Updated Aug 30, 2023
Our shared ownership explained guide will cover some of the most widely common misconceptions about Shared Ownership.
Shared Ownership is often overlooked because of misconceptions that can obscure its true benefits and potential.
Is shared ownership more expensive than renting a property?
Although it’s a common belief, it’s not true that shared ownership is more expensive than renting a property.
With shared ownership, you need to provide a deposit for the portion of the property you’re buying. However, this can be lower than what you’d pay for a privately rented property because you are only buying a share of the home (usually between 25% - 75%).
In terms of monthly payments with shared ownership, you would typically have two payments. A mortgage on the owned portion and rent on the remaining part that you don’t own yet. But these costs can often still be cheaper than paying rent on an equivalent privately rented property.
A significant financial advantage to shared ownership over renting is that each mortgage payment is building equity in your home. This acts as an investment which can give returns if the property value rises, unlike renting, which offers no return at all.
You can buy additional shares in your home until eventually becoming full owners if desired, thus reducing the rental portion.
Shared ownership can provide more security compared to renting. A landlord cannot end tenancies as they could in private rentals.
Everyone’s circumstances differ. There are pros and cons to both options. This will depend upon personal financial conditions, plans for future mobility or stability.
Check our guide on shared ownership vs renting for more information on the pros and cons.
Is shared ownership only for first-time buyers?
Shared ownership is not only for first-time buyers. It can also be utilised by previous homeowners who now find it difficult to buy a property outright. Also by people who have had changes in their life circumstances, such as a relationship breakdown.
Shared Ownership is popular among first-time buyers. This is because of the lower upfront costs and deposit requirements. It is accessible and beneficial for those looking to re-enter the property market.
The eligibility criteria can vary depending on the housing provider and location.
Can you sell a shared ownership property?
You have a right to sell your share. The process might differ compared to selling a privately owned property. Here are some things to consider:
The housing association that owns the rest of your home usually has ‘first refusal’ rights. This means they have the right to find a buyer before you can put it on the open market.
There is typically a nomination period (usually around 8 weeks) in which the housing association has time to find another eligible buyer.
To determine the price of your share, your property needs to be valued by an independent valuer.
Just like with any other type of house sale, there will still be estate agent fees, legal fees etc., involved in selling your shared ownership.
Remember that every housing association may have slightly different processes and rules regarding selling. It’s always important to check with them first or consult with a legal professional.
While there might be more steps involved compared to conventional house sale procedures, it’s definitely possible to sell it!
Is it more difficult to get a shared ownership mortgage?
Getting a shared ownership mortgage is not always more difficult than getting a traditional mortgage. The process might be slightly different, but it doesn’t have to be more challenging.
Lenders do still require borrowers to meet certain financial requirements for shared ownership mortgages. The loan can be lower with shared ownership mortgages compared to traditional ones. This could make it easier for borrowers with less-than-perfect credit scores or low income to qualify.
There are complexities involved in every type of mortgage application. You can seek information and support from professionals such as legal advisors and mortgage brokers.
Can you decorate a shared ownership property?
Certain structural changes may require permission from your housing association. Usually you can decorate your home and make non-structural alterations. This can include painting walls, changing carpets or curtains, and other forms of interior decoration.
It’s always a good idea to check with your housing provider first if you’re planning any major refurbishments. Keeping good communication with all involved parties helps avoid potential issues arising down the line.
Can you own a property outright with shared ownership?
You can eventually purchase a shared ownership property outright in a process known as “staircasing”.
You start by purchasing a percentage of your home (usually between 25% and 75%) and pay rent on the rest. Over time, as your financial circumstances change, you can choose to buy more shares in your property.
Buying additional shares is called staircasing. If you staircase to 100%, you become the outright owner of the property and no longer have to pay rent on any portion of it. The rules around this may vary slightly depending on the housing association. Broadly speaking, staircasing to full ownership is indeed possible under shared ownership.
However, note that there might be extra costs involved, such as valuation fees, legal expenses and stamp duty. This will depend on how much you staircase at once.
It’s advisable to seek professional advice tailored to your individual circumstances.
Do you have to share your property with the landlord or other tenants?
The term “shared ownership” can be a little misleading. You don’t actually share your home with landlords or other tenants.
Even though you’re buying only part of the property, the part you do own is yours alone. You have sole rights to live in it; no one else, including landlords or other tenants, has such rights unless specified differently in some agreements.
The ‘sharing’ part comes mainly from sharing financial stakes with the housing association. You may choose to buy further shares in your property and potentially own it outright - this is known as staircasing.
What is the eligibility criteria for shared ownership?
While it is commonly believed that shared ownership is only available to a small percentage of people, this is actually not entirely accurate. The eligibility criteria for shared ownership schemes may be more accessible than many people think.
The basic eligibility requirements typically stipulate that:
You must be at least 18 years old.
Your annual household income must be less than £80,000 (£90,000 in London).
You should generally be a first-time buyer - you don’t currently own a home and can’t afford to buy one on the open market.
If you already own a home but need to move and cannot afford to, you may also qualify.
There are certain criteria that potential buyers must meet in order to qualify for shared ownership. These aren’t as restrictive as some might believe. They should help those who otherwise wouldn’t be able to step onto the property ladder.
That being said, it’s always important when considering property purchases or entering any kind of financial agreement to thoroughly research and understand all associated requirements and obligations. Consulting with professional advisers or housing associations can provide valuable guidance.
Can you keep pets in a shared ownership property?
The ability to keep pets often depends on the individual housing association’s rules and regulations. Details will also be in the lease agreement.
While some properties may have restrictions or require prior permission for pets, it is not a blanket rule across all properties. It’s always best to research and ask questions about specific policies before moving into a property if keeping a pet is important to you.
Even if pets are allowed, you’re typically expected to ensure they do not cause any nuisance or damage to the property or neighbours.
Can you only buy a flat or apartment through shared ownership?
Shared ownership isn’t exclusive to flats or apartments. It applies equally to houses too. The type of property available will depend on what the housing associations in your area offer.
Many housing associations provide the option for shared ownership with both houses and flats. The range and availability will depend on local market conditions.
Can you only buy a new build through shared ownership?
Shared ownership doesn't just allow you to purchase newly built properties. Shared Ownership Resales are homes that a current owner bought through shared ownership and now wants to sell on. When they choose to move, they can sell their share for its value at the time of sale.
This presents another opportunity for individuals or families who cannot afford the total cost of buying a home outright. It remains similar for resale properties, where you would purchase a portion of the home and pay rent on the remaining share.
Remember, just like with new build shared ownership homes, you’d have an option to increase your share in the property over time if you wish.
We’ve delved into some of the most common myths around Shared Ownership and have debunked them. Whether it’s the right fit for you will always depend on your individual circumstances. Shared Ownership can present an affordable stepping stone for many people.
Remember, as with any financial commitment and investment like buying a house, careful research is key before making your decision. Consult with professionals in housing associations, legal advisors, or mortgage brokers. This will help you understand more about Shared Ownership.
Keep in mind that rules and eligibility criteria can vary between different housing providers and locations.