Unlocking Homeownership – Is shared ownership the solution? 

For those about to deploy on their post-Military journey or are still Serving, shared ownership can present a viable pathway to home ownership.

By Fiona McCann

What is Shared ownership?  
Introduced in the 1980s, shared ownership encompasses over 1% of all households in England. It’s a government initiative in England with different rules on shared ownership in Northern Ireland, Scotland, and Wales. The scheme enables individuals to purchase a share of a property, while renting the remainder. This arrangement reduces upfront, and possibly monthly costs.  

 Eligibility 
Eligibility varies by area; applicants need to be over 18, with an annual household income below £80,000 (£90,000 in London) and who cannot afford all of the deposit and mortgage payments for a home that meets their requirements.  

Applicants must either be:  

• A first-time buyer (having never owned a home). 
• A former homeowner, but cannot currently afford to buy. 
• Forming a new household (for example, a separating couple). 
• An existing shared ownership owner.  
• Wanting to move but cannot afford a new home that meets their requirements. 

 Repairs  
All maintenance and repairs are the responsibility of the owner, in line with the service agreement.  

 Rent  
Rent is payable on the portion of the property not owned by the buyer, typically at 2.75%. For example, you would pay 2.75% rent on £150,000 (£150,000 divided by 100 multiplied by 2.75% equates to £4,125 per year, or £343.75 per month), in addition to the mortgage payments. NB: when your rent is reviewed it may increase by the Consumer Prices Index +0.5%, or Retail Prices Index +1%.  

 Shares purchased 
Initial shares purchased can start as low as 10%, however they usually start at 25%, with options to purchase up to 75% of the home’s full market value. For example, purchasing a 25% share of a £300,000 home would be £75,000. If the property is currently a shared ownership home being sold on, the minimum percentage that can be purchased has to be greater than 25%. 

 Remaining shares  
The remaining shares not purchased will belong to either a private company, local authority, or housing association.   

 Deposit 
The deposit is usually around 5-10% of your shares’ value. For example, you buy a 50% share of a £300,000 property equating to £150,000, requiring a 10% deposit, (150,000 divided by 100 multiplied by 10 equates to a deposit of £15,000) leaving a 90% mortgage of £135,000, and rental share of £150,000.  

 Mortgages 
Not all lenders offer mortgages on shared ownership properties, due to their risk; leading to higher rates compared to standard mortgages.  

 ‘Staircasing’ 
Gradually increasing ownership through ‘staircasing’ up to 75% is an option, although some schemes limit the number of times you can do this, and it has associated costs.   

Re-selling complications
Requiring notice to the scheme, in some cases having to resell the property through the scheme, and generally to someone who meets eligibility requirements.  

Armed Forces 
Purchase offers on shared ownership homes made by Serving members of the Armed Forces, are prioritised over civilian offers. 

You could also look at alternative options such as ‘Forces Help to Buy’ which may also suit your needs.

Visit: www.gov.uk/guidance/forces-help-to-buy

About Fiona McCann
Fiona McCann Served with RLC as a Driver, touring Northern Ireland multiple times, Canada and Cyprus. She left to pursue a career in the property sector, surveying homes for mortgage lenders, and is currently studying to become a lawyer.