Buying a home can be pretty daunting. There are different options available into home ownership and with the wealth of good (and some bad) information out there, it can be hard to know which route to take.
You may have heard the term ‘shared ownership’ or ‘part buy, part rent’ and not really understand what it’s all about, or whether it’s a good idea. We’re here to help hopefully answer some of the questions you have around how #ThisSOThing works.
Shared ownership is a great alternative to renting on the private market and perfect if you can’t afford to buy a home outright. It’s open to a wealth of people, including first-time buyers, people looking to downsize due to marital splits or retirement and even families looking to ‘upsize’ their family home who need more room to grow. It’s even a great solution for families that are unable to live together too and could provide both Mum and Dad with the solution to have their own home.
It's an affordable route into home ownership. You can access the scheme with a 5% deposit, but that deposit is only paid on the share that you are looking to buy straight away not the full property price, making deposits far more achievable to save for. You can buy shares between 25% to 75% of a new build property straight away and we can help you work out the maximum share you can afford by carrying out an affordability assessment.
You’ll have a share in a property, an asset with a value however much you buy, as opposed to nothing at all, which is the case when you rent privately.
Shared ownership allows you to buy a property in aspirational areas; with higher prices, which could normally be out of reach. Allowing you to put down roots in the area you want to live giving you security and the feeling of safety.
Most shares you buy in your home would be funded by a shared ownership mortgage which you would arrange with a Bank or Building Society, just like you would a traditional house purchase. But, if you’ve got sufficient savings, you might not need a mortgage. You can in some cases buy your share outright and just pay rent on the share you don’t own to Aster.
The larger the share you buy, the lower your rent will be. We’ll give you details of the rent you pay along with your monthly service charges, and your mortgage lender will provide details of the monthly mortgage repayment. Everything’s broken down for you, simple.
The rent you pay on the share you don’t own is linked to the RPI (Retail Price Index) which is a fair index that housing associations use and means that rental increases should only be in proportion to the costs of living and wage inflation. This isn’t the case with open market rental homes. Private renters unfortunately do not have any control over how much their rent is increased by. Shared ownership monthly rental amounts are clear & monitored. Giving you peace of mind.
Shared ownership homes are leasehold properties. This is something we get asked about a lot. They have to be, as when you buy a share in your home you don’t own the whole property. If your circumstances change and you decide that you can afford to buy more shares in your home, you can! This is called staircasing and the more you buy, the less you will pay in rent. If your lease allows you to buy 100% of your house and you go on to purchase all of the property – in most instances the freehold on a shared ownership house can be yours and at this point you wouldn’t pay any more rent to Aster.
We’ll even help you market and sell your property if you decide to move on AND even if you sell your shared ownership home, you can buy another in the future. It’s not just for first time buyers, it’s great if you need to buy a larger home but can’t quite afford to do so on the open market (we don’t just sell 1-bedroom homes – we have 2, 3 and 4-bedrooms homes too!)
Another great thing about shared ownership houses, is that you can get the pet you’ve always wanted! Unlike with private rental properties where the landlord usually doesn’t allow your furry pal to live with you, shared ownership houses welcome fluffy companions as part of the family.
Fancy yourself as a bit of an interior designer? Go crazy. You can decorate as you wish with a shared ownership property. Make it your own. It’s your home. No more permissions needed for putting that gorgeous feature wallpaper up – do it!
The only instances when shared ownership isn’t the right scheme for you is if:
- you're able to buy a home to meet your needs on the open market
- your household income exceeds £80,000 a year (outside of London)
- you’re not able to meet the cost of rent and mortgage payment
- you aren't going to live there
- you're using the scheme to fund a ‘buy to let’ property, or if
- you currently own your own property (however, once you have sold your home or have a sale agreed, you can apply!)
So that’s it – our no-frills blog on how the scheme works and whether shared ownership is a good idea; hopefully you’ll find it helpful. Interested to find out more? Get in touch with one of our team who will be happy to help you on our contact page or take a look at the properties available for shared ownership here.