In an effort to assist first time buyers and people trying to get back onto the property ladder, the Government have introduced many “Help to Buy Schemes” over the last few years – the latest being the “Help to Buy ISA”.
However, although this has gone some way to assist, buoyant house prices, the need to provide a 10% deposit and the stricter “affordability” criteria that Lenders now adopt, mean that for many owning one’s own house still remains a “pipe dream”.
Not everyone is in a position where they can rely on the kindness of parents to help out financially and therefore see their only option to secure housing as renting through the private sector. This further impedes their ability to save a deposit and get onto the housing ladder.
There is however an alternative: Shared Ownership Housing or part buy / part rent
Shared Ownership Housing is operated by both Local Authorities and private Housing Associations.
Subject to meeting the initial eligibility criteria a buyer purchases a share of a property (a minimum of 35% of the total value) with the balance being rented from the Housing Association. The purchaser is given the opportunity to increase their share (usually up to 100%). The larger the share that is owned, the lower the rent that will be paid.
The obvious advantage of Shared Ownership to the purchaser is that the initial financial input and the level of Mortgage required are lower.
Properties provided by Housing Associations are generally of a very high quality and, in some cases Housing Associations are building new developments in prime locations or purchasing new properties from Developers. Even where a property forms part of an existing housing stock, the property will generally have been refurbished to a very high standard.
Additionally, some Housing Associations are prepared to give incentives to potential buyers, for example, the provision of fittings (e.g. carpets) free of charge or payment of legal costs and expenses. In some cases a “gift” of part of the deposit will be made thus further reducing the initial cash input required.