Mortgages - Shared Ownership

It's good to share....?

Shared Ownership is a scheme typically operated by a Housing Association where the borrower owns part of a property, and pays the mortgage on this, while a Housing Association owns the rest of the property, and the borrower pays rent on this.

Shared Ownership – The Pros & Cons of Shared Ownership Schemes
Evaluating the advantages and disadvantages of any potential project is essential before deciding whether to proceed. Given that a home is likely to be the most expensive thing you will ever purchase, it's imperative that you carefully weigh up your options before going ahead.

The Pros - Benefits of Shared Ownership Schemes

- It helps you get that first foot on the property ladder.
- It may enable you to buy a bigger property than you would otherwise be able to afford.
- If you are on a low income, housing associations will usually give you priority. They will typically consider what money you have coming in, as well as your housing need (i.e. whether you have children).
- Your combined monthly rent and mortgage repayment might be less than if you had bought the property outright.
- You may need little or no deposit.
- You will be exempt from paying stamp duty if the share you are buying is worth less than the lowest stamp duty threshold.
- It is an investment, allowing you to receive a share of the increase in the value of the property should you sell.
- You can build up the share of the property you own until you own it outright, thus investing in your own home rather than just paying rent.
- You save money on maintenance and redecorating as the housing association is typically responsible for the property's structure.
- It is a useful scheme for people who expect their income to increase in the future.

The Cons - Potential pitfalls of Shared Ownership Schemes

The problems you experience will largely depend on the terms of the shared ownership scheme you use, which is why you should ensure that you read terms and conditions thoroughly before going ahead. However, below are some of the more general problems that might occur:

- There may be limited or no properties available for shared ownership in your preferred area.
- You may not qualify to participate in a shared ownership scheme.
- You still have the responsibilities of a homeowner but the home does not belong only to you.
- As you do not fully own the property you may have to ask for permission from the housing association regarding redecoration or home improvement.
- Valuer’s fees are payable should you wish to increase your share of the property.
- There may be restrictions upon selling.
- In some rural areas, housing associations may restrict your ability to buy further shares or may retain the right to buy back the property when you sell.
- Even if you own your home outright, you may still have to pay some service costs to the housing association.

If you wish to discuss this or any other mortgage option in greater depth please contact our advisors

Partners: Kenneth Harrington & Katherine Harrington
Harrington & Horne Financial Services are Independent Financial Advisers which are directly authorised and regulated by the Financial Services Authority
Head Office: 31 Southdown Avenue, London W7 2AG