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What is Shared Ownership?

Shared ownership is a system that allows people to get onto the property ladder by buying a percentage of a home while renting the remainder from a housing association or developer.

It is aimed that those looking for affordable housing, such as first-time buyers, and can be taken out through schemes that are operated by both private companies as well as the government.

Shared ownership works by home buyers purchasing between 25% and 75% of the property’s market value with a mortgage. The developer or housing association retains ownership of the remaining percentage and charges the buyers an appropriate monthly rent for it.

Properties purchased on a shared ownership basis are leasehold, meaning the buyer owns a lease of the property for a set period, typically 99 years. However, as time goes by, the occupiers are able to purchase further percentages in the property until they get to 100% and own the freehold. This is process is known as staircasing.

Getting a Shared Ownership Mortgage

Obtaining a mortgage for a share ownership purchase requires a good deal of research, as not all lenders provide mortgages on such a basis.

Those that do tend to also have very different criteria. For example, some lenders will not allow you to borrow 100% of the share you are buying as they insist that all borrowers put down a deposit and have some element of free equity in the home.

As with most mortgage deals, the larger your deposit the less risk you pose to the lender, giving you access to better deals.

The Contractor Mortgage Company is recommended by a large number of housing associations, as we have a wealth of experience at supporting first time buyers looking to borrow for a shared ownership property.

Shared Ownership Schemes

While it is possible to purchase a shared ownership property without assistance from the government, there are a number of schemes that have been made available to assist people looking to get a foot on the property ladder.

The best known of these is New Build HomeBuy, which is available on new homes with the buyer taking a mortgage for their share and the subsidised rent then being charged.

Social HomeBuy is an alternative for those living in social housing properties who are eligible to purchase under their council/landlord’s Right to Buy scheme. In order to qualify, the would-be buyers need to have lived in the home for more than five years.

Rent to HomeBuy provides a third option, as it allows people to rent a home for up to five years, after which they can then start the buying process.