Ten things you should know about shared ownership

Confused about shared ownership? Find out exactly what it means, who's eligible for the scheme, and how you can eventually own the whole property outright...
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1. What is shared ownership
A part-buy, part-rent scheme offered by government-funded housing associations. You buy a share of your home (between 25 per cent and 75 per cent of the full value) and pay a discounted rent on the share retained by the housing association.

Combined monthly payments are usually lower than the cost of renting privately in the same area. Instead of putting down a 20-30 per cent deposit on the full purchase price of a home, you put down 5-10 per cent of the equity share you buy. Shared ownership does not mean sharing your home with people you do not know. You live there as the sole resident, or with your partner or family.

2. Who can buy
All first-time buyers who cannot afford a home on the open market, who earn less than the household income limit of £66,000 a year for singles and couples, and £80,000 for families. People relocating for work reasons and divorcees starting again may also qualify.

You don’t have to be a public sector key worker such as a nurse or teacher.

3. What size home you can buy
A property with one bedroom more than your current needs, so singles and couples can buy a home with up to two bedrooms, and a one-child family can buy a three-bedroom place.

4. You can eventually own the property outright
Buying more equity shares until you own the property outright is called staircasing. You pay the prevailing market price, set by an independent valuer, on the extra share you buy.

5. How to find a property
Register with First Steps, the “gateway” to affordable housing schemes in London. Visit www.sharetobuy.com/firststeps.

6. You cannot rent out your property
Sub-letting, even informally renting out a spare room, is forbidden.

7. What happens if you want to sell
You can sell your share at any time. Often housing associations have right of first refusal, typically eight weeks to find a buyer, and will get a surveyor to determine the value. Once sold, you pay a minimum 1.25 per cent of the full market value.

8. There is a vetting process
Housing associations may give priority to key workers, families or people living and working in the area. A financial appraisal aims to ensure you can afford the purchase.

9. Mortgages are available 
More than 20 lenders offer shared-ownership mortgages, and associations can put you in touch with specialist brokers. Survey and legal costs are extra. Stamp duty is payable only on part-share purchases over £125,000.

10. It's not always cheaper than buying outright on the open market
Shared-onwership homes reflect market values but are more affordable as you are buying a part-share and the deposit is lower. The rent element  is about 20 per cent lower than a private rent. Monthly outgoings comprise the mortgage payment to the lender, the rent to the housing association, and possibly a service charge.

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