Shared ownership

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shared ownership
Shared ownership involves purchasing a portion of a property, typically ranging from 25% to 75%, and co-owning it with a housing association. While you own one portion of the property, the remaining portion is owned by the housing association.

How shared ownership works

Shared ownership is a mix of buying and renting. You take out a mortgage on the share you want to buy, and pay rent to the housing association for the remaining share of the property.

To secure a shared ownership mortgage, you will still need to provide a deposit. However, unlike traditional mortgages that require a deposit of 10% of the property value, shared ownership mortgages typically ask for a deposit of 5% of the share you intend to purchase.

Stamp duty and shared ownership

Stamp Duty Land Tax (aka SDLT or just “stamp duty”) is a tax you have to pay when you buy any property in UK to the value of £125,000 and upwards.

You will need to pay stamp duty on your shared ownership home. But first-time buyers are exempted from stamp duty.

When you buy a share in a property through an approved shared ownership scheme, you may have to pay SDLT. There are two ways to pay:

  • make a one-off payment based on the total market value of the property
  • pay any SDLT due in stages

If you decide to make a one-off up front payment, this makes a ‘market value election’ for SDLT.

If you choose to pay SDLT in stages, you can pay anything that’s due on the first sale amount. But you don’t have to make any further payments until you own more than an 80% share of the property.

You can choose which option’s best for you, depending on your financial backing.

These examples are for transactions that take place on or after 4 December 2014 and use the rates that apply on or after that date.

Am I eligible for shared ownership?

The main criteria for eligibility for shared ownership are dependent on a few factors, ranging from your age to your credit rating.

You have to be:

  • At least 18 years old.
  • Outside of London your annual household income must be less than £80,000.
  • If you reside within London, your annual household income must be less than £90,000.
  • You cannot own another home. Shared Ownership purchasers are often first time buyers but if you do already own another property (either in the UK or abroad), you must be in the process of selling it.
  • You should not be able to afford to buy a suitable property on the open market.
  • You must show you are not in mortgage or rent arrears.
  • You must be able to demonstrate that you have a good credit history (no bad debts or court judgements), and are able to afford the regular payments as well as costs involved in buying a home.

Your property may be repossessed if you do not keep up repayments on your mortgage.

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