At Ubique Legal, we understand that getting on the property ladder can feel like an impossible task, especially in today’s property market. With rising house prices, many first-time buyers are exploring alternative ways to get their own home. One option worth exploring is shared ownership, which offers several benefits if you’re struggling to buy a property.
As experienced residential conveyancing solicitors, our team can help you decide whether this option could work well for you. We provide clear, practical advice on all aspects of property law, and will be happy to assist you with the conveyancing processes should you decide that shared ownership is your way onto the property ladder.
What is Shared Ownership?
Shared ownership is a government-backed scheme designed to help people who can’t afford the deposit and mortgage payments for a whole property. Under this scheme, you purchase a share of a property (typically between 10% and 75%) and pay rent on the remaining share, which is owned by a housing association, local council or private organisation. Over time, you can buy more of the property until you eventually own it outright.
This scheme is particularly beneficial for first-time buyers or those who are struggling to save for a full deposit. It offers a more affordable way to get onto the property ladder, allowing you to own a share of the property while paying lower rent than you might expect.
How Does Shared Ownership Work?
Shared ownership can be a great option for a broad range of people. Here’s how the scheme typically works:
- Initial Purchase – You buy a share of the property, with the remainder owned by the provider or landlord. The share you purchase depends on what you can afford, and unless you’re a cash buyer, you will need to secure a mortgage for that portion.
- Paying Rent – You pay rent on the portion of the property that you don’t own. This rent is often lower than the market rate; however, you need to account for additional costs associated with leasehold properties, such as service charges and management fees.
- Staircasing – Over time, you can ‘staircase’, which means buy more of the property in shares. By increasing your ownership percentage, you can reduce the amount of rent you pay. Your lease will contain all the information you need to buy shares.
- Eventually Owning the Property – Once you’ve purchased 100% of the property, the rent stops, and you’ll own the property outright, just like any other homeowner. However, in some circumstances, the maximum share you can own is 75% or 80%.
As property law specialists, we can guide you through every stage of the process, ensuring the terms of your shared ownership agreement are clear and answering any questions you have.
Eligibility for Shared Ownership
Before considering shared ownership, it’s important to know whether you’re eligible for the scheme. While eligibility criteria can vary slightly depending on where you’re looking to buy and who the landlord is, here are some common requirements:
- Financial Criteria – Shared ownership is primarily designed for buyers with an annual household income of less than £80,000 (or £90,000 in London) or who can’t afford a home that meets their needs.
- Type of Buyers – Not everyone looking to buy a home can apply for shared ownership. Common criteria include: being a first-time buyer, being unable to afford a new home, forming a new household, or moving from one shared ownership home to another.
- Local Connection – Some shared ownership properties are specifically aimed at people who live in, work in, or have connections to the area where the property is located. This is to ensure the scheme benefits people who are already part of the local community.
- Minimum Deposit – While shared ownership helps reduce the financial burden, you still need to save for a deposit. Typically, the deposit is based on the share of the property you’re purchasing. For example, if you buy a 40% share in a £200,000 property, your deposit would be based on the £80,000 share, not the full £200,000.
You can use the Government’s online eligibility checker or get in touch with our team if you’re unsure whether this is a scheme that could work for you. Our conveyancing solicitors will assess your situation and provide the legal advice you need.
Benefits of Shared Ownership
Shared ownership can be an excellent option for anyone who can’t afford the deposit or mortgage on a full property. Here are some of the key benefits:
More Affordable Way to Become a Homeowner
The biggest advantage of shared ownership is that it makes homeownership more accessible. With a lower deposit and a smaller mortgage, people can get onto the property ladder faster than they might with a traditional purchase.
Option to Increase Ownership
The option to ‘staircase’ and gradually buy more of the property means you can increase your ownership over time, as and when you can afford to. This provides flexibility and offers the potential to eventually own your home outright.
Security of Tenure
As a shared owner, you have the security of a long-term lease on your home, which provides greater stability than privately renting. This can be particularly reassuring for families or those looking for a more stable living environment.
New Build Properties
Shared ownership is often available with new-build properties, meaning you can enjoy the benefits of a modern home with energy-efficient features. A new home can also be lower maintenance than an older property, reducing monthly expenses.
Potential Downsides of Shared Ownership
While shared ownership offers many benefits, it’s important to consider the potential downsides as well. It’s not the right choice for everyone, and there are a few things to keep in mind:
Rent Payments
Even though the rent you pay on the portion of the property you don’t own is typically lower than market rent, it’s still an additional cost. Similarly, you need to take into account additional costs like reservation fees, service charges, estate charges and repairs reserve funds.
Limited Control Over the Property
As a shared owner, the landlord still holds a stake in your property. This means there might be some restrictions in your lease on things like making alterations to the property or subletting. You may need to get permission to carry out home improvements.
Staircasing Can Be Expensive
While staircasing can help you eventually own the whole property outright, it can be expensive. You’ll need to pay for each additional share, and the landlord may charge an administration fee. This might not always be affordable, especially if property prices rise.
Selling the Property
When it comes to selling the property, if you don’t own 100%, it’s not always straightforward, and you might not have as much control over the process. Some landlords may offer to buy back your share, or they may have a ‘nomination period’ to find a new buyer.
How Ubique Legal Can Help
It’s always important to choose the right solicitor when buying a house, but it’s even more important when you’re using a scheme like shared ownership. At Ubique Legal, our team can help you navigate the complexities of shared ownership. From reviewing contracts to guiding you through the staircasing process, we’re here to ensure the legal side of things is clear.
Our residential conveyancing solicitors have extensive experience in shared ownership transactions, and we can offer practical advice and support every step of the way. Whether you’re just starting to explore shared ownership or you’ve already found a property you want to buy, we’re here to help you make informed, confident decisions.
Is Shared Ownership Right for You?
Shared ownership offers a great opportunity for many first-time buyers to get onto the property ladder, but it’s not right for everyone. To determine whether it could work for you, it’s essential to assess your financial situation, your long-term property goals, and whether the benefits outweigh the potential downsides.
If you’re considering shared ownership and want to ensure the legal work is handled properly, we’re here to help. Our team at Ubique Legal can guide you through the property transaction, and we pride ourselves on our transparent conveyancing fees.
Contact us today to schedule a consultation with one of our property law specialists. We’re based in Redditch and service Birmingham and the West Midlands area. We also work with clients throughout England and Wales.
