Is Buying a Shared Ownership Property a Good Idea?

The UK’s shared ownership scheme was introduced in the 1980s, but has become increasingly more popular over the last five years, especially in relation to purchasing a new build property in a Government-backed project. The scheme allows those who may find it difficult to get on the property ladder the opportunity to purchase a home through a part ownership, part rent strategy. In other words, you own a certain percentage of the property, and pay rent on the remaining percentage. 

But, is buying a shared ownership property a good idea? If you’re looking for a more affordable means to purchase your own home, then exploring your options with a shared ownership scheme is a good idea. However, before you purchase a new home, you’ll need to ensure that you check for hidden costs such as maintenance fees or service charges, which may increase your monthly outgoings. 

A RICS registered surveyor will be able to help and advise you further on the shared ownership scheme, what it could mean for you and investigate any potential issues with your property with a survey. To help you learn more about what shared ownership means for you, we’ve explained all the essential information below. Simply keep reading to learn more. 

Is it worth buying a shared ownership property?

If you’re looking for a way to jump onto the property ladder, but can’t borrow enough for a mortgage in the current market, then shared ownership offers you an opportunity to purchase a percentage of a property instead. From here, you pay a mortgage on the percentage that you own, and pay rent on the remaining share. Because of your reduced mortgage, you also pay a reduced deposit, meaning that the costs are lower to purchase a home. This makes this scheme a more affordable option for those looking to buy a home. 

With a shared ownership, you also have the potential to buy more shares of your property if you desire. This is a process known as ‘staircasing’, which means that you work your way towards owning the whole property, although this isn’t a requirement. It’s worth noting that the process of purchasing more shares can be costly and complicated; it is likely that you will need the guidance of a RICS Chartered Surveyor to help you. 

How does the shared ownership scheme work?

Typically, with the shared ownership scheme, you will be able to purchase a share of the home between 25% and 75%. A bank, housing association or private developer will own the remaining percentage, and you will pay rent to them. The rent you pay will be no higher than 3% of the value of the percentage that the landlord owns. For example, if you own 40% of a home worth £200,000, then each year you will pay £3,300 of rent, equal to £275 a month. Further details on renting costs can be found on the GOV UK website. 

Do shared ownership properties increase in value?

As with non-shared ownership properties, the value of your house will increase or decrease in line with the current housing market. If the housing market increases, then so will the overall worth of your percentage share. If you are considering selling your shared ownership property, then the value of which your share is worth will be determined by a RICS Chartered Surveyor. 

When does the shared ownership scheme end?

As it stands, the current Government-backed scheme does not have an end date. However, most shared ownership properties are leasehold, meaning that you simply have the right to ‘occupy’ the home, and do not own the land forever. Most leasehold agreements are between 99 years to 125 years, meaning that the end of your lease agreement should not be a factor of concern during your ownership. This is especially the case in relation to new build properties. To learn more about your lease agreement, or to have one of our expert team members calculate your leasehold end date in any London-based property, simply get in touch with one of our trustworthy RICS Chartered Surveyors. 

Crest Surveyors are here to help

If you’re in London, and you’re seeking more guidance or information on your shared ownership property, simply reach out to one of our RICS-qualified team members today. We offer affordable and reliable services to ensure that your purchase, remortgage or staircasing opportunities for your shared ownership property goes smoothly. Simply get in touch to learn more about how we can help you. 

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