Shared Ownership is another form of home ownership scheme for those that do not currently own a home and also provide an opportunity to purchase a share in a new building or resale property.
Buying properties under a shared ownership scheme involves purchasing a share of between 25% and 75% of the property. The buyers will pay the homeowner’s loan on the share that they own, below-market-value rent with the remainder to a housing association which includes service charge and ground rent. As the buyers just needs the deal for the share they own, the amount of money required for a deposit is at least 5% of the share being purchased.
However, with further days, buyers can increase the share of the property they own, either by borrowing more from the lender and increasing amount of the contract or by making full cash payment.
So, these are the Shared Ownership Pros and Cons:
Pros of Shared Ownership
- Shared Ownership is a very easy and affordable way to enter the property market.
- In Shared Ownership, the amount needed to be deposited is low than the price on the open market.
- The amount of money required for a deposit very low i.e., 5% of the share being purchased.
- It further allows you be part of the property as an owner-occupier which has long-term stability.
- It also makes the contract more accessible, even though you have a lower wage.
- The shares you own can be sold at any time.
- There is no stamp duty land tax on an initial purpose.
- The monthly payments are more affordable and lower than plain renting or paying a full mortgage.
- The housing association itself takes the responsibility for maintenance and repairs if you were a regular tenant.
- The shared ownership can be combined with joint ownership to make the venture more affordable.
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Cons of Shared Ownership
- Though many lenders do not offer contract for Shared Ownership, however it is increasing these days.
- The choice available is very limited and the properties of neighborhood you fancy may not be available.
- The ground rent and service charge on your property should be fully paid ignoring how low your share is.
- All individual are not eligible for any shared ownership schemes, and even if you do, you might still have to wait as some properties give preference to key workers, like nurses, teachers, police officers and social workers.
- You have to pay stamp duty on the whole value of the property if your share exceeds 80%.
- There are restrictions on what home improvements you can do. The permission should be granted from the relevant housing provider before making any structural alterations internally or externally.
Shared ownership can be a great option for helping you get on the market. However, it isn’t suitable for everyone, and also, it is eligible for everyone. But if you apply some common sense and caution, the shared ownership can work wonderfully for you.