Shared ownership is a housing scheme that allows individuals to purchase a share in a property, typically ranging from 25% to 75%, while the remaining portion is owned by a housing association or developer. This shared ownership model provides an alternative to traditional homeownership, particularly for those who may not afford to buy a property outright in expensive housing markets.
The primary goal of shared ownership is to help individuals or families step onto the property ladder by reducing the initial financial burden. It enables aspiring homeowners to purchase a portion of the property and pay rent on the remaining share. Over time, they can gradually increase their ownership stake through a process known as staircasing.
Advantages of Shared Ownership
Affordability: Shared ownership makes homeownership more accessible, especially for first-time buyers or those with limited budgets. The initial deposit and mortgage payments are based on the share being purchased, rather than the full property value.
Equity Growth: As the value of the property appreciates, so does the value of the homeowner’s share. This means that individuals can benefit from capital growth and potentially sell their share at a higher price in the future.
Staircasing: Shared ownership offers the flexibility for homeowners to increase their ownership stake gradually. By purchasing additional shares over time, individuals can eventually own the property outright if they desire.
Security and Maintenance: Shared ownership properties are typically managed by housing associations or developers who ensure the overall maintenance and security of the property, providing peace of mind to homeowners.
The Conveyancing Process for Shared Ownership
When engaging in shared ownership, the conveyancing process is crucial to ensure a smooth and legally sound transaction. Here’s an overview of the steps involved:
- Instructing a Conveyancer: Start by engaging a conveyancing firm experienced in shared ownership transactions. They will guide you through the legal aspects and protect your interests.
- Mortgage and Financial Arrangements: Obtain a mortgage offer from a lender specialised in shared ownership. The conveyancer will liaise with the lender to ensure all financial arrangements are in place.
- Legal Documentation: Your conveyancer will review the legal documents, including the shared ownership lease, and provide you with advice. They will also handle the necessary searches and inquiries to uncover any potential issues.
- Exchange of Contracts: Once all legal checks are complete, contracts are exchanged, and a completion date is set. At this stage, you become legally bound to the purchase.
- Completion and Handover: On the completion date, the outstanding balance is paid, and ownership is transferred to you. Your conveyancer will register your ownership with the Land Registry.
Staircasing: If you decide to increase your share in the future, your conveyancer will assist you with the necessary legal processes and paperwork involved in staircasing.
Final Thoughts on Shared Ownership
Shared ownership provides a stepping stone to homeownership for individuals who might otherwise struggle to enter the property market. This scheme offers affordability, potential equity growth, and the opportunity to increase ownership over time. By understanding the conveyancing process and seeking assistance from a specialised conveyancing firm like PM Property Lawyers, you can navigate shared ownership transactions with confidence and ensure a successful transition.