Shared Ownership – Is it a good idea?

With the housing market and the economy slowly on the rise from the aftermath of the recession we Brits are finding it rather hard to take that first step onto the housing ladder and as such are more than happy to look into the options that might make that transition a little easier. One of these seemingly easy fixes is that of Shared Ownership.

 

So what is Shared Ownership exactly? Well to put it simply Shared Ownership is the part buying and part renting of a property. Provided by housing associations, Shared Ownership is a means by which those who doesn’t quite have the savings needed to buy a house outright, can still make their way onto the housing ladder. Shared Ownership means, that instead of buying the house at one fixed cost and assuming sole ownership instantly, you buy a share from 25-75% of that home and pay additional rent on the remaining share. Once started, it is possible to buy bigger and bigger shares in that house where affordable.

 

Originally this Shared Ownership scheme appears to be something highly positive, suggesting that there are incentives and that the thinking is out there to keep in mind those of us who at the moment can’t afford the costs of buying a house outright , but that don’t want to go on renting from now until forever. Coupled with the numerous government schemes such as HomeBuy and NewBuild, it’s hard not to see the efforts being made to help first time buyers and to keep the housing ladder accessible and active.

 

However, Shared Ownership has recently gotten a significant amount of bad press. It appears that the original thinking behind Shared Ownership, for new buyers to use it as a stepping stone towards full ownership, has broken down. In a study carried out by Cambridge University in 2012, they found that shared owners were in fact less mobile than those who bought outright, defeating the very purpose of the scheme at the most basic of stages.

 

Another problem lies within the legal flaws of a Shared Ownership contract, in that there is not actually a ‘shared ownership’ at all. If a tenant, or one of the so called “shared owners” of the property defaults on their rent over a prolonged period, the Home Owner can legally repossess the property outright, suggested that in practise Shared Ownership is nothing more than a glorified tenancy agreement, with an expensive down payment to buy the property at a later date.

 

So is it really worth it? Well, it looks like the answer might be no. With the housing market cooling down, combined with all the government aids and financial support networks for first time buyers , it seems better to buy outright rather than hang in limbo between renting and owning.

 

 

 

Sophie Lockhart