Shared Ownership Explained – From Mortgages To Selling
*This is a collaborative post. But all things to do with shared ownership explained are from my own experiences and thoughts
Back in 2012, I bought my very first property on the shared ownership scheme. I can’t actually believe it was as long ago as that. But I still stand by that it was one of the best decisions I’ve made. At that point in my life shared ownership was the only way for me to get onto the property ladder on my own.
I’ve done some posts on the shared ownership scheme before and the realities of it. But I thought I’d do a shared ownership explained post answering some of the most popular questions around the scheme.
Shared ownership explained
What is shared ownership?
Shared ownership is an affordable property ownership scheme that makes it easier for first-time buyers to get on the property ladder. What happens is you purchase a share of the property and pay rent on the remaining share. So you may pay a deposit and get a mortgage on 20-45% of the property. And then pay rent to a housing association that owns the other part of your property. This means that the amount of deposit you’ll need will dramatically reduce. And the amount you’ll need to borrow as a mortgage will also be lower.
Over time you can staircase and purchase more of your property if you plan on staying there. But most people I know who have had this type of property use it as a stop-gap before buying a property outright.
What do you pay?
As I explained above you will pay back your monthly mortgage each month for the part of the property you own. But you’ll also pay rent on the other portion. If you’re buying a flat you’ll also have to pay a service charge. You pay a service charge on flats for the communal areas such as car parks, lifts, lobbies, etc along with buildings insurance. This is a cost set by whoever owns the block and you pay it whether you own your flat outright or buy it via shared ownership.
The rest of the costs are similar to buying a property outright such as contents insurance, council tax, and bills. And as you’ll be a first-time buyer you won’t have to pay stamp duty (unless the property is above the duty limits- but this is unlikely).
Shared ownership explained- mortgages
Getting a mortgage on a shared ownership property is fairly similar to getting a mortgage on any other property. But you may have less choice and want to get the advice of a mortgage advisor and broker. When I was getting my mortgage only about half of the banks supported shared ownership mortgages. But as they’re much more common now I expect you’d have more choice.
These types of mortgages are available to first-time buyers, or someone who used to own a home but now cannot afford to buy a new one. You have to be over 18 years of age and your combined household income must be under £80,000 a year (or £90,000 in London). What this means is that shared ownership properties go to people who otherwise couldn’t afford to buy a property outright.
You can’t get a shared ownership mortgage on any property, and it must be a specific property advertised in this manner. A lot of these properties tend to be relatively new-built properties.
How easy is it to sell a shared ownership property?
I documented my whole experience of selling my flat when I moved out at the start of 2019 (Part 1 and Part 2). Shared ownership explained articles tend to focus a lot more on buying it than selling it. But one day you’ll want to move on!
Unless you’ve fully staircased to 100% you’ll need to jump through the hoops of your housing association starting with getting your property valued and then it going up for sale through an agent approved by the association. Unlike other properties, people can’t put bids in on shared ownership properties. So as long as it sells you know how much you’ll get. It’s likely you’ll have to do a lot of the workload including taking photos, conducting viewings, and answering buyers’ questions. But I found the whole process pretty straightforward.
Once I had a buyer it was just the usual back and forth of solicitors paperwork. For me, the whole process took about 3 months, but we weren’t moving into a new property which helped.
Can you make money selling property this way?
Yes, you can make money through shared ownership. As long as the value of the property goes up between you buying and you selling. I bought at the right time and due to the market changing and our local town being renovated my property went up by £100,000 in the 6 and a bit years I was living there. As I owned a 45% portion of the house I made £45,000 of the extra money. This was part of the reason for selling as it meant we have enough capital to buy our dream home.
Have you ever thought about getting a shared ownership property?
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17 responses to “Shared Ownership Explained – From Mortgages To Selling”
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Rhian Westbury
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Shared Ownership is a great way to get on the property ladder, it is so much harder now than it was when I started out many years ago
It was the only option for me at the time to do it on my own x
We have some of these shared ownership at our town now, and these are new builds so was wondering about it. Glad you explained what it means to own one
Yeah they tend to be new builds, but they’re great ways to get on the property ladder x
Wow , what a mindfield shared ownership is . I’ve heard of it before but never really understood it all
I hadn’t heard of shared property ownership before this. It sounds like good option for some folks to start owning and for some to make a return on their investment.
Making a return was a blessing, but the most important aspect was that it was the only way I could buy a property on my own x
My friend and her partner have a shared ownership, that was the first time I heard about it a few years ago and it works well for them and I think it’s a really good scheme for first time buyers cos the property ladder can be hard. Thank you for more insight on this though, going to bookmark and refer back when the time is right x
That’s great for your friend, it is a great stepping stone to get on the ladder x
House prices simply are not affordable to many people in this country. it sounds like this affordable housing scheme can be a lifesaver. Thanks for the article I didn’t know much about this before.
This is something I have considered sometimes – there are plenty of benefits to it for sure!
So many benefits although you don’t have as much control as if you fully owned your property but for families who may be on one income or low income it’s a great alternative x
For youngsters or any one wanting to get their foot on the property ladder this sounds like a great affordable option. This is a really useful post highlighting how it all works.
Yes it’s great for everyone, in my old building most people were in their 30’s or 40’s and loads of families, so it’s anyone who can benefit x
My sister went through shared ownership as well because that’s the only way she could get on a property with her current salary and hopes to sell in a few years time.
Good luck to your sister when she sells, I hope it goes as pain free as mine was x
I think this is a great way to get on the property ladder and definitely something I am going to look into. Have shared this post with my Mr to see what he makes of it all, but it’s definitely a useful resource – thanks!