What Is Shared Ownership and How Does It Work?

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Imagine this: you’ve stumbled upon a charming Cape Cod home, complete with white picket fence and sprawling backyard. It’s everything you’ve dreamed of, yet the price tag unfortunately rockets it out of your financial orbit.

Should you abandon that dream? Absolutely not! This is exactly the scenario where shared ownership can be a game changer.

Shared ownership allows several people, much like you and me, to pool resources to secure something otherwise unattainable, similar to how friends might split a hefty dinner bill. The best part? This innovative method isn’t just for homes. Picture co-owning a sleek Porsche, an impressive art collection, a luxury yacht, or even your own thriving business. Intriguing, right? 

Now I bet you’re asking “Ok, this sounds promising, but what’s the catch? How exactly does it work??”

Well, the process of shared ownership can seem a tad complex due to the different factors involved, such as the asset you’re buying and the specific agreements among all parties.

But don’t fret! We’re about to plunge head first into the depths of shared ownership. So fasten your seatbelt, as we embark on this enlightening quest.

  • This arrangement is predominantly prevalent in the vast realm of real estate, especially in the United States, and is favored by those in the hunt for a second residence.

Shared ownership offers a beguiling alternative for those who may not yet be financially prepared to plunge into complete property ownership, while simultaneously affording them an opportunity to build equity and, possibly, to eventually acquire their dream home in its entirety. 

Mastery of the shared ownership concept opens the door for you to explore a new perspective on homeownership – one that continues to dismantle traditional barriers and transforms the dream of owning property into tangible reality for a growing number of people.

Such a strategy provides you with a foothold on the property ladder, without necessitating you to dive into a colossal financial obligation.

So, as you explore the exciting world of shared ownership, keep in mind, home is indeed where we plant our mutual equity!

Shared Ownership: A Fast-Track Solution for First-Time Buyers

Shared ownership is a scheme orchestrated by housing associations that allows first-time buyers to get their first property quickly.

This is possible by enabling them to purchase a portion of the mortgage and then pay the rent of the remainder of the property. As a result, you will be paying a lot less in deposit than outright purchasing the property.

Co-buying a house with your housing provider will allow you to afford a new home without incurring too many expenses. Shared ownership helps first-time buyers and even other people who cannot afford a property in the open market.

Why You’d Want a Shared Ownership Property

You’re someone that wants to get a new home but cannot afford to buy one. Shared ownership allows buyers to achieve full ownership. This results from having a lower barrier of entry because of its affordability.

Furthermore, most shared ownership homes can be found in high-value areas. This is because shared ownership homes are usually required to develop a piece of land.

While you may not see it first as you purchase your shared-ownership home, there is a high probability that you’ll be living in one of the most sought-after developments in your city.

Of course, you will have the ability to purchase the entire mortgage of your home through a process of “staircasing.”

Staircasing allows an owner-occupant to buy more shares of the property. An independent and qualified valuer determines the market value of the property shares.

You have to remember, though, that you will incur additional costs for valuation and solicitors’ fees.

There are two types of staircasing. First, you have Interim Staircasing, which means buying an additional share of the property.

Final staircasing, on the other hand, is the acquisition of all the property shares of your home. Purchasing all property shares means that you will no longer pay the rent of your home.

While interim staircasing will not grant you freedom from rent, the monthly payment will be reduced.

What Are the Drawbacks of Shared Ownership Property?

Despite the advantages of shared ownership, there are still many downsides that you have to expect when buying this type of property.

The first one is, of course, the monthly maintenance charges that you have to pay.

These charges fluctuate in value, which means that they can increase. This is regardless of how much of the property shares are already yours. While rent will decrease in proportion to your shares, maintenance and repair charges wouldn’t.

Staircasing can also be a double-edged sword. While it’s true that this allows you to purchase all shares of your home, this usually can become a tad too expensive for first-time homeowners.

And this is minus the fact that you will be paying additional fees such as stamp duties, valuation fees, and legal expenses, among many others.

This means that while it’s possible to staircase your property shares, it can be pretty tricky to achieve. Some housing providers even provide an upper limit to how much you can staircase or even limit how many times you can staircase your shares.

Selling your share of the home can also be challenging. The process of selling a shared property home is not as straightforward as selling a property that you wholly own.

For instance, your housing provider will have the right to repurchase your shares before you can sell them to anyone else. This is because these houses should be sold to other individuals on the waitlist who cannot afford to buy a property in the open market.

You may be wondering if you can use your shared property home for sub-letting.

The simple answer for this is that you can’t. One restriction for shared ownership properties is the ability to let other people rent your home. Renting your home is only possible if you can achieve a 100% property share of your home. This is to prevent any misuse of the shared ownership scheme.

Are You Eligible for Shared Ownership?

Knowing all the advantages and drawbacks of shared ownership, you finally decided to get yourself a property. But how exactly do you buy a home with part ownership?

Here are the eligibility requirements for shared ownership acquisition:

  • You must have a total household income of less than $100,000 and be a first-time buyer.
  • You are unable to buy a property in the opening market.
  • You currently don’t own any home. Alternatively, it would help if you had sold your home by the time you are purchasing a co-ownership property.
  • There are no mortgage or rent arrears in your name.
  • You can afford the regular payments under the co-ownership scheme.
  • You must have a good credit history.

There is also prioritization for military members, individuals who work locally, and those who don’t have any hope at the moment. While you may still opt into shared ownership properties, you must provide sufficient documents that prove you are in the process of selling your current property.


Do I Have To Share the Home With Someone?

No. Shared ownership properties are properties that you share ownership with an entity such as a housing provider or housing association. This doesn’t mean that you have to live with someone else in your home.

Can I Decorate My Shared Ownership Home?

Absolutely! Since you are now a homeowner, you can now freely decorate your home as much as you’d like, such as hanging pictures and even painting rooms. This is, in fact, one of the many good things about shared ownership homes.

Do You Pay Rent and Mortgage on Shared Ownership?

Yes. You will first pay the mortgage of the share that you own and then pay for the rent of the rest of the property.

Is It Possible To Make Major Alterations to My Shared Property?

While decorating your home is possible, any significant alterations such as adding a patio or replacing your roof for aesthetic purposes will require permission from your housing provider. Of course, this is only true if you have not acquired the 100% of your house’s shares yet.

Is There a Restriction on the Number of Bedrooms for Co-Ownership Homes?

There is no limit to how many bedrooms you can buy for a shared ownership home. There are many options for homebuyers to choose from. Whether it’s a four-bedroom house or a small apartment, homebuyers have a menu of choices that depends on several factors, including their capacity to pay.

Can I rent out a shared ownership property?

Typically, peddling your shared ownership property as a rental isn’t generally on the cards. This is mainly since the whole idea behind this scheme is to aid folks who otherwise might be left twiddling their thumbs on the property ladder sidelines.

However, keep in mind that there’s no such thing as ‘one size fits all’ when it comes to housing association rules. So, a little chinwag with your association can offer some much-needed clarity.

How does shared ownership affect my ability to get a mortgage?

Let me explain… When you’re applying for a mortgage, lenders take a good hard look at your income-to-debt ratio. Entering a shared ownership agreement adds rent to your regular expenses, which could tip the scales. Don’t let this spook you though!

You’ll find plenty of lenders out there who’ve got a niche in shared ownership mortgages. They provide products specifically designed for folks like you who’ve opted for this unique homeownership path. So, snagging that much-needed financing? It’s not only possible but also pretty darn manageable!

Can I pass on my shared ownership property to my children or heirs?

Got kids or grandkids you’re itching to gift your shared ownership castle to? You absolutely can! Just remember to dot the i’s and cross the t’s in your shared ownership agreement to ensure everything’s above board.

But let’s not get ahead of ourselves. Your lucky heirs will need to meet certain eligibility requirements to keep the shared ownership arrangement going. Those housing association folks mean business!

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