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Is Shared Ownership as good as it seems?

Shared ownership is promoted as the low-cost, low-deposit path for first-time buyers to escape the rent trap. But is the part-rent, part-buy model the staircase to heaven or hell?

For Caitlin Bucktrout and her partner, Sam Ward, both 25, it has been heavenly. They picked up the keys to their newly built three-bed semi near Headingley in Leeds in February 2020, just as the coronavirus pandemic threw the country into lockdown.

Their 25% share costs them just under £900 a month (including the rent element and service charges) – or almost exactly the same as the rent they paid on their former two-bed flat. But their new home comes with an extra bedroom, a garden and parking – and they now have their fabled first foot on the property ladder.

“It’s not lost on us how lucky we are. We have a lovely house on a really good corner plot overlooking parkland. We’re both 25 and, of our social group, half are still renting, and the ones that have been able to buy on their own have largely been given money through inheritances,” Caitlin says.

But why did they opt to buy only 25% rather than buy the £250,000 property outright?

The crux of the matter was the deposit. Buying a £250,000 home on the open market typically means raising a deposit of at least £25,000, which is far beyond the means of most young people unable to save as they struggle with high rents and all the other costs of living.

Caitlin and Sam’s shared ownership deal required that they put down a much more affordable minimum deposit of £8,500 (although they chose to add a little more). “We did not have a big deposit, so that meant we had very limited options on the open market,” Caitlin says.

But while the experience for Caitlin and Sam has been extremely positive, shared ownership is not without its drawbacks.

Even though a buyer owns just a share of the property, they are responsible for all repairs. Many shared ownership properties, particularly in cities, are leasehold flats that come with high service charges. The purchase price is sometimes steeper than similar properties on the open market and, if their circumstances change, buyers are mostly forbidden from subletting the property (although some big housing associations are now more relaxed about this). The mortgage rate on shared ownership homes can also (although not always) be slightly higher than standard purchases.

Courtesy by: The Guardian

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