Changes to the shared ownership scheme

Buying a house can be a difficult and demanding process. In an attempt to make this process easier and to help more people get onto the property ladder, the Government have recently unveiled a number of measures. A review of the shared ownership scheme is amongst these measures. The new scheme will allow homeowners to reduce their monthly mortgage repayments by spreading their borrowing over a longer period.

What is a shared ownership scheme?

A shared ownership scheme helps first time buyers or those with lower funds make those initial steps onto the property ladder. This is done by purchasing a share of a property. By a process called “staircasing”, you are then able to increase the share up to 100% and own the lease of the property.

How does a shared ownership scheme work?

By purchasing a 25% – 75% share of a property rather than the whole property, the buyer can pay less or secure a lower mortgage. They have to pay rent on the other share to the housing association from which the property is being bought, and over time they can “staircase” up to owning the full property. The Ministry of Housing gave the example of: “ A family in a £200,000 shared ownership 3-bedroom property could buy an initial 25% stake with a mortgage for £50,000 while paying subsidised rent on the remainder. They would then have to save up £20,000 at a time to increase their stake, and decrease their rent” However, with the plans for a new national model for shared ownership, people will be able to buy their home in 1% chunks – rather than being forced to save up 10% at a time. This means that in the example above, you could buy 1% shares of your property for £2000, instead of 20,000 for 10%.

Why make these changes?

On the day he became Prime Minister, Boris Johnson made the promise to "help a new generation to own their own home". By making these changes to the shared ownership schemes it means that people who can’t afford to buy more expensive properties or can’t secure higher mortgages can get onto the property ladder earlier, with greater flexibility in terms of how they achieve the property purchase.

Housing Secretary Rt Hon Robert Jenrick MP also said: “Building the houses this country needs is a central priority of this government. We know that most people still want to own their own home, but for many the dream seems a remote one.” “My mission is to increase the number of homes that are being delivered and to get more young people and families onto the housing ladder, particularly those on lower incomes.” “That’s why I am announcing radical changes to shared ownership so we can make it simpler and easier for tens of thousands trying to buy their own home.”

How we can help!

If you’re looking to get onto the property ladder, we have a variety of great homes to suit you!

We’ve also put together a helpful guide on “Buying a House” so that you can have fun choosing your dream home, rather than being bogged down by the stress of fees and paperwork!