Buying a property via shared ownership schemes

The value of properties may have been falling over recent months in parts of the UK, but after a ten year house price boom property values are still extremely high, and for many first time buyers these prices are simply out of their reach, making it impossible for them to get onto the property ladder.

The situation has not been helped by the global credit crunch, which as resulted in credit conditions becoming much tighter, the interest rates on mortgages being hiked up for new borrowers, the withdrawal of 100% mortgages, which have been very popular amongst first time buyers, increased demands on deposit requirements, and huge mortgage arrangement fees.

This is why many first time buyers still cannot afford to get onto the property ladder even though house prices are falling, but many also do not want to get lumbered with paying the high rents that are being charged on rental properties with private landlords.

Whilst going on the waiting list for housing with a council or housing association is an option some could find themselves waiting for years and even when they do get a place the choice of accommodation and areas is limited, and they will still be no closer to getting onto the property ladder.

One effective solution that could help some first time buyers to get their foot onto the property ladder and to avoid repayments that are unaffordable is shared ownership, and this is a scheme that is run in conjunction with housing associations to try and increase affordable housing in the UK.

The benefit of shared ownership is that you will not have to take out a huge mortgage, because you will only be purchasing a certain percentage of the property, and this means that you will not be making huge repayments on a huge loan.

You will also find it easier to get a smaller mortgage than a larger one, particularly if you are not on a very high income. The scheme enables the purchaser to buy a certain percentage of the property, such as 25%, 50%, or 75%. The remainder of the property belongs to the housing association, and you will be charged rent on this part.

However, as and when you find yourself in the position to do so you can purchase further shares in the property in increments, which is known as staircasing, until the property belongs to you, at which point you will no longer pay rent on it. You can, however, choose to keep just the original share that you purchased, and if you want to sell you would sell your share in the property.

Shared ownership is a scheme that provides a more affordable and effective solution for first time buyers that want to get onto the property ladder but have problems with affordability. Often the properties offered are newly built houses and apartments, so you can enjoy plenty of choice.