What is Shared Ownership?
Shared ownership is a 'part buy, part rent' way of owning your own home for a smaller upfront payment - making it easier for buyers to get on the property ladder.
Shared ownership explained
Shared Ownership is a way you can own your own home. Buying a part and renting the rest is a simple and manageable way to start out on the property ladder. So, what does ‘Shared Ownership’ mean? When buying a Shared Ownership home, initially you can buy anywhere between 10% and 75% of the home. You would take out a mortgage for the share you are buying, or in some cases you can be a cash buyer. On the outstanding percentage of the property that you don’t yet own, you pay a subsidised rent.
What does 'Part buy, Part rent' mean?
Shared ownership is sometimes called ‘part buy, part rent’ which means is that you buy a share, while you rent the rest of the property. For example: You buy a 40% share of a £150,000 property, so your share is worth £60,000. The rent is charged at a rate of 2.75% on the £90,000 share that is owned by the social housing provider (Sage Homes, of course!). This would mean your rent is £2,475, spread over the year, so £206.25 a month. If you've borrowed money to fund buying your share of the property you will also make mortgage repayments on top of this rent. If you'd put down a 5% deposit, you'd need to make repayments on a £57,000 mortgage. |