WTF is Shared Ownership and is it right for me?!

WTF is this blog about?!

  • Dreaming of owning your own home but struggling to save a deposit? Shared Ownership could help you get on the property ladder sooner! 🏡
  • FYI, the current Shared Ownership scheme is set to run between April 2021-2023.

Most of us have dreamt of owning our own home from the moment we built our first 20-bed mansion on The Sims. Unfortunately, the ‘motherlode’ cheat code doesn’t seem to work irl, which can make saving for a house deposit long af!
But don’t worry, you won’t have to rent forever, ’cause the government’s new and improved Shared Ownership scheme’s got your back 👊

WTF is this blog about?!

Shared Ownership is a government-run housing scheme that lets you buy a small chunk of a property (between 10-75%) and pay rent on the rest. The cool thing about this is that it’s cheaper than buying a whole property upfront and you can buy more chunks (in as little as 1% instalments) as and when you afford to – this is known as ‘staircasing’. This means that, eventually, you could own the whole damn thang!

Don’t quite understand how it works? Let’s look at an example shall we:

Am I allowed to do it?!

Shared Ownership isn’t open to everyone, but if you’re:

  • Earning less than £80k a year as a household (or £90k in London); and
  • Either a first-time buyer, an ex-home owner (or in the process of selling your current place), or an existing Shared Ownership owner looking to move.

You’re in luck!

What’s so good about Shared Ownership?!

👍 It can help you get on the property ladder sooner.

👍 It allows you to buy a bigger house than you would have been able to if buying outright.

👍 You can buy more chunks of the property as and when you can afford to (AKA ‘staircasing’).

👍 The total monthly cost (mortgage and rent) can often work out cheaper than renting alone.

👍 The new and improved scheme (available from April 2021 onwards) comes with a 10-year repair period, whereby the landlord or housing association is responsible for any repairs/maintenance in the home (this is one of the key perks of renting vs. buying – so it’s a HUGE improvement!).

What’s not so good about Shared Ownership?!

👎 You have to pay fees each time you buy another chunk of your property (AKA ‘staircase’).

👎 It can be difficult to sell the property (unless you’ve staircased to 100%).

👎 All Shared Ownership properties are leasehold (i.e. you don’t own the land that your house is built on).

👎 Owning only part of the property means you can face restrictions on building work and sub-letting.

👎 If you can’t keep up with your rental payments you could get kicked out of your house and lose the proportion you own.

👎 You might not qualify for the first-time buyer stamp duty exemption.

👎 The type of property you can buy is limited (it must either be a new build or an existing Shared Ownership property that someone’s looking to sell).

👎 The limit on a Help to Buy or Lifetime ISA is applied to the entire property price, not just the value of the chunk you’re buying – so you might miss out on the bonus.

So what?

If you’re desperate to own your own crib but can’t afford a big enough deposit, Shared Ownership could help you get on the property ladder sooner. But there are some limitations involved, so it’s important to decide whether these are worth it. To find out more about the types of Shared Ownership properties available in your area, click here.

P.S. If you’re feeling pressure to buy a place because you’re worried you’re “wasting all your money on rent”, check out this blog I wrote about why renting is low key 🔥

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Now for the serious part: my blogs are for educational purposes only – speak to an independent financial advisor for information on your specific circumstances. And remember, investments can go down as well as up.

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