Why Shared Ownership is a leading first-time buyer scheme

Getting onto the property ladder as a first-time buyer isn’t easy. The average home deposit for first-time buyers in the UK is around £53,400. Meanwhile, more than 11 million of us have less than £1,000 in savings.

With ongoing factors like inflation and the cost of living eating into budgets, securing enough funds for a home deposit on the open market can feel like a distant dream. But there’s another way!

One of the leading first-time buyer schemes comes in the form of Shared Ownership: a cost-effective, simple way to purchase shares in a home that could one day become entirely yours through a process known as ‘staircasing’. 

With Shared Ownership, first-time buyers have the option to buy shares and live in a home that could be far larger than they might have been able to afford otherwise – with deposits as low as £5,000 with a 5% deposit. 

How does Shared Ownership work?

Shared Ownership is a first-time buyer scheme (suitable also for anyone over the age of 18) that allows people who meet the eligibility criteria to purchase shares in a new build home – typically between 25% and 75%. 

You’ll take out a mortgage on the shares that you own and pay rent to a property management provider – such as Legal & General Affordable Homes – based on the shares owned by them. 

And there are Shared Ownership properties available all across the UK – not just in major cities like London. This opens up getting onto the property ladder for a wide range of individuals, and lets new families and first-time buyers get onto the property ladder sooner.

Benefits of Shared Ownership for first-time buyers

Lower overall monthly payments

As part of your Shared Ownership property fees, you’ll pay rent on your property as well as your mortgage and any associated service fees to the management company. However, while this combination may sound like a lot, it will typically end up being far lower than privately renting. 

This is because your rent is calculated based on the remaining shares in the property, and typically charged at 2.75%. On a £200,000 property of which you own 25%, that works out to £344 a month in rent.

Wide range of properties to choose from

One of the key pieces of advice for first-time buyers that comes up often is to browse as many homes as you can. This gives you a sense of what’s on the market, and what kinds of things you like or dislike in a new home. 

Thankfully, Shared Ownership properties are numerous and situated on developments all over the UK. This means a wide selection for first-time buyers, growing families and individuals to browse, including flats, apartments, and family homes.

Clear pathway towards home ownership

As mentioned above, Shared Ownership buyers can increase their share through a process known as ‘staircasing’. This approach has a couple of key benefits that make Shared Ownership an attractive option: 

1) The more shares you own in your home, the less rent you’ll be charged
2) If you increase your shares to 100%, the home will be wholly owned by you

Is Shared Ownership only for first-time buyers?

While Shared Ownership is commonly known as a first-time buyer scheme, it is available to anybody who meets the eligibility criteria. This could include older buyers who experience a change in their situation and want to secure their own home, or families undergoing separation and requiring a new place to live.  

The criteria for securing a Shared Ownership home includes: 

• You must be at least 18 years old
• You must not be able to afford a property on the open market
• Your income must not exceed £80,000 (or £90,000 if you live in London)