The rules around Shared Ownership are changing - here's what it means for buyers

The minimum share required to buy a home under Shared Ownership has been lowered (Photo: Shutterstock)The minimum share required to buy a home under Shared Ownership has been lowered (Photo: Shutterstock)
The minimum share required to buy a home under Shared Ownership has been lowered (Photo: Shutterstock)

As part of the government's affordable housing pledge, thousands more first-time buyers will soon be able to access Shared Ownership.

The government has pledged an investment of £12.2 billion pounds for new homes, which will go towards properties for buyers, initiatives like Help to Buy, and homes with discounted rent.

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Rules have also been changed on the minimum share needed to purchase a home under Shared Ownership.

What is Shared Ownership?

Shared Ownership allows first-time buyers and those who don't own a home the opportunity to purchase a share of a resales or new build property, paying a mortgage on the share they own and rent to a housing association on the share they don't. Buyers can then continue to purchase further shares in their home in a process known as "staircasing."

The appeal of Shared Ownership has always been that a lower deposit is required compared to buying a house outright.

Previously, the minimum initial share needed to buy a property under Shared Ownership was 25 per cent, but that amount has now been reduced to 10 per cent. In addition to this, buyers will be able to purchase further shares in their home in one per cent increments, involving little to no fees.

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Previously, the amount that buyers were able to "staircase" by was between five and 10 per cent.

Buyers will still have to put down a deposit for the house and pay rent to the housing association that owns the remaining proportion of the home.

Stamp duty tax - if applicable - and legal fees will also be required with each "staircase".

Half the homes delivered under the £12 billion scheme will be available to buyers, the rest for renters, at a discounted rate. This includes 10 per cent for supported housing for anyone with mental or physical health challenges.

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Homes England, the government's housing accelerator, said £7.5 billion worth of new homes will be delivered outside of London. The government says the homes will be delivered from next year.

'Flexible ownership options'

"Today's announcement represents the highest single funding commitment to affordable housing in a decade and is part of our comprehensive plans to build back better," said Housing Secretary Robert Jenrick.

"This government is helping hard-working families and prospective first-time buyers get their feet on the housing ladder in an affordable way.

"Thanks to the range of flexible ownership options being made available, more families across the country will be able to realise their dreams of owning their own home, with half of these homes being made available for ownership."

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Polly Neate, Shelter's Chief Executive, said, "With an unprecedented recession under way, major job losses on the horizon and a housing emergency about to spin out of control, the government must invest more in social housing than its current plans allow for.

"Social homes are designed to be genuinely affordable, which is exactly what we need right now. Discounted homeownership schemes are not."

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