The Top 5 Benefits of Shared Ownership
The speed of house price growth may have slowed down for now, but workers can still be required to wage almost eight times their salary for their home. This figure is higher in some parts of the country. The government has set up schemes to help people get on the property ladder. Which do you choose Shared Ownership or Help to Buy? This is a brief guide for the top 5 benefits of Shared Ownership.
What is Shared Ownership?
Shared Ownership is a governmental homeownership plan, which offers a way on to the housing market for people who cannot afford to buy a property of their own. With Shared Ownership, you own a part of a property, with a housing association owning the remaining part.
You pay mortgage payments on the part you own and rent on the part you do not. The portion of the property is up to you, to start with you can buy between 25% and 75%, and then increase and buy more of the property over time.
If you do want to own your home, however, then you may wish to explore Help to Buy. These two options are the most popular government schemes, and both have their own benefits, so make sure you thoroughly explore which is right for you. This handy article entitled “Shared Ownership vs. Help to Buy: which one’s right for you?” offers a very comprehensive analysis of the two and is worth the read if you want more information.
For now, we’ll focus on the key benefits of Shared Ownership.
One of the main benefits of Shared Ownership is that it is affordable. Shared Ownership allows people to live in a nicer property, which might not have been affordable else. The rent on the property is less than the rate charged on the open market, usually charged at 2.75% of the property value for each year.
The deposit for the property will also be less because the mortgage is smaller. The deposit is taken from 5-10% of the price of the share you want to own, not a percentage for the whole of the property. This means that if you are a low-income earner, you can still be approved for a mortgage as the loan will be much smaller.
3. Your property
Many people think that because you are part of Shared Ownership, you cannot decorate or improve upon your property, but you can. You are free to decorate the interior of your property as you wish; however, the housing association will not contribute to improvements or changes. Your lease will have details as to whether you can make bigger alterations to the property, such as new flooring, as well as making adjustments to the exterior of the property.
Another benefit of Shared Ownership is that over time you can ‘staircase’ up to 100%. This means that you can buy more shares of the property and eventually own the property outright and no longer have to pay rent. However, you can choose not to ‘staircase’ and can keep your shares at the same rate.
5. More Secure
Shared Ownership is beneficial as whilst you’ staircase’ you get more security than you would renting privately, as you own the property. However, if you choose not to the staircase, it means you are less at risk of fluctuations in the property market. If you choose to, your shares of the property can be sold at any time, allowing you to move within the property ladder as an owner-occupier easily.
The benefits of Shared Ownership are worth considering if you would like to get on the property ladder quickly or live in a better property that you would be able to afford if you were to buy on the open market. Your monthly repayments can also work out cheaper than an outright mortgage or privately renting, while also giving you more security and being at less of a risk if the housing market were to change.