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Broadcaster Reggie Yates is fronting a shared ownership initiative for first-time buyers. But are properties available under these schemes affordable for those who have small deposits?<\/strong><\/p>\n ‘Shared Ownership Week’, which begins today, aims to equip prospective buyers with details about shared ownership schemes, which involve investing in a share of the property and renting the rest.<\/p>\n Here, we let you know that shared ownership works and its benefits and drawbacks, then explore options for first-time buyers with 5% deposits.<\/p>\n <\/p>\n Shared Ownership Week runs from 20-26 September and aims to boost understanding of shared ownership as an ‘affordable, good way to purchase a new or resale home’.<\/p>\n Reggie Yates, this year’s Shared Ownership Week ambassador, said: ‘To become a teenager and own your own home should be an aspiration that everybody has got the to fulfil.’<\/p>\n Shared ownership schemes are well-liked by buyers, with data published captured from the English Housing Survey (2022-17) showing there are 136,000 shared ownership households in England.<\/span><\/p>\n Shared ownership schemes allow buyers with a deposit of 5-10% to purchase a stake as high as 75% inside a property from a housing association and pay rent around the remainder.<\/p>\n Shares can begin from less than 25% from the property – though many schemes need a bigger minimum stake – and buyers can increase their share with time utilizing a process called staircasing.<\/p>\n If you staircase, you’ll usually have to buy at least another 10% in one go, will have to pay for an industry valuation, and could be subject to further stamp duty payments (more about this later).<\/p>\n <\/p>\n To use shared ownership, you’ll call for a household salary of less than lb80,000 (or lb90,000 working in london).<\/p>\n You’ll should be a first-time buyer, existing shared ownership homeowner, or someone who has used a house but can’t afford to purchase one now.<\/p>\n Shared ownership homes are leasehold, meaning you’ll have to pay a service charge for the maintenance of any communal areas.<\/p>\n While the prospect of buying a share of a property with a 5% deposit might sound appealing, the cumulative costs can be quite expensive.<\/p>\n Research we published last year discovered that, for three quarters (76%) of shared ownership homes within 25 miles based in london, buying a minimum share was unaffordable for buyers aged under 30.<\/p>\n We also discovered that the average minimum share of the studio or one-bedroom shared ownership home in London cost lb145,146.<\/p>\n While a 5% deposit about this property would cost a little over lb7,250, the cumulative mortgage, rent payments and service charges would leave you having a bill of lb1,189 per month – a sum way beyond the means of many buyers.<\/p>\n Shared ownership properties are usually available in places where individuals can’t afford to buy outright, meaning you’re likely to be purchasing in an expensive market.<\/p>\n This has led to some homeowners finding themselves stuck within their shared ownership properties – not able to pay the costs of staircasing to full ownership and lacking the necessary equity to purchase a house outside the scheme.<\/p>\n This leaves owners in a difficult situation, as though they choose to stay in the future making improvements to the property, the housing association will profit from a sizable slice from the increased value when they do come to market their home.<\/p>\n Shared ownership schemes are complicated, so we’ve summarised the pros and cons below to help you weigh up whether it’s the best move for you personally.<\/p>\n If you’re considering shared ownership, take a look at the following alternatives before rushing in.<\/p>\n Broadcaster Reggie Yates is fronting a shared ownership initiative for first-time buyers. But are properties available under these schemes affordable for those who have small deposits? ‘Shared Ownership Week’, which begins today, aims to equip prospective buyers with details about shared ownership schemes, which involve investing in a share of the property and renting the<\/p>\n","protected":false},"author":1,"featured_media":5324,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[1],"tags":[32],"_links":{"self":[{"href":"https:\/\/tdafinance.com\/wp-json\/wp\/v2\/posts\/5328"}],"collection":[{"href":"https:\/\/tdafinance.com\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/tdafinance.com\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/tdafinance.com\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/tdafinance.com\/wp-json\/wp\/v2\/comments?post=5328"}],"version-history":[{"count":0,"href":"https:\/\/tdafinance.com\/wp-json\/wp\/v2\/posts\/5328\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/tdafinance.com\/wp-json\/wp\/v2\/media\/5324"}],"wp:attachment":[{"href":"https:\/\/tdafinance.com\/wp-json\/wp\/v2\/media?parent=5328"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/tdafinance.com\/wp-json\/wp\/v2\/categories?post=5328"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/tdafinance.com\/wp-json\/wp\/v2\/tags?post=5328"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}Shared Ownership Week<\/h2>\n
How does shared ownership work?<\/h2>\n
Shared ownership rules<\/h2>\n
Is shared ownership too expensive?<\/h2>\n
Will you've problems selling your home?<\/h2>\n
Shared ownership pros and cons<\/h2>\n
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\n Advantages<\/strong><\/td>\n Disadvantages<\/strong><\/td>\n<\/tr>\n \n Initial affordability: <\/strong>you can buy a share of a home having a 5% deposit and a small mortgage.<\/td>\n Service charges: <\/strong>you’ll need to pay service charges for upkeep of common areas and, even if you only own 25% of the home, that won’t be reflected in just how much you have to pay in charges.<\/td>\n<\/tr>\n \n Additional costs: <\/strong>you may either pay stamp duty on the full property value in advance (useful if you plan to reach 100% ownership and therefore are concerned about the value increasing) or decide to pay it just for the share. What this means is if you’re spending less than lb125,000 initially you won’t have to pay a lump sum payment up front – though you may have to pay a little amount around the rented part of the home.<\/td>\n Leasehold issues: <\/strong>unlike other leasehold properties, you won’t be able to invoke your To Manage, which helps homeowners to take within the management of the block if they’re unhappy with how it’s being maintained. You also won’t be able to buy the freehold until you own 100% of the property.<\/td>\n<\/tr>\n \n New homes in good locations: <\/strong>while there are many resale shared ownership properties about, many are new-builds in sought-after locations. New-build homes include warranties against build defects, and you should benefit from lower energy bills.<\/td>\n Letting: <\/strong>if your needs change and you wish to allow the property out, you won’t be able to without the permission from the housing association.<\/td>\n<\/tr>\n \n Flexibility: <\/strong>if your needs change and also you enter into some money, you can ‘staircase’ up to full ownership. Keep in mind that you’ll need to get a valuation and buy additional shares at the market rate.<\/td>\n Cost of increasing share: <\/b>you’ll require a significant lump sum payment in order to staircase, because the minimum share you are able to usually buy so as to is 10%. You’ll should also pay stamp duty on any additional shares.<\/td>\n<\/tr>\n \n Can be in love with account: <\/strong>when selling a shared ownership home you have to begin by informing the housing association, who will look for a purchaser before it’s placed on the open market.<\/td>\n Rent costs: <\/strong>the costs of rent on the housing association’s share can be steep. You can be charged rent as high as 3% of the association’s share every year.<\/td>\n<\/tr>\n \n Good for local buyers: <\/strong>many shared ownership schemes offer preferential treatment to clients who already reside in the borough in which the homes are located – potentially providing you with a chance of beating the competition.<\/td>\n Borrowing:<\/strong> not every mortgages allow shared ownership purchases, so you’ll need to shop around – and you can end up paying a greater rate of interest than if you were borrowing with an existing property.<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n Alternatives to shared ownership<\/h2>\n
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\n Help to Buy<\/strong><\/td>\n Help to purchase enables you to include a 5% deposit, borrow a share from the property price from the government (the borrowed funds size will differ based on whether you live in London, the rest of England, Wales or Scotland), and take out an inferior mortgage on the remaining sum.<\/td>\n<\/tr>\n \n 95% mortgage<\/strong><\/td>\n 95% mortgages also allow you to purchase a home with a 5% deposit. Rates this year happen to be very competitive weight loss deals arrived at the marketplace.<\/td>\n<\/tr>\n \n Guarantor mortgages<\/strong><\/td>\n Guarantor mortgages enable a relative to take on some of the chance of lending to you, meaning your mortgage application might be more likely to be authorized and you might be provided better rates.<\/td>\n<\/tr>\n \n Joint purchase<\/strong><\/td>\n Many first-time buyers are now clubbing together with friends or perhaps a partner to purchase their first home. Check out our guide on joint mortgages for more information.<\/td>\n<\/tr>\n \n Save more for any better deal<\/strong><\/td>\n If you’re in a position to save a bit more, you could get a far greater mortgage deal. Save right into a Help to Buy Isa or lifetime Isa and you’ll obtain a government bonus in your cash when you purchase your first home.<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n","protected":false},"excerpt":{"rendered":"