How shared ownership works

ALTHOUGH Shaun Bailey’s objective to build 100,000 homes for London’s first-time buyers with deposits and mortgages from as little as £5,000 and £100,000 is eye-catching, shared ownership is not new. It is available nationwide to first-time buyers who otherwise could not afford to get on the housing ladder.

Available to households earning less than £80,000 a year – £90,000 in London and £60,000 in Wales – they tend to be offered by housing associations. Typically, you will be required to find a deposit equivalent to at least ten per cent of the share of the property you are buying. You will then need to get a mortgage for the remainder of the share from a bank or building society (not all are prepared to lend).

There are likely to be fees for arranging the mortgage plus legal and valuation costs – and stamp duty may be payable. For the part of the home you don’t own, you will pay a rent to the housing association, plus probably a service charge to cover the cost of maintaining any common areas.

Once you are a shared owner, you can then increase your ownership slice – in theory up to 100 per cent.

Shared ownership is not without drawbacks. Major changes to a home such as an extension may be prohibited. And when you come to sell it is the housing association that finds a buyer or buys it back (in some cases even if you have become a 100 per cent owner).

For those keen to find out more, visit sharetobuy. com ( England); London.gov.uk (London); gov.scot/ policies/ homeowners ( Scotland); co-ownership.org (Northern Ireland); gov.wales/shared-ownershipwales (Wales).