How does shared ownership work?

You’ve come to the right place if you’re looking at purchasing a new home – no longer do you need to worry about hefty deposits, with shared ownership you can get yourself on the property ladder with minimal stress.

Forget about having to scrape together a deposit upwards of £10,000 - shared ownership works by allowing you to purchase a share of a home – usually between 40% and 75% in order to make it more affordable (in some cases, you can even buy as low as 10% depending on the terms of the lease).

Not only does this mean you only pay a mortgage on the share that you own but you can have a deposit as low as 5% of the total share amount. You then pay a below-market rent on the rest of your sparkly new home to the friendly folk at Aster.

What are the benefits of shared ownership?

Get yourself on the property ladder

Don’t let your dreams of getting on the property ladder fade, the main benefit of shared ownership is it allows you to get on the ladder and gives you that all important stability without having to save up huge deposits.

In comparison to traditional home-buying, deposits are lower and monthly repayments will often work out cheaper than a standard mortgage or if you were renting.

Keep climbing those stairs

You’ve probably noticed there are a great deal of climbing metaphors associated with home-buying and we have another one for you. Once you purchase your shared ownership home you have the chance to continue to buy shares when you decide to do so – this is called ‘staircasing’.

In most cases, if you are able to purchase 100% of your home you would then acquire the freehold, as long as your lease allows it. It is worth noting though that some homes will always remain leasehold (such as flats or other specific schemes where the freehold cannot be acquired). If this is something of importance to you, please speak to a member of our team and we can check the terms of the lease.

Long term security

Tired of living with the fear your landlord could come along and ask you to pack up at a moment’s notice? Whilst private standard renting does not offer long term security – shared ownership does as long as the rent and mortgage payments are made.

What are the disadvantages of shared ownership?

Don’t worry – we’re going to be upfront with you and let you know the small disadvantages that come along with shared ownership.

First of all, some lenders might not offer mortgages on shared ownership but there is no need to fret as the majority do.

Now we need to talk about the term leasehold – no matter how low your share, you will be responsible to pay rent on the part of the home you don’t own along with a monthly service charge and, on some properties (such as flats) a ground rent too. You are also responsible for all maintenance and repair costs once your initial defect period has ended. However, on the new shared ownership model lease, a repair contribution will be applicable, our team can advise you further on this.

All shared ownership properties are sold as leasehold for a specified term which is set out in your lease. Don’t worry though as you can still sell the home – we have a dedicated resale team to help you!

In some cases, you may be restricted on what home improvements you can make – although most decorating jobs are perfectly fine.

What are the different percentages?

Now time for a bit of maths – you can actually own different percentages of your home, there is no set amount.

Your percentage will depend on your circumstances and preferences. You will usually buy a share between 40%-75% on your initial purchase - occasionally you can even go as low as 10% depending on the terms of your lease. From there you can continue to purchase more shares – called ‘staircasing’, as we mentioned earlier. If you keep climbing that staircase you may be able to go on to own your home outright if the lease allows. At this point, there is often the opportunity to acquire the freehold for your house too, although flats have to remain leasehold.