Buying A Home with Shared Ownership? Here’s what You Need to Know

Buying A Home with Shared Ownership? Here’s what You Need to Know

If you are really struggling to find a home that is within your price range, then shared ownership may be an option. This is essentially a halfway house that will put you right between buying and renting. It is also ideal if you are a first-time buyer and finding it hard to raise a big deposit. For a lot of people, shared ownership can be a fantastic steppingstone that will help you to get out of renting. That being, there are some things that you need to know.

What is Shared Ownership?

Shared ownership schemes tend to be run by housing associations. They are open to first-time buyers, and they give you the chance to take out a mortgage on part of your home. You then pay rent on the remainder, meaning you won’t need to take out a big mortgage as you won’t be buying the property outright.

The Advantages of Shared Ownership

The main advantage that you get when you opt for shared ownership is that it makes it much easier for you to get on the property ladder. You will be able to take out a smaller mortgage and therefore, will need a smaller deposit. Even though your mortgage repayments may be more than a full mortgage, as you’ll be paying rent as well, you won’t have to worry about the deposit as much. Shared ownership is preferable when compared to renting, as the portion of the home you do own will increase in value. If this happens, you will have equity which will help you to take that next step on the property ladder.

Can You Buy the Rest of the Property?

You can increase your share of the property through staircasing. This is possible if your circumstances improve or if you have acquired a lump sum. You can do this at any point during your tenancy, but you can only do it three times. If you start by buying 25%, you could staircase to 50%, then 75% and eventually 100%. Every time you staircase, a housing association will carry out a valuation, meaning every time you staircase, you will do so at the current value of the property and not at the price when you originally bought your share. If you staircase, you will have to remortgage as well.

What about Stamp Duty?

Most first-time buyers will not have to pay stamp duty, but this doesn’t always apply when it comes to shared ownership. You have multiple options here. You can either pay it on the full value of your property right away, or you can choose to pay it on a percentage of the property instead. If you pay it on a portion, you won’t qualify for exemption, and you will need to pay it every time you increase your property share. If you pay it all upfront, you will qualify for exemption, but only up to £300,000. This is £500,000 in London.

How do I Sell?

Selling a shared ownership property is very similar to selling a home. The downside is that you need to give your housing association the chance to find a buyer before you put it on the market. The money you’ll get equates to the share you own.


If you would like to discuss how you can apply for a Shared Ownership Mortgage, then contact us on 0800 001 6515.