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Debunking the myths around Shared Ownership

Debunking the myths around Shared Ownership

Shared Ownership is a great way to buy a house, especially if you can’t afford the current prices of properties making home ownership more affordable for many people. Unfortunately, a lot of people don’t understand the concept of Shared Ownership fully, and with a lot of misinformation around it, it can be quite difficult to know if it’s the right option for you.

So, to help you understand it better, we’ve created a list of the most common myths surrounding Shared Ownership.

Myth: Shared Ownership is more expensive than renting

Fact: In a lot of cases, Shared Ownership will work out to be cheaper than renting privately in the same area. Of course, it depends on a range of factors including the area you live, the percentage of the property you buy, and the mortgage deal you get.

The added benefit of Shared Ownership is that your monthly payments are also contributing towards paying off your mortgage and, if you buy more shares in your home, your mortgage payments will increase but your rent will decrease in turn.

Myth: Not many people are eligible

Fact: Like with everything, there are some requirements for you to be eligible for the scheme, including:

  • You must be at least 18 years old
  • Your household income must be less than £80,000 or less a year (or £90,000 or less a year if you live in London)
  • You cannot own another property. This means the scheme is particularly suitable for first-time buyers
  • You should not be able to afford to buy a home suitable for your housing needs on the open market
  • You must show you are not in mortgage or rent arrears
  • You must be able to demonstrate that you have a good credit history (no bad debts or County Court Judgements) and can afford the regular payments and costs involved in buying a home during your Shared Ownership credit check
  • You will need between 5-10% of the equity share that you’re purchasing as a deposit

So, as you can see, the scheme is designed to be available and affordable for a lot of people!

Myth: Shared Ownership is only available to first-time buyers

Fact: Yes, Shared Ownership is a great way for first-time buyers to get on the property ladder, but it’s available to anyone as long as they meet the criteria and don’t own another home, the Shared Ownership scheme is open to anyone over the age of 18 and the household income is less than £80,000 (or £90,000 in London). 

Myth: You still need a large deposit to be able to afford a Shared Ownership home

Fact: One of the biggest benefits of buying a Shared Ownership home is that you only need to raise as little as a 5-10% deposit on the share you are buying, not on the full price of the property. 

For example, you could buy a one bedroom apartment at Harrow and Wealdstone Heights for £81,250 for a 25% share, meaning, you’d only need £8125 deposit instead of £32,500 if you bought the property at full price, making it far more affordable!

Myth: With Shared Ownership, you never actually own the home

Fact: You can buy more shares in your home or, buy your home outright whenever you can afford to, however, it isn’t compulsory, and you are under no obligation to buy more shares in the property unless you want to. 

However, you can buy more shares of your property when you can and eventually own 100% of the property through a process called staircasing, if you wish to. This means that you will own the property outright.

Find out more about the staircasing process here.

Myth: You can’t get a mortgage for a Shared Ownership home

Fact: It’s true that not all lenders will provide mortgages for Shared Ownership, but the majority will, so getting a mortgage for a Shared Ownership home shouldn’t be harder than it is for any other home.

There are a lot of lenders offering Shared Ownership mortgages, and their options are calculated on the same affordability criteria and are just as competitively priced. Also, remember, you’ll only be taking a mortgage on the share of the home you are buying, meaning the cost will be significantly lower than buying a property outright on the open market.

It’s also worth noting that you’re only taking out a mortgage on your portion of the home, which means your payment will be much lower than if you were to buy the property outright.

Check out different mortgage types here and have a look at Shared Ownership mortgage comparison here.

Myth: You can’t sell a Shared Ownership home

Fact: You can sell the property whenever you want, but you will need to contact your housing provider to let them know first. Your housing association will then have a set period (as outlined in the terms of your lease) to try and sell your home to other buyers who are looking to purchase through the scheme. After this time, you will be able to advertise the property yourself, selling privately or through an estate agent of your choice.

Myth: Shared Ownership means that I have to share my home with someone

Fact: You don’t have to share your home with anyone (unless you really want to!). In fact, the whole point of this scheme is that you’re sharing ownership with the housing association. You initially buy a share of your home, which can be anything from 25% to 75%. The housing association will own the remaining percentage and you’ll pay rent on that share. If your funds will allow, you can buy more shares of your home until you own 100% of it through a process called staircasing.

Myth: You can’t decorate your home because you’re still renting

You are the homeowner through Shared Ownership, and you have the right to decorate your home however you’d like. So, if you fancy painting the walls or adding a new wall feature, you can!

You do however need to consult us if you wish to do any major work – such as fitting a new kitchen or bathroom – or extend your property as you will need permission from your housing association.