Shared ownership has emerged as a popular housing option for individuals and families looking to get onto the property ladder in England. It offers an opportunity to purchase a portion of a property while paying rent on the remaining share. This arrangement provides a more affordable path to homeownership as a much smaller deposit is required. However, not everyone can take advantage of shared ownership. In this article, we look at who is eligible for shared ownership, including the criteria and benefits of shared ownership schemes, and whether it’s right for you.
What is Shared Ownership?
Before delving into eligibility requirements, let's briefly recap what shared ownership entails. Shared ownership allows individuals to buy a share of a property, usually between 25% and 75%, while paying rent on the remaining share. The buyer then has the option to increase their share in the property over time through a process known as staircasing. This gradual increase in ownership can eventually lead to full ownership of the property in most cases.
Who is Eligible for Shared Ownership?
Some of the key criteria that determine if you can apply for shared ownership include:
Income and Affordability Criteria
One of the primary factors that determine eligibility for shared ownership is income and affordability. Your maximum household income must be no more than £80,000 (£90,000 in London) and you must not be able to afford a home without help.
As well as income limits, there are affordability assessments that take into account the applicant's financial situation. Lenders will perform a credit check and assess the applicant's ability to afford the monthly mortgage payments, including service charges and other associated costs. This evaluation ensures that the shared ownership arrangement is sustainable for the buyer.
First-Time Buyer Status Doesn’t Matter
One of the bigger myths surrounding shared ownership is that it’s solely for first-time buyers. Although the scheme is designed to help first-time buyers with securing a property, it’s actually a viable option for many people searching for their next home. With shared ownership, you cannot own multiple homes, so you must be in the process of selling your current home in order to be eligible. Provided you can meet the eligibility criteria, you can make full use of this scheme to secure a home.
Location
The location of the property is another factor when it comes to shared ownership. At the moment, this type of purchase is only available in England, so if you’re looking in other parts of the UK for a property then you won’t be able to use this housing option. If you’re in Scotland, you might want to look into the New Supply Shared Equity (NSSE) Scheme, which offers a similar setup.
Previous or Existing Home Ownership Status
Eligibility for shared ownership schemes often relies on your home ownership status. You won’t be eligible to enjoy the benefits of this scheme if you’re already an existing homeowner or have your name on the deeds of another property. If you have formally accepted an offer for the sale of your current property, then you could still be eligible for home ownership schemes in certain cases. These include being an existing shared owner, having once owned a home but no longer being able to afford one, or starting a new home after ending a relationship. Alternatively, if you have a memorandum of sale, including the price and intent to sell the property, then you should also be eligible for the scheme.
Age Restrictions
While shared ownership is generally available to individuals of various age groups from the age of 18, some schemes may have specific age restrictions. For example, certain retirement shared ownership schemes cater to older individuals who are looking to downsize or have specific housing needs related to their age. These schemes may have age limits to ensure that the properties are appropriately allocated.
Is Shared Ownership Correct for You?
Shared ownership offers a valuable pathway to homeownership for many individuals and families who may otherwise find it challenging to afford a property outright. Whether it’s right for you depends on your personal circumstances. For instance, shared ownership can be more affordable because the deposit you pay will be on the share rather than the entire house’s value. If you’ve struggled to save for a deposit, this could make it a good option for you.
There are certain myths about shared ownership, but for many people, it’s a fantastic way to get on the property ladder. By understanding the requirements and realities of shared ownership, aspiring homeowners can assess their eligibility and take steps towards achieving their dream of owning a home.
At Sanctuary, we take great pride in offering an extensive range of affordable housing options across the UK, without compromising on space, quality or comfort. If you’re interested in the shared ownership purchase of a new Sanctuary property, get in touch with our team today by sending an email to [email protected].