WAYS TO BUY
GETTING A LEG UP ON THE HOUSING LADDER The high cost of renting combined with the increased reserve of lenders has meant that many millennials have a tough time getting on the property ladder. However, the Government is well aware of the issues and the tide is turning, with initiatives and incentives aimed at supporting first time buyers. Debbie Clark looks at the options Often, the biggest barrier is saving a large enough deposit. However, the initial layout may be less than you expect and, with the average cost of a mortgage significantly less than rental costs for most, it is definitely worth exploring all of the opportunities available to you. Here we look at a handful of popular options. Remember to look out for any incentives on offer from developers too, as they can make all the difference to affordability, particularly in the early days of homeownership.
SHARED OWNERSHIP Shared ownership is a Governmentsupported way to buy an apartment or a house. You buy as much as you can afford and pay rent on the remainder. Over time, if you choose to, you can buy the rest and own the property outright.
New build homes for shared ownership sale are available in most parts of England. Existing homes in more established communities are also on offer through housing associations’ resales programmes. Shared ownership is designed for people who cannot afford to buy a home that suits their household’s needs on the open market, mainly first time buyers. To be eligible, your gross household income should not be higher than £80,000 per annum (£90,000 in London). One of the biggest benefits of shared ownership is its much lower mortgage deposit requirements; these are calculated as a percentage of the share that you buy rather than on the full property value, making access to homeownership truly affordable for many. Rents for shared ownership properties are calculated at 2.75% (sometimes less) of the share owned by the housing provider. They are not market rents. They rise each
year by RPI (Retail Price Index) plus 0.5%. Shared ownership is changing and some new features were introduced in April 2021 and will be rolling out over coming months. For example, the minimum share available to buy is reducing from 25% down to 10% of the property value. A contribution by the housing provider of up to £500 per year towards certain repairs in the property’s first 10 years is another of its new features. One other is the option to buy more shares (this is called staircasing) adding an extra 1% each year to the portion that you own for a period up to 15 years. These new product features are all subject to conditions, and you will need to check with the housing provider to understand which ones apply. Shared ownership is a leasehold product; if you buy an apartment and, over time, you increase your share to 100%, then the
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