What to know about buying a home with Shared Ownership

In partnership with SO Resi

Many of us would love to buy our own home one day. But raising a deposit and high property prices can make this feel impossible. If the bank of Mum & Dad can give you a helping hand, then great. But if not, there are other options. You’ve probably heard about Help to Buy, but do you know about shared ownership? We asked the experts at shared ownership brand SO Resi to explain how it works…

What is shared ownership?

SO Resi: It simply means that you buy a share in a home and make a payment to the housing company on the share you don’t own. That’s why it’s often called part-buy part-rent. The share you buy is between 25 percent and 75 percent, depending on your household income – i.e. what you (and your partner) earn. You’re not sharing your home with anyone. 

How does this help?

SO Resi: To start with, you pay a lower deposit than buying a home outright, because it’s based on the share you buy – which itself is based on what you can realistically afford – not the full property price. The mortgage you raise is also based on the share you buy, so that’s lower too. Essentially, shared ownership opens the door to hopeful homebuyers who are priced out of the open market.

Can you give an example?

SO Resi: OK, imagine you want to buy a property for £400,000 but, based on your household income, you can only raise a mortgage around £100,000. You could buy a minimum share of 25 percent in the property for £100,000. You would need a deposit between £5,000 and £10,000, and to raise a mortgage to cover the rest. You’d also make a payment to the housing company you bought the share of the property from each month on the £300,000 you don’t own. 

What are the monthly payments?

SO Resi: There’s your mortgage, the monthly payment on the share owned by the housing company, and service charges to cover things like repairs and maintenance. The good news is that the housing company payment is often at a lower rate than you’d pay on the open market for renting.

Could I buy more shares in the home?

SO Resi: Yes – you can buy extra shares whenever you like until you own 100 percent of the home. Think of it like buying your home gradually, when you can afford to.

Good to know – So Resi actually has a unique scheme called SO Resi PLUS which lets you automatically buy an extra one percent a year for 15 years at an agreed price, which means you don’t have to pay extra fees (like the valuation and solicitors’ fees) each time you buy an extra share.

Who’s eligible for shared ownership?

SO Resi: The scheme is for first time buyers or anyone who used to own a home, like someone going through a divorce, who can’t afford to buy one out right now. Your household income must be £80,000 a year or less (£90,000 if you’re in London). Sometimes priority is given to those in the first instance who live or work in the area.

What’s the quality of the homes like?

SO Resi: You’d be hard pushed to tell the difference between a new home for outright sale and a shared ownership home. The properties are often part of privately built developments because developers have to include shared ownership homes to get planning permission. It’s also a great way to get on the property ladder in a popular area where prices are high.

Are all shared ownership homes new?

SO Resi: No, there are also resale shared ownership homes. After all, people in shared ownership homes have to move too!

How do I find out more?

SO Resi: Make sure you check out our website – we have a whole range of homes across the UK available to buy and can also help out with property jargon, other questions, and news stories. There are also Shared Ownership properties available on Rightmove and Share to Buy, for example.