and instruct a solicitor and surveyor, all before you can buy any additional shares. If the process extends over this three month period, you’ll need to get a new valuation.

Article by: Plumlife

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