Choosing between Shared Ownership and Private Sale

Buying your first property can be one of life’s most exciting milestones, but high asking prices and large deposit requirements can make it unattainable for a large portion of society, particularly first-time buyers. Shared Ownership is a possible solution that can help house hunters to get on the property ladder at a reduced cost compared to a private sale.

Here, we’ll explore the key differences between Shared Ownership and private sale, including eligibility requirements and the main benefits of getting on the property ladder via Shared Ownership.

Shared Ownership vs private sale

Shared Ownership allows you to buy a share of a property, typically ranging from 25% to 75%, while renting the remaining share from a housing association or private developer. Private sale, on the other hand, involves buying the entire property outright, either with a mortgage or cash payment, without any additional assistance.

When buying through Shared Ownership, you may be restricted in terms of the modifications you can make to the property (decorating is allowed, while larger structural changes may not be) while private sale comes with complete ownership and control. Additionally, you will still need to pay rent on the portion of the property that you do not own, which can increase over time. However, a significantly larger upfront cost is required to purchase a property via private sale, which in expensive areas such as London, can be unaffordable for many first-time buyers.

What are the Benefits?

One of the primary benefits of Shared Ownership is that it allows people who cannot afford to buy a home outright to get on the property ladder. Instead of having to save for a large deposit, you can buy a share of a property with a smaller deposit, typically around 5-10% of the shares value. Although each housing association or developer may have its own set of eligibility criteria, which can vary depending on factors such as location, property type, and size. This can be especially helpful for those living in expensive areas where property prices are high.

Another benefit of Shared Ownership is that it provides more stability than renting, as you have a long-term stake in the property and can potentially buy more shares in the future as your financial situation improves – a process known as ‘staircasing’. This also means that you can benefit from any increase in the property’s value over time, which can be a significant advantage.

Shared Ownership can also provide protection against fluctuations in property prices. As you only own a portion of the property, you are not as exposed to the risk if property prices fall as you would be if you had bought the property outright. Additionally, Shared Ownership properties are often new or recently built, which means they are generally more energy-efficient and require less maintenance than older properties.

Eligibility Requirements

Eligibility requirements for Shared Ownership include earning under a certain amount, typically £80,000 per year (or £90,000 in London) in overall household income, being a first-time buyer or in the process of selling property with no others in your name, and being unable to purchase a suitable home on the open market. You must also be over 18 with a good credit history and no mortgage or rent arrears, with the ability to prove that you can afford the regular payments and costs of homeownership.

You will generally need to show that you can pay a deposit of around 5-10% of the property price, and each housing association or developer may have its own set of eligibility criteria, which can vary depending on factors such as location, property type, and size.

Shared Ownership can be a great option for people who cannot afford to buy a property outright. It provides a way to get on the property ladder with a smaller deposit, greater stability, and protection against fluctuations in property prices. It’s important to do your research to find the best Shared Ownership scheme for your needs, and to carefully consider whether you meet the eligibility criteria.

Southern Housing New Homes offers exciting opportunities for first time buyers, with properties for sale via Shared Ownership in London and the South East. With a range of developments, from traditional family homes in the countryside to contemporary city apartments, there’s something to suit anyone looking to get on the property ladder with Shared Ownership.