As house prices continue to rise, many people find the concept of owning a home increasingly elusive. Shared ownership schemes offer a more accessible path to homeownership, allowing you to buy a percentage of a property and rent the remaining share. However, to qualify for this scheme, you need to meet specific criteria. In this article, we delve into these requirements to help you determine if you're eligible for shared ownership.
Understanding Eligibility Requirements for Shared Ownership
Shared ownership is a scheme launched by the UK Government that aims to help people purchase their own properties in England instead of staying stuck in a cycle of renting. This scheme works by letting you purchase a share of the property, with the remainder being owned by the developer or housing association. Over time, you can purchase more shares of the property through a process called staircasing.
As this scheme is geared towards people who require assistance and support to buy property, there are certain eligibility requirements. This ensures that the right people have access to this scheme as a priority. Shared ownership can be quite difficult to understand, particularly when there are many myths around this scheme. To help you understand whether or not shared ownership is suitable for you, let’s go over some of the requirements below:
Age Limitations
The first basic criterion is age. To qualify for a shared ownership scheme, you must be at least 18 years old. This minimum age limit is a standard legal requirement for entering into contracts like mortgages and rental agreements. If you're under 18, you'll have to wait or explore other housing options.
Income Limits
Income plays a critical role in determining your eligibility for shared ownership. Typically, your annual household income should not exceed £80,000. However, this limit increases to £90,000 if you're looking to buy property in London. These income caps are put in place to ensure that the scheme benefits those who genuinely struggle to otherwise enter the property market, offering a balanced approach to affordability and eligibility.
Housing Needs
Another important factor is your ability to purchase a suitable home without assistance. This criterion is slightly more subjective and may require you to provide evidence demonstrating your inability to afford a home that meets your needs. Whether it's due to high property prices in your desired location or the size of a home suitable for your family, you will need to prove that buying a home through traditional means is not a feasible option for you.
Current Homeownership
Current homeownership isn’t a disqualifying factor for shared ownership, but you do have to meet certain eligibility requirements. So if you’re looking to move but can’t afford a property that meets your needs, the scheme can be helpful for you. You’ll have to have formally accepted an offer for the sale of your current home, which is known as ‘sold subject to contract (STC)’. You’ll also need to have written confirmation of the sale, known as the ‘memorandum of sale’. Finally, you’ll need to have completed the sale of your home on or before the date you complete buying your home through shared ownership.
Credit Health
Your credit history is a crucial component of the eligibility criteria. Specifically, you must not have any outstanding credit issues. Financial stability is important not just for eligibility, but also for securing a mortgage for your share of the property. Make sure to review your credit report and address any issues before applying for shared ownership.
Find Your Perfect Home Using Shared Ownership
Understanding the eligibility criteria for shared ownership is the first step towards making an informed decision about your housing future. Meeting these requirements are all prerequisites for benefiting from this innovative homeownership solution. If you meet all the criteria, shared ownership can be a fantastic way to make the dream of owning a home more achievable.
If you would like to know more about shared ownership, or if you would like assistance in finding a suitable property for your needs, contact our team of sales advisors at Sanctuary today.