Why shared ownership may be a good step on the housing ladder.

Shared ownership can have benefits for making a step on the housing ladder in England and Wales for several reasons:

1. Affordability:

Shared ownership allows individuals to purchase a share of a property rather than buying it outright. This can make homeownership more affordable, particularly for first-time buyers or those with limited savings. By only needing a deposit and mortgage for a portion of the property’s value sometimes as low as 25%, the upfront costs are often lower.

2. Access to the Property Market:

Shared ownership provides an opportunity for individuals who may not be able to afford a home on the open market to enter the property market. It can be a stepping stone towards full homeownership, allowing individuals to build equity and potentially increase their share in the property over time.

3. Flexibility:

Shared ownership offers flexibility in terms of the initial share purchased. Buyers can choose a share that suits their budget and financial circumstances. Additionally, the ability to staircase (purchase additional shares) over time allows individuals to increase their ownership percentage as their financial situation improves.

4. Security of Tenure:

Shared ownership properties are typically leasehold, providing security of tenure for the homeowner. This means that they have the right to live in the property for a specified period (usually 125 years or more), subject to meeting their financial obligations.

5. Supportive Services:

Shared ownership properties are often managed by housing associations or developers who provide support and services to residents. This can include maintenance, repairs and access to shared facilities or amenities, which can be beneficial for those who prefer a more managed living environment. Such support is collected through a service charge which is often collected monthly, quarterly, half yearly or annually.

6. Potential for Capital Growth:

Like any property, shared ownership properties have the potential for capital growth over time. As the property value increases, the homeowner’s equity in the property also grows. This can provide a financial benefit when selling or staircasing to a larger share.

It’s important to note that shared ownership may not be suitable for everyone, and it’s essential to carefully consider the terms and conditions of the specific shared ownership scheme being considered. Consulting with a housing association, solicitor, developer or a financial advisor can help assess whether shared ownership is a good step on the housing ladder based on individual circumstances and goals.

As with any investment decision, when buying a property it’s vital that you do your homework carefully. As well as fully researching the location and market that you are looking to buy in, it’s vital that you seek advice of experts, including surveyors and financial advisors. Alexander JLO, its Partners and employees cannot provide specific advice on choice of location or the market but can advise on all matters legal once you have made a decision to buy a property.

If you are looking for a first rate conveyancing service why not give one of Alexander JLO’s specialist property lawyers a call on 020 7537 7000, click on the get a quote button or email quote@london-law.co.uk for a free, no-obligation quotation? Come and see what we can do for you.

This blog was prepared by Alexander JLO’s property partner Matt Johnson on 26th February 2024 and is correct at the date of publication. Matt has many years of experience of dealing with property work and specialises in new build and shared ownership properties.  His profile on the independent Review Solicitor website and be found here