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Could shared home ownership be the way forward?

We’ve all learned the fundamental importance of sharing as a child. But building blocks and toys are one thing..... but a home? That may be a bit too far.

Let’s discuss the details of this growing trend.

Shared ownership is a scheme developed by local councils for those unable to purchase a property through normal means due to low income or poor credit. People interested in this scheme need to apply to the local housing organization to ensure they meet specific criteria. Up to four people can buy a property together but all must meet the financial criteria. Favour may be given to individuals currently on a waitlist for social housing or public sector tenants. It is important to note that if you are making a modest income and want to get on the property ladder this may also be a good option.

Once approved, the buyer owns a percentage of the property (anywhere from 25%-75%), and pays rent to the local council on the remaining portion. The more of the property you own the less your monthly rent payments are, similar to the relationship between your mortgage down payment and ongoing monthly payments. Individuals have the opportunity increase the amount they own in the future if they are able.

Depending on the arrangement, the purchaser is normally responsible for the property's maintenance and upkeep as one would be if they owned the property outright. It is worth noting that it can be difficult to get a mortgage on shared properties due to legal misunderstandings by lenders on issues such as recoveries and defaults.

The recent economic meltdown has shown what living beyond our means can result in and it wasn’t pretty. Enabling people to purchase properties within their means has got to be a good thing. This trend should help stimulate the economy with more first-time buyers without burying them in unmanageable debt.

shared-ownership.org.uk for further information on where to find shared properties.

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