Can’t afford to get on the property ladder?


1 October 2018

By Bakshi Dhanda

The price of properties, including ‘first-time homes’ can, at time, be out of proportion to the average income. To save for a deposit on your first home is now  taking a considerable length of time compared to previous years (especially first-timers). The ‘Bank of Mum and Dad’ is an option if you’re struggling to get the funds together on your own, but if you don’t have the ability to borrow from family members, or are unable to raise the money for that essential deposit on your own, there is another way to get your foot on the first step of the property ladder.

Shared ownership – what is it?

Shared ownership properties are only available through housing associations. Put simply, you go into partnership with the association and buy a stake in a property of between 25-75%. You’ll still need a deposit and a mortgage, but depending on how big a stake you purchase, that’ll be considerably less than you’d have to find for an outright purchase.

The housing association continues to own the property and you pay ‘rent’ on the remaining percentage of the property owned by the housing association. They charge a fixed amount of rent based on the value of the property, up to 3%. So for example, if you have a 40% share in a house worth £150,000 (£60,000), you would then pay the rentable value on the remaining £90,000 at a rate of 3%. So your rent would be around £2,700 a year, or approximately £225/month. That’s far, far less than you’d pay in normal private rented accommodation.

Who can apply for shared ownership?

Technically, anyone who is a first-time buyer can apply for shared ownership. If you’ve owned a property before but cannot afford to buy one again, then you may apply for shared ownership, but be aware that first-time buyers will be more likely to be accepted. Military personnel get priority treatment.

If your household income is less than £80,000 a year (and £90,000 in London) then you’re eligible to apply for a shared ownership home. You can also sell your ‘share’ of the property at any time.

Staircasing – climbing the property ladder to full ownership

At any stage during your time in the property you can buy a larger percentage of the property so that you get a little closer to owning the property outright. This is called ‘staircasing’. The cost will entirely depend on the value of the property at the time you decided to staircase, and not the original value when you first agreed to a shared ownership deal.

It does vary, but generally you’ll have to purchase a minimum of 10% each time you staircase, usually you’ll only be able to do it three times, and for some housing associations they’ll only let you make that third staircase purchase if you intend to go for 100% ownership and buy the property outright.

Is it a good idea?

Shared ownership is a great idea if you’re desperate to get onto the property ladder but just don’t have the funds for an outright buy. It’s also generally cheaper than private renting, and you can sell your share in the property at any time.

However, you’re limited to where you can buy shared ownership properties, so if you have a preferred location do some intensive research first to see if shared ownership properties are available.

Staircasing means you can decide when (and if) you want to make a block payment towards owning the property outright, which will decrease your rent and increase your share in the house. But it can be difficult and expensive, as the percentage will be based on the current value of the property, and not the original purchase price. You’ll also have to pay service charges, especially if the property is on a leasehold agreement.

Remember, that like any other property purchase, it’s important to have your finance in place before you go house hunting. You’ll still need both a deposit and a mortgage to buy into a shared ownership property.

Get some legal expertise

Whether you are buying, selling, remortgaging or need help with any other type of residential property transaction, we can guide you through the process, keeping you safe and helping to avoid any unexpected problems after the deal is done.

To find out more about our conveyancing services, call us now on 01245 343980 or email

This article should not be used as legal advice.