What are the benefits of shared ownership?

Image of Whitney Tully head of residential and conveyancing in stafford.

By Witney Tully

benefits of shared ownership

Updated: 02/09/20

With even ‘affordable housing’ seemingly out of reach for many buyers, Witney Tully, from Stafford solicitors ORJ, asks if shared ownership is the solution.

There are thousands of people out there who desperately want a home to call their own. For many of them, the phrase ‘affordable housing’ has an ironic ring to it because, as hard as they try, they just can’t afford the properties on the market.

That’s why the concept of shared ownership was introduced way back in the 1970s. It was seen as a way for, predominantly younger, people to get a foothold on the housing ladder. In short, it enables house-hunters to buy a share of a property, rather than the whole property, and pay a subsidised rent on the remaining share. This normally involves a smaller deposit and mortgage, so making it easier to enter the housing market.

Housebuilders are now obliged by local authorities to build affordable housing within all major developments. Today, in fact, around one-third of all social housing in Staffordshire is offered for sale on a shared ownership basis.

So what’s stopping all first-time buyers heading down the shared route? To begin with, there are certain conditions you have to meet:

  • You must show that you cannot afford to buy a suitable home on the open market
  • You must have a good credit rating
  • You must have enough savings to meet the costs of a home purchase (that’s not the cost of the property itself but the costs involved in buying it). Typically, that has been around £4000, but current stamp duty relief may well reduce this figure. 

The benefits of shared ownership

Assuming you can meet these conditions, is shared ownership the right solution for you? I believe it offers many real advantages for first-time buyers.

Firstly, as you are buying a share of the property, rather than all of it, your deposit and monthly mortgage repayments are likely to be significantly less.

Secondly, it means you can effectively leave the rental sector, which many people see as ‘money down the drain’ rather than investing in their own home. You don’t leave rent behind altogether however, as you will still be leasing the proportion of the property you don’t own.

Thirdly, shared ownership means you can move into a brand new home, built to the latest quality and environmental standards.

These are all good reasons to consider shared ownership as a way to secure your first home. And of course, further down the line when finances permit, you have an opportunity to buy an increased share of the property – known in the trade as ‘stair casing ‘ – until eventually, it’s all yours!

Next steps

For these reasons, I believe that shared ownership can be a very positive move for people who may otherwise struggle to buy their first home. Unlike renting or an outright purchase however, the process is quite complex, which is why it pays to speak to a solicitor who specialises in these transactions.

With the right legal advisor on your side, you are far more likely to secure that home of your dreams and have all the paperwork done on time – ensuring nothing goes wrong. It also means you have someone to talk to when the opportunity arises in future to acquire a greater share of the property.

So if you want to grab your little share of paradise, now could be the time to start moving.

Image of Witney and Charlotte conveyancing solicitors at ORJ. Witney Tully is the Head of Residential Conveyancing at ORJ – specialists in shared ownership purchases. To find out more, contact Witney via email: witney.tully@orj.co.uk or Charlotte Matthews: Leader, New Build Homes (email: charlotte.matthews@orj.co.uk ) or call 01785 223440.

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