Should You Consider Shared Ownership to Get a Foot on the Property Ladder?

These days it can be very difficult to purchase your first home and get a start on climbing the property ladder. Many people are finding it challenging to save up a deposit large enough and handle the payments on their first mortgage. Home prices in the UK are continuing to rise, especially in the major centres such as London, Newcastle and Edinburgh. Low paid workers are finding that they are being priced out of the quickly inflating housing market.

However, if you are in this situation this doesn’t mean you should give up on the dream of owning a home. There are some ways to make purchasing your first property a little bit easier, such as opting for a shared ownership scheme.
How Does Shared Ownership Work?

A shared ownership scheme allows you to purchase part of a property and rent the rest from a local authority or housing developer. The percentage you purchase is anywhere from 25-75% which means that your deposit will be much smaller and your mortgage will be more manageable.

Most city councils in the UK will have shared ownership housing schemes which help people to afford their first home. To qualify you usually need to be a first time buyer and be registered. Most of the properties offered in this scheme are brand new or recently renovated houses or flats.
Advantages of Shared Ownership

There are many advantages to buying shared ownership in a property, for example:

You will be able to afford a much bigger property than you would otherwise be able to live in.
The combination of the rent and the mortgage will likely be less than if you bought the property outright.
You might be able to get tax relief on your mortgage.
You might be exempt from paying stamp duty if the share that you are buying is below the minimum stamp duty threshold.
Most often a maintenance company or housing association is responsible for renovating and updating the property, so you will save money.
Once you have lived in the property for a while, you have the opportunity to purchase further shares and increase the percentage that you own, which is called staircasing. As you purchase more shares, your weekly rent decreases.

Disadvantages of Shared Ownership

There are, of course, a few pitfalls when it comes to shared ownership of property, such as:

You will still have all of the responsibilities of home ownership but the property will not belong to you fully.
As you don’t own the home, you will not be able to make renovations or changes with permission from the housing association.
You might need to pay service costs to the housing association.

Could shared ownership be the right option for you to help you afford your first home?

Simon Grant produced this content on behalf of first time buyer mortgage provider Ulster Bank.