Earlier this year the government pledged to invest £12.2 billion into increasing affordable housing all across the UK which includes Yorkshire & the Humber. There are a number of objectives one of which was to introduce a new shared ownership model, helping more first-time buyers onto the first rung of the property ladder. But what exactly is shared ownership?
You will find that shared ownership is an alternate to the more traditional approach of purchasing a property, you don’t take out a mortgage for the full purchase price, instead you buy a share of the property, the size of the share can vary. This means each month you pay some mortgage and the remainder of the share of property you don’t own you will pay rent.
There are pros and cons of a shared ownership property, these include:
- Shared property deposits are normally a lot lower than when you take out a full mortgage, if you don’t have much readily available funds this is a viable option for you.
- You can sell the share of your property at any time back to the housing association you bought the property from.
- Added security is provided as normally you will find that shared ownership properties are leasehold.
- Overall costs can still be expensive, even though your mortgage payment is small, you will still need to make rental payments, ground rent, stamp duty on the cost of the home and leasehold fees, be sure to check everything.
Shared ownership is only available to first time buyers, or if you used to own a home but can’t afford to buy one anymore, lost your job or have recently become divorced.
The Investment of £12.2 billion from the government will be up until 2026 with the plan to provide 180,000 new affordable new homes.
So, what are the main changes?
- Minimum share of the mortgage will reduce from 25% to 10%
- You can increase your share by 1% at a time rather than 5%
- New shared owners will have a 10-year period where any repairs will be covered by the landlords.
If you have any questions about shared ownership get in touch we’ll be happy to explain the advantages and what to look out for in shared ownership.