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29 | 11 | 21

Shared Ownership: an easy step-by-step guide

If you're looking to get on the property ladder but can't afford a hefty deposit or 100% of the mortgage, then you’re in luck
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There is another way to own a home that relieves some of that financial pressure. The ‘Shared Ownership’ scheme, also known as ‘part buy, part rent’, allows you to buy a share of your new home while paying the rent on the remaining share.

Figuring out the financials

Instead of the typical 10-20% deposit required to buy a home on the open market, Shared Ownership mortgages allow you to put down as little as 5% of the share value, hugely reducing your upfront costs. As for your share of the property, you’re required to buy between 25-75% percent, and you pay rent on the rest.

Let’s see how it works in practice: say you’d like to buy a one-bedroom apartment in FABRICA’s new Cavendish Gardens development, moments from Hounslow West station. If the home is valued at £300,000 under the Shared Ownership scheme and you want to buy a 40% share, worth £120,000, the other £180,000 belongs to the housing association. You pay a deposit from 5% (from £6,000) along with monthly mortgage payments for your 40% share, whilst paying rent to the housing association for the remaining share. So in this case, you’d pay £413 a month in rent (£4,956 a year), plus the mortgage payments on your 40% share.

Am I eligible?

If you're a first time buyer, or have previously owned a home but currently are not a home-owner, or if you're an existing shared ownership homeowner looking to move house – and your household income is less than 80k (outside London) or 90k (London) – then the answer is yes! It’s worth noting though that for the Shared Ownership scheme, priority is often given to those living and working in the borough, as is the case for our Cavendish Gardens homes.

Finding a Shared Ownership home

Shared Ownership homes are available through housing associations. They could be newly-built homes or existing homes. All Shared Ownership properties are leasehold, though usually with the option to extend. To apply, you need to get in touch with your local Help to Buy agent – check out www.helptobuy.gov.uk.

Here at FABRICA, we have a few Shared Ownership properties, including the new Cavendish Gardens – a collection of modern one, two and three bedroom apartments nestled between Beaversfield Park and Hounslow West. For more information on Cavendish Gardens, please get in touch with one of our sales team by calling 020 3925 6235 or by completing an enquiry form.

Staircasing: what is it?

If, later down the line, you decide you want to increase your share of your home, you can do just that, though the cost of your increased share will depend on the current market value. For example, if your home has increased in value since you bought your original share, the new share price will be higher, but if it’s dropped in value, it will be lower. Upping your share is called ‘staircasing’, and you can do it more than once. Of course, buying additional shares of your property means you’ll be paying less rent, and in many cases, you can ‘staircase’ up to 100% of the shares, which would mean you own the property outright and no longer have to pay rent.

Selling your Shared Ownership home

Some more good news: you can sell your shared property at any time, but just bear in mind that the housing association has a brief window to find a buyer before you put it on the market. Typically this period, known as the ‘nomination period’, will last between one or two months. It's also worth pointing out that you have to pay for the valuation of the property, but once you sell, the amount you and the housing association receive depends on the amount your property ends up selling for.

Why is the Shared Ownership scheme a great idea?

Firstly, there are less upfront costs, and Shared Ownership mortgages are more accessible to those with less expendable incomes. But apart from being a lot more affordable, the scheme also offers you security of tenure; you can live in your Shared Ownership property for the duration of the lease. Plus, your monthly payments are in most cases cheaper than if you had a mortgage or rented privately. You can also up your share – sometimes buy outright – and yet you're not tied in either; you can sell at any time. In the case of Cavendish Gardens, you also get a 12-year construction warranty and a 2-year developer’s warranty (which covers defects). All in all, it’s an attractive option for those struggling to get on the property ladder, especially with new, highly sought-after homes like FABRICA’s Cavendish Gardens under the scheme.

For more information on Shared Ownership and our properties eligible under this scheme, contact FABRICA at 020 3925 6235 or complete an enquiry form.