Step by step, a guide to Shared Ownership
Download our latest Shared Ownership guide to find out whether Shared Ownership is a suitable route for you.
Download Shared Ownership GuideWe understand that getting on the property ladder in the current market is difficult - whether you're saving for a large deposit or struggling to get a mortgage application accepted. This is where an affordable house scheme such as shared ownership can help.
Shared ownership is a key part of the service we offer at Platform and we have a range of shared ownership properties available in desirable developments across the UK.
Below we answer the question 'what is shared ownership', tell you everything you need to know about how shared ownership works and how shared ownership staircasing fits into the process.
What is Shared Ownership?
Shared ownership is one of the most popular affordable house schemes due to its simplicity and accessibility. When someone purchases a shared ownership property, they pay a mortgage on the share they own and subsidised rent on the remainder.
Since the purchaser only needs a mortgage based on the share they're purchasing - typically between 10% and 75% of the property's full market value - the deposit required is often much lower than purchasing outright. Likewise, the subsidised rent means it's generally cheaper going through shared ownership rather than privately renting.
At any point, the purchaser can increase their share via 'shared ownership staircasing', with the ultimate goal being full ownership. Once this happens, the purchaser no longer pays rent and simply focuses on the mortgage payments
Shared property ownership offers much more flexibility and accessibility for buyers in several ways. Firstly, it reduces the amount you need for a deposit. Most shared ownership deposits are between 5% and 10% on the share, rather than the full market value. Secondly, you pay mortgage repayments based on your share and a below-market value rent, which is often cheaper than either private renting or buying outright.
Whilst we continue to deliver homes using the standard model with shares from 25-75%, there will be a transition period in which both models will be available for some time. Therefore the model you purchase under will be subject to the development and property you choose to purchase. Please refer to your Sales Consultant to confirm which model you're purchasing under.
How does Shared Ownership work?
Shared ownership is an affordable house scheme available through housing associations, local councils and private developers. Shared ownership properties are leasehold properties and typically you can buy:
- A new-build property
- An existing property that is within the shared ownership resale scheme
- A property that meets specific needs - such as a ground-floor property for a disabled user
So, how does shared ownership work? You can apply for a shared ownership mortgage to buy your share or pay using savings, it really depends on what works for you. If you need a deposit, you'll generally need between 5% and 10% of the share amount, not the full market value.
Based on a full property value of £250,000, this means a 5% deposit for a 25% share (£62,500) may be as little as £3,125. And a 5% deposit for a 10% share (£25,000), could be around £1,250. This makes shared ownership much more accessible compared with the costs you'd pay through traditional purchase methods.
You then pay mortgage payments based on your share and below-market value rent on the remainder. As you purchase larger shares of the property through staircasing, your rent goes down and your mortgage payments go up.
One benefit of shared property ownership is that you can usually defer any stamp duty until you own an 80% share of the property, which reduces your initial overall costs.
It’s important to remember that due to shared ownership properties being leasehold properties, you’ll likely have to pay ground rent and service charges, which go towards the maintenance of the property or communal areas.
Why buy Shared Ownership homes?
Buying Shared Ownership properties is ideal if you can’t afford to buy through traditional methods. The entire process is based on eligibility but if your application is successful, it offers a number of unique benefits:
- You can buy a share of your home as small or as large as you feel comfortable with
- Your deposit is based on the share you buy, not the full amount
- You can defer on paying Stamp Duty Land Tax
- The rent you pay on the remaining amount to the housing association or landlord is usually below market value, around 2.75% of the entire property value
Developers are also increasingly being encouraged to categorise a percentage of their development as Shared Ownership in return for planning permission. This is creating a larger amount of affordable housing in desirable areas and providing a broader range of choices for buyers.
It also provides a greater level of control over your repayments. If you find that you own a part-share of your home and you’re ready to take on more responsibility, the opportunity is there to increase the size of your share.
Shared Ownership, explained.
Through our shared ownership scheme, we’ve helped thousands of people step onto the property ladder. And we could help you too.
Who is eligible for Shared Ownership?
The Shared Ownership scheme is available if both of the following apply to you:
- Your household income is below £80,000 a year. The threshold increases to £90,000 if you’re buying in London.
- You cannot afford the deposit and mortgage payments for your property of choice.
One of the following statements must also be true:
- You’re a first-time buyer
- You used to own a home but can’t afford to buy now
- You’re forming a new household - typically after a relationship breakdown
- You’re already part of the Shared Ownership scheme but want to move
- You own a home and want to move but can’t afford the new home that meets your needs
Find your new Shared Ownership home
If you're ready to take the next steps towards owning your own home, use our property search to see what's available in your area.
Search Available HomesShared Ownership for current homeowners
The rules change slightly if you already own a home. When you buy a Shared Ownership property you must have:
- Accepted an offer for the sale of your current home, referred to as a ‘sold subject to contract’ or ‘STC’
- Written confirmation of the sale - referred to as a ‘memorandum of sale’ which includes the price and intention to sell
Frequently Asked Shared Ownership Questions
Most buyers who can’t afford to buy a home outright can apply to buy through shared ownership.
We may also be able to help if you need to move because of a relationship breakdown or if your work requires you to live in an area outside your price range.
In order to buy through the Shared Ownership scheme, you must be able to demonstrate that you can afford and sustain home ownership. If you proceed with Shared Ownership you will be required to undertake an affordability assessment.
You must meet our adverse credit policy, if you have a history of adverse credit you are unlikely to be accepted depending on individual circumstances.
There's 10 key steps to buying a home with us, and our aim at Platform is to make the buying process run as smoothly as possible for you, we outline the full process when buying through Shared Ownership here.
Our team are here to help you every step of the way.
Shared owners still have to pay many of the usual costs involved in buying a home.
Reservation fee
We will ask you for a £250 deposit to reserve your chosen home. When the sale goes through we put this towards your purchase payments. However, we cannot refund it if the sale does not go through.
Mortgage deposit and fees
Most mortgage lenders will ask for a 5% or 10% deposit towards the price of the share you want to buy. They are also likely to charge a valuation fee and administration fees.
Legal fees
Solicitors’ charges can vary so it is best to get a few estimates. You will also have to pay Land Registry and local search fees, and may have to pay stamp duty depending on the value of the property.
After you've moved in
You also need to budget for the ongoing costs of owning a home.
Mortgage repayments
You will have to make monthly mortgage repayments to your lender. Depending upon the type of mortgage you have, these repayments may vary as interest rates change.
Rent
You pay a subsidised monthly rent to us on the share of your home which we own. The amount is reviewed on the 1st April each year.
Service charges
You will have to pay a small charge if your home has any facilities or communal areas which we maintain, such as shared entrance halls, lighting and grounds. Your service charge will also include your buildings insurance and your management fee.
Household bills
These include your council tax and utility bills for water, gas and electricity.
Repairs
We will arrange for any defects on new-build homes to be repaired during a set time period. After that time has elapsed, you will be responsible for arranging and paying for all repairs to your home.
Home contents insurance
We provide buildings insurance with the cost of your service charge but this does not cover your belongings. We strongly recommend you arrange your own home contents insurance.
On the property listings for some of our shared ownership homes, you will see that we state a local connection to the area is required.
This generally applies in rural areas and small villages where land has been made available specifically for affordable housing to meet the needs of local people, rather than for private development.
These are known as ‘rural exception sites’ or 'protected areas' and are controlled by ‘Section 106 Agreements’. They aim to help local people and families afford homes in the area where they grew up.
The local connection criteria can vary between different developments, but is usually based on the following:
- applicant was born in the area and has lived there for a number of years
- applicant has permanently lived in the area for a number of years
- applicant used to live in the area for a number of years but had to move away because of the lack of affordable housing
- applicant has been permanently employed in the area for a number of years
- The number of years is usually between 2 and 5, although this differs by local authority
Usually priority is given to applicants with a local connection to the parish. If there are still properties remaining, allocation will be opened up to surrounding parishes and then to the whole of the local authority area. This ensures that the homes are occupied by residents as local to the area as possible.
If you want to find out more about the local connection criteria for a particular development, or check if you qualify, please email sales@platformhg.com
Much will depend on your other financial commitments and what property/share you want to buy. We don't want you to be overstretched, so we need to be sure that you can afford to pay your mortgage and rent. We look at each application individually and will advise you on your options.
Shared ownership schemes are backed by government funding to help people on smaller incomes. So you will not qualify for most shared ownership schemes if your household income is less than £10,000 or more than £80,000 a year.