Plastic puzzle of house split into four pieces

Shared Ownership has long been a central component of affordable housing strategies in the UK, offering a pathway to homeownership for those who might otherwise be priced out. Through these schemes, buyers can purchase between 25% and 75% of a property and pay a subsidised rent on the remaining portion.

It sounds straightforward, but in reality Shared Ownership has proven to be more complex than expected. Escalating rents and maintenance costs make it challenging for shared owners to live in their homes long-term, while difficulties in selling Shared Ownership properties make it complicated to leave them.

This March, a report the Levelling Up, Housing and Communities (LUHC) Committee released a report outlining the “failures” of the current Shared Ownership system. One of the central issues identified was the complexity of Shared Ownership leases, which often leave buyers unaware of the full extent of their financial commitments. This complexity, coupled with the lack of accessible, independent advice, can lead to unexpected costs that can’t be paid.

With a clear call for greater transparency and public understanding about Shared Ownership schemes, it is important to address some popular myths and misunderstandings about Shared Ownership. Clarifying these misconceptions could help first-time buyers make better-informed choices about their ownership options.

Many prospective homebuyers believe it’s impossible to fully own their property. This isn’t strictly true, as “staircasing” allows shared owners to purchase more shares in the property when they can afford to, often up to 100% ownership. However, in practice, staircasing can be difficult. Rising property values, additional costs, and prohibitive mortgage terms can all lead to buyers feeling stuck in a partial ownership situation, unable to afford the next step towards full ownership.

It is also important for prospective shared owners to remember that most Shared Ownership properties are managed by Housing Associations, meaning that any covenants on how a property can be used and enjoyed, such as rules about pets or alterations to the property, remain valid, even when the property has been fully purchased. It is therefore important for potential buyers to clearly understand the terms of their contract before signing it.

There’s also a lot of confusion around selling Shared Ownership properties. The process is certainly more complicated than the traditional selling process, particularly if the Housing Association still owns shares in the property. If this is the case, they can decide to buy the shared owner’s share back, or find a buyer eligible to buy your share. They are given an eight week “nomination period” to find a seller, before you can list the property on the open market with an estate agent. This could be a benefit, as some associations have waiting lists, but on the other hand their criteria for eligibility can narrow the selection of potential buyers, and increase the time it takes to make a sale.

To explore more about the state of Shared Ownership in the UK, including its current failings, future developments, and interplay with commonhold and co-living properties, check out our opinion piece asking “Shared Ownership: Is it Working?

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