Shared ownership has become a really popular way to get a foot on the property ladder. Housing associations sell their property on in part and if a property costs £150,000 and you can only afford to buy 50% of it for £70,000 the housing association keeps hold of the difference and sets up a rental agreement for the rest.
The rent is generally charged as a percentage of the value of the property the housing association still owns and is generally kept as low as possible.
If your circumstances change at any time, the housing association can allow you to buy a larger portion and decrease the rental amount paid. You can do this until you own the property outright. This is called Staircasing. You will have to pay the current market rate for each share and this may not be the rate of the original 50% purchase.
In some areas, particularly rural, housing associations may impose restrictions and will not let you buy a full share. Others may insert a clause in the contract which gives them first refusal when you choose to sell up as housing associations need a stock of properties to offer to the next generation of first time buyers.
You must reach certain criteria to qualify for a shared ownership scheme. You have to prove that you are unable to buy a full share on the open market and that you are able to make the rental and mortgage payments.
Credit checks are most stringent and carried out by both the mortgage lender and the housing association. It is generally expected that you will have some connection with the area in which you want to buy, you may have either lived or worked there for some time.
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