What is Shared Ownership?
9 October 2020
Shared Ownership is a Government-backed scheme which allows first-time buyers, and those who do not currently own a home, the opportunity to purchase a property at an affordable price.
Shared Ownership works by enabling a buyer to purchase a share of a property, otherwise known as the ‘share value’. This share value is typically between 25% and 75% of the purchase price and represents how much of the property the buyer owns.
A subsidised rent is then paid on the share of the property not purchased.
Is a deposit needed?
Yes – in order to purchase your property, you will need to have a deposit in order to secure your mortgage.
However, the deposit is only required for your share value, not the full property value. Generally, the deposit amount is just 5% of the share value but can vary depending on the property. This is what makes the scheme so affordable.
Let’s break it down: say you want to buy a £320,000 one bedroom flat at Leon House in Croydon, London. The minimum share value you can purchase is 25%, which equates to £80,000. In order to secure your property, you will need to put down 5% of the £80,000. This means that in order to buy a London property, you need as little as a £4,000 deposit.
Is a mortgage required?
Yes – a mortgage is required on your share value.
Let’s say you purchase a four-bedroom family house at Stortford Fields with a 40% share value. This means you own 40% of the property at a cost £218,000. You will have to pay a monthly mortgage for this amount, which will be worked out by your mortgage lender and yourself. For the remaining 60%, you will pay a discounted rent.
Can I eventually own 100% of my home?
Yes – If you would like to eventually own 100% of your property, this is possible.
Owning your home outright is achievable through something called ‘Staircasing’. In the weeks, months or years after you move into your home, you can increase your share all the way up to 100% – as and when you save more money.
The great thing is, when you increase your share, the subsidised monthly rent you pay each month reduces even further.
Want to get on the property ladder with Shared Ownership?
We provide an array of top quality, contemporary apartments and houses across England. Start your search by viewing our current properties available. Or, head to our social media profiles on Instagram and Facebook (@legalandgeneralaffordable) to ask your Shared Ownership questions. #landgah