As UK house prices continue to rise, more people are looking for alternate paths to owning their own homes. For many, money is an issue and saving for a deposit is the hardest part of being able to buy a home. The challenges faced mainly by first time buyers appear to have been recognised. As a result, there are now a number of schemes, mainly government supported, available for those struggling to get on the property ladder. The Shared Ownership scheme is one example. It allows those with a smaller deposit to buy a share in a property they wish to live in.

However, Shared Ownership is not the only option if you want to buy your home. There are other schemes out there to help first-time buyers. At Wayhome, we've been looking at the different approaches to Shared Ownership and what they involve.

Before we take a look at the various schemes available, 

it's important to understand what the concept of Shared Ownership itself involves

Shared Ownership does pretty much what it says on the tin. You'll buy a share (usually between 25% and 75% in the first instance) of your home and pay rent on the remaining amount. As time goes by, there's the option to increase the amount of shares you have in the property. This is known as ‘staircasing’ and in some circumstances, you can staircase your way to 100% ownership.

Who can apply for a Shared Ownership property?

You can apply for a Shared Ownership property if you're over 18 with a household income of less than £80,000 a year (£90,000 in London). You'll be eligible if you're a first-time buyer, or if you've previously owned your own home but no longer do so (unless you live in a council or other Housing Association property).

What type of properties does it apply to?

Generally speaking, Shared Ownership applies to new builds or Housing Association resale properties. So, if you're looking for a grade 2 listed doer-upper, the scheme probably isn't for you. In addition, Shared Ownership properties are always leasehold properties. This means that you're likely to be responsible for any ground rent or service charges associated with the lease, no matter the size of the share you currently own.

It's true that with Shared Ownership, you'll get a route to owning your own home, but it's not without restrictions. The Shared Ownership lease may prevent you from making changes and alterations to the property. So, whilst it might be the case that you can make the property your own internally, you may need to get permission to make any significant or structural alterations to your home. It's not an automatic right. If, for example, you're considering investing in an extension, you should always get help and check with your Housing Association and the full terms of your lease before doing so.

Be aware that each Shared Ownership scheme has its own specific rules so you should check with the Shared Ownership provider. We also suggest getting a second opinion from an independent, regulated, third-party, financial advisor.

Stamp Duty for a Shared Ownership Property

First-time buyers can either pay the Stamp Duty on the full purchase price of the property as if they were buying the property outright and not using Shared Ownership. The downside of this is the cost that you have to lay-out up front, but on the plus side you will never have to pay any more Stamp Duty on that property, even if you go on to buy it outright at a more expensive price. Or, they can choose to just pay the Stamp Duty on the share that you are initially buying (and this may even be less than the allowance for first time buyers). The plus side here is that you don’t need to lay out as much money when you first buy your home, but then the overall cost that you end up paying for Stamp Duty might be higher when you eventually staircase to 80% or more of the property.

Working out Stamp Duty payments on a Shared Ownership property can get complicated so do make sure that you take independent financial advice.

Shared Ownership schemes have proved a popular way for first-time buyers and those with a lower household income to get their feet on the property ladder. However, as you'll see below, they're not the only option.

The Government's Help to Buy Equity Loan helps aspiring homeowners and first-time buyers get onto the property ladder with as little as a 5% deposit. If you're eligible, you'll get a Help to Buy equity loan to support the purchase of your new build home from the Government. Whilst this is not exclusively for first-time buyers, it is restricted to new build properties. You must have at least a 5% deposit, and you'll then get a 20% top up from the Government (40% in London). As a result, you'll technically get a deposit worth 25% of the property purchase price even though you've only contributed a 5% deposit.

You'll then need to get a mortgage to cover the cost of the remainder. With this scheme, when you take out a mortgage, it must be a repayment mortgage, as interest-only mortgages are not permitted. This means that you'll have two loans outstanding on your property: the 20% deposit loan from the Government; and the mortgage. Remember that there's no guarantee that you'll get a mortgage. Your credit history will play a part here and it's important to seek independent advice to assess your eligibility.

When you get a loan, there are repayments to be made. The equity loan from the Government must be repaid either when your property is sold, at the end of your mortgage term or after 25 years - whichever comes first. Regardless of how much your property is worth, you'll always owe the Government 20% of the value of the property. So, if your property increases in value, the larger the amount you'll be required to pay back to the Government.

The good news is that the equity loan you get is interest free for the first five years. After that, you'll need to get ready to start making repayments. Bear in mind that the payments on your equity loan are interest only and will not reduce the amount you'll eventually be required to pay back. The interest is initially charged at 1.75% but this increases annually in line with inflation, plus 1%. On the upside, even if your property increases in value, you'll only ever be paying interest on the original loan amount. Proponents of the scheme have argued that this makes the Help to Buy scheme very competitive when it comes to purchasing your home.

Equity loans are available to both first time buyers and property owners looking to move. However, the home you purchase must be newly built and have a price tag of no more than £600,000. The purpose of the scheme essentially, is to help you buy a property to live in. Therefore, you're not permitted to use the scheme in order to purchase a second home, or to get a buy to let property. Remember, you'll also need to account for paying stamp duty on 100% of the purchase price.

The current Help to Buy scheme is being replaced with a revised, and more watered down, version of the initiative. From 2021 through to 2023, it will be focused on those who need to get support in purchasing their own home and has the following new features:

It will only be available to first-time buyers.

The scheme will be subject to regional price caps. These will range from £186,100 in the north east to £600,000 in London.

Intended to replace the Help to Buy ISA, the LISA (Lifetime ISA) is now open for applications. You can pay in up to £4,000 a year into a Lifetime ISA and the Government will provide a 25% bonus (maximum £1,000 a year). There are certain criteria you must meet should you wish to use your Lifetime ISA to purchase your first home:

The property must cost £450,000 or less.

The account must be open for at least 12 months before you purchase your property.

You must use a conveyancer or solicitor to act for you in the purchase - the ISA provider will pay the funds directly to them.

A mortgage must be used in order to make the purchase.

If you’re buying with someone else and they have a Help to Buy or Lifetime ISA, they're also able to use their government bonus towards the price of your home. However, should you as an individual have both a Help to Buy and Lifetime ISA, you cannot use both bonuses.

Anyone aged between the ages of 18 and 40 is eligible to apply for a LISA. In addition, you must be a first time buyer. Unlike some other schemes, you're not eligible if you've owned property previously.

In 1980, the Housing Act brought into being the 

 It was introduced to help those living in council or housing association properties purchase their homes at a discounted price. It's only available in England, not in other parts of the UK. Different councils and Housing Associations will have different rules around how the Right to Buy scheme operates. So, it's best to seek independent professional advice from the relevant body before you make any commitments here.

Essentially, the scheme provides substantial discounts to council tenants who are looking to buy the properties they live in. The maximum discount available is £82,800 for those tenants living outside of London. The discount is £110,500 for London residents. However, if you sell your home within five years of purchase, you'll be required to pay back some or all of your discount.

To be eligible for the Right to Buy scheme, the council or housing association property must be your only, or main, home. It must also be a self contained property. You won't be eligible if you share rooms in your home with people who are not members of your household. In addition, you must have been a tenant of a public sector landlord for a minimum of three years (though these don’t need to be consecutive) and there must be a legal contract between you.

What does the future hold for Right to Buy?

In 2016, a pilot scheme was put in place to extend the Right to buy scheme to Housing Association tenants. The Government has put in place a further pilot scheme in the Midlands which is due to come to an end in 2020. It's uncertain whether the scheme will be fully rolled out, but it's certainly something to keep an eye on.

Often confused with Shared Ownership, Shared Equity allows you to buy your home using a deposit (of at least 5%), a mortgage and an equity loan. You will be borrowing from 2 separate parties - your mortgage provider and also the party who sharing the equity in your home with you. The Help to Buy Equity Loan is an example of Shared Equity, but they are not the only providers. Sometimes property developers will offer their own Shared Equity schemes to help them sell their new houses. In contrast to the government’s Help to Buy Equity Loan which is interest free for the first 5 years, a key difference where the equity loan is from another provider is that they may charge interest on it from Day 1.

In contrast to Shared Ownership, you'll have control of your home and be able to sell it more easily should you wish to do so. However, the mortgage lender and the equity loan provider will have a ‘charge’ on it. Therefore you need to ensure that you are able to repay both your mortgage and the interest on the equity loan each month, if you fall behind on payments to either party, there's the possibility of this leading to repossession. Please ensure that you take independent financial advice beforehand so that you are clear of what you will be expected to repay to each of the 2 parties each month and what the penalties are if you are unable to make these payments.

When you sell a shared equity property, the equity loan provider is entitled to receive their share of the value at the point of sale. As with Help to Buy, if you sell the property for more than you bought it for, you'll still owe the lenders their share of the proceeds. For example, if your equity lender gives you 25% towards your home, they will be entitled to 25% of the subsequent sale price, regardless of whether the value of your home has increased.

 was a savings account designed for those saving up for a home of their own. You could start the savings account with as little as £1, or alternatively you could make an initial deposit of £1,200. The Government then enhanced your savings by 25% and gave you a £50 bonus for every £200 you saved. The minimum bonus amount you could receive from the Government was £400, the maximum being £3,000.

The Help to Buy ISA ended in November 2019 and is no longer open to new applicants. However, if you opened an account prior to this, you can continue to save until 2029.

No matter which path to home ownership you choose, you should approach each of these schemes in the same way you would a standard mortgage application. You should thoroughly review your circumstances and decide whether you’re ready for the commitment of purchasing a home. You should contact an independent and professional financial advisor who should be able to assist here.

As we've discussed above, there are many different schemes. And different options will suit different buyers. Do your research and speak to a professional to ascertain the most appropriate route for you.

Wayhome is the Gradual Homeownership option that helps aspiring homeowners take their first steps towards ownership without taking a mortgage. A simple, yet revolutionary idea: if you can afford to rent, you can afford to gradually buy. Start with as little as a 5% deposit, and pay rent on the part of the home that you don’t own. Buy more as and when you can afford to do so.

A look at all of the alternative options to the Shared Ownership scheme currently available to home buyers

Shared Ownership Alternatives

Shared Ownership, also known as Part-Buy, Part-Rent, is a government scheme that is designed to help first-time buyers, and other selected groups, get a foothold on the property ladder when considering what 

. You begin by buying part of a home—typically between 25% and 75%—with the remaining part owned by the landlord, usually a council or housing association.

Under the terms of your homeownership agreement, you typically pay rent (at a reduced amount) on the part of your new home you don’t own, but retain the ability to buy further shares in the future—a process known as ‘staircasing’. In most cases you can staircase up until the point you own 100% of your home. You can find out more about staircasing here.

Unfortunately, available Shared Ownership scheme properties are confined to those that have been built by a housing association via a government subsidy. Typically, such homes are found in apartment blocks or in new-build estates. In some cases, all the properties may be available under the Share to Buy scheme, in others it may only be a proportion that are released in order to help the housing association meet its affordable housing targets. This means that most of the time your new home can only be a new-build. In a smaller number of cases, you may be able to buy a recently built resale property that is being sold on by a previous Part Buy, Part Rent owner.

If you’re going to share ownership with a housing association, you’ll need a mortgage. However, you won’t have to borrow as much as if you were purchasing the house outright – this is because you’ll only require a mortgage for the portion of the property you’re purchasing rather than one that covers the whole value of the property. When it comes to your deposit, you’ll typically need between 5% and 10% of the value of the share you’re purchasing. For example, if you’re buying a 50% share of a £250,000 property, your share will be worth £125,000. Therefore, you’ll need £12,500 for a 10% deposit or £6,250 for a 5% deposit.

Your household income (yours and your partner’s income) must be £80,000 a year or less (£90,000 a year or less in London). You must also meet one of the following criteria. You’re either:

A prior homeowner but no longer able to afford a new home on the open market,

You’re unable to afford to buy a suitable home on the open market.

You’re not in mortgage or rent arrears.

You plan to live in the property and have no plans to rent either all or part of it.

You have the permanent right to live in the UK.

You’ll receive military priority for the Share to Buy scheme if you have completed your phase 1 training and meet at least one of the following criteria:

You’re regular Army, Air Force or Navy service personnel.

You’re a Ministry of Defence Police Officer.

You’re a uniformed staff member of the Defence Fire Service.

You may still be eligible for military priority for the scheme if you’re an ex-military member who meets the following criteria:

You served in the Armed Forces for six or more years.

It’s within two years of your date of discharge from service.

You can produce a Discharge Certificate (or similar documentation) proving your service.

Lastly, if you’re the surviving partner or spouse of a Regular Service Personnel who has died within the past two years, you may be entitled to military priority for the Share to Buy scheme. Veterans Gateway offers help and advice to armed forces members and their families. You can find more information 

How much should you budget for additional costs?

Everything depends on your individual circumstances, including the terms and conditions of your housing association, but you should budget to ensure that you’ve enough to cover the costs of buying your Share to Buy home – for example, solicitor and management fees.

Do Shared Ownership properties require a specialist mortgage?

Many mainstream mortgage lenders don’t offer Share to Buy mortgages, so you may need to find a specialist provider. One consequence of this limited availability is that Share to Buy mortgage interest rates may be higher than those of a standard mortgage. You may want to get specialist mortgage advice.

How much deposit do you need for Shared Ownership properties?

Share to Buy lenders calculate loan to value (LTV) on Shared Ownership mortgages differently than for standard mortgages: instead of calculating the LTV based on the whole value of the property, it’s calculated based only on the share you’re buying. In most cases you’ll need, as a minimum, a deposit of 5-10% of this amount.

For example, if you’re buying a 50% share of a flat that has a total value £180,000, you’ll need £90,000 from your mortgage and deposit combined. In this case, if you had a 5% deposit (£4,500), you’d need a £85,500 mortgage – meaning the loan to value of the mortgage would be 95%. You can work out the LTV of your mortgage by using 

For more information about deposits check out our

Flowers on a window sill

What are the Share to Buy mortgage lending criteria?

As with any mortgage application, your ‘sharetobuy’ mortgage lender will carry out an affordability calculation to determine whether you can safely cover the cost of your monthly mortgage repayments.

However, ever since changes brought about by the Financial Conduct Authority (FCA) in 2014, the amount you can borrow has been capped at a loan-to-income ratio of four-and-a-half times your income. Lenders are now required to also make a case-by-case affordability assessment of your ability to repay the loan. This affordability assessment should consider the following:

Your income, including salary, bonuses and pensions.

Outgoings, including vehicle costs, commuting costs, utility and broadband bills.

Your debt repayments on personal loans, credit cards etc.

Rent on the portion of the Share to Buy property you won’t own.

Ground rent and service charges (these are inevitable as all Shared Ownership homes are sold on a leasehold basis).

The FCA further requires lenders to ‘stress test’ your capacity to repay the mortgage in the event of interest rate rises or any of the following events:

According to Which?, ‘if the costs combined with your mortgage exceed 45% of your overall income, you may struggle to pass affordability checks.’

The amount you can borrow will ultimately depend on the lender’s criteria and you should consider getting specialist mortgage advice.

Does Shared Ownership have a lower monthly cost than a conventional mortgage?

Your monthly Share to Buy mortgage payment plus your monthly rent should typically be less than what it would have cost you to secure a mortgage on the whole property. If it isn’t, the deal is unfortunately not right for you and you may wish to consider getting specialist mortgage advice.

Is there a Shared Ownership mortgage calculator?

The official Help to Buy Shared Ownership mortgage calculator can give you a rough idea of how much you’ll need to borrow as well as your monthly rent and mortgage repayments. You can find the calculator 

Can you get a guarantor for a Share to Buy mortgage?

Although it may technically be possible to get a guarantor for a Shared Ownership, 

 mortgage, in practice few if any lenders and housing associations will allow it.

Can your parents be on your Shared Ownership mortgage?

Unfortunately not. All named parties on the mortgage application must intend to live at the property. However, the Bank of Mum and Dad may still help (if they wish to!) by gifting you funds to contribute towards your first-time buyer deposit.

Can you get a Shared Ownership mortgage if you’re self-employed?

Yes. However, you’ll need to provide evidence of enough earnings. The challenge in this situation is finding a lender who accepts 

 applicants AND offers Share to Buy mortgages.

How do you apply for the Shared Ownership scheme?

As of 2 January 2020, applicants should apply with one of three agents across England.

Home Ownership for People with Long-Term Disabilities (HOLD)

If you have a long-term disability and the standard Share to Buy schemes don’t meet your particular needs – for example, you require the ease of access provided by a ground floor flat – you may be able to buy a Shared Ownership home through the HOLD scheme. In this situation the housing association will negotiate with the mortgage lender on your behalf. More information about HOLD mortgages can be found here.

The OPSO scheme is available to anyone over 55 who is a first-time buyer or who previously owned a home but is now unable to do so on the open market. As with the standard scheme, you can purchase between 25% and 75% of the home’s value and pay rent on the remaining share. OPSO differs from standard Shared Ownership in that it allows you to buy only 75% of the home’s value. However, unlike Shared Ownership once you own 75%, you do not pay any rent on the housing association’s remaining 25%.

Staircasing – your route to 100% ownership?

Once you buy a portion of a property you have the option of later increasing your percentage share through a process known as ‘staircasing’. In most cases you can staircase all the way to 100% ownership – exceptions include if you’re part of an OPSO scheme or live in a semi-rural location in Surrey or Devon where the portion you’re allowed to own may be capped at 80%.

"home sweet home" written on a picture next to a flower pot

Unless you’re able to use savings or inheritance to purchase further shares, you’ll need to secure a staircasing mortgage to fund the purchase of further shares in your property. You can do this in two ways:

Further advance: Your existing lender offers you an additional advance to help you staircase your way to greater equity in the property. In this situation, the lender performs a property valuation and is likely to carry out a fresh affordability test.

Shared Ownership remortgage: By obtaining a new, larger loan with a different lender you can repay your original lender while also securing funds to purchase further shares. It’s likely that any new lender will perform valuations and affordability tests.

Is there anything else you need to remember before staircasing?

The following factors may help you decide whether you want to staircase:

Whether your property is worth more or less than it was at the time you purchased your initial share: if it’s worth more you’ll have to pay more for each percentage share; if it’s worth less you’ll have to pay less for each percentage share.

The housing association will require a property valuation to calculate the cost of your new share. You’ll have to pay the valuation fee. Most valuations are valid for only 3 months, so you’ll have to act quickly. You otherwise risk incurring additional fees.

The terms and conditions may vary from housing association to housing association and agreement to agreement. However, in general you can staircase up to three times. Given that you’ll likely have to pay survey, valuation, legal and mortgage fees each time you staircase, it makes sense to do it in as few transactions as possible.

If you’re struggling to meet your shared ownership mortgage payments, you may be able to ‘downward staircase’. However, this will depend on the terms of your lease.

Mortgages for Shared Ownership properties can seem complicated. Here's a quick guide to clear everything up!

An Introduction to Shared Ownership Mortgages

For some, investing in a Shared Ownership property can prove to be the solution when looking for help to buy a home. The Shared Ownership scheme is designed to help you get onto the property ladder if you can’t get the home you want with a traditional mortgage. It’s also an option open to you if you’ve previously been a homeowner, but no longer own your property.

If you're over the age of 18, with a household income of less than £80,000 per year (or £90,000 in London), then you could be eligible for Shared Ownership. However, if you’re considering the Shared Ownership scheme, you’ll need to think about the costs involved. To not do so could turn your Shared Ownership plans into an unexpected financial struggle.

And of course Shared Ownership is usually only available for newly built properties, or resales that a current Shared Ownership owner is looking to sell on.

As with any property purchase, you need to be sure that the Shared Ownership scheme is appropriate for you. In this article, we discuss the costs associated with buying and owning a Shared Ownership home, and how you can be prepared to meet them.

You should be aware that each Shared Ownership scheme has its own specific rules so you should check the rules with the Shared Ownership provider. We also suggest getting a second opinion from an independent, regulated, third-party, financial advisor.

When you apply for any mortgage, it’s likely that you'll need to provide a deposit. Shared Ownership properties are no exception. Usually, you'll buy an equity share of anywhere between 25% and 75% of the property and then pay rent on the remaining share.

Under Shared Ownership, the general rule is that you pay a deposit only on the share of the property that you’re purchasing. This is different to a standard residential mortgage, where you’re usually required to pay a deposit on the full purchase price.

As an example; if you’re purchasing a 25% share of your home and the property is worth £300,000, the value of your share will be £75,000. In the case of Shared Ownership, you'll usually be required to provide a minimum 5% deposit of your £75,000 share, depending on which Housing Association you’re dealing with. This means you’ll need a deposit of £3,750 and then will need to take out a mortgage for £71,250 to buy your £75,000 share. For first time buyers, or those struggling to buy a home, the small deposit required for a share in the property could prove a big help to buy their home.

Scrabble tiles spelling out "mortgage" on a wooden table

It’s likely that your lender will charge an arrangement fee. Be sure to thoroughly check for fees like this and how much they are. Sometimes, mortgage lenders have been known to increase their arrangement fee in order to make the interest rate appear lower, but always seek advice from an independent and professional mortgage advisor before signing on the dotted line. You need to be in the know about how the arrangement fee could potentially affect your monthly repayment and what you can afford to pay based on your household income.

There is sometimes the option to pay the arrangement fee upfront depending on who your lender is. However, you need to consider the possibility that if the Shared Ownership purchase falls through, this may not be refundable. On the other hand, if you choose to add the fee to the mortgage, you’ll be paying the interest on it for the duration of the loan term.

Some lenders charge an additional booking fee to secure your mortgage. On average, the fee is in the region of £100-£200, but this is dependent on the lender you’re using. It’s paid upfront, so if your purchase doesn’t go ahead, it’s money that you may not see again.

The valuation fee is charged by the lender for a valuation survey to ensure that the property you're buying is worth what you’re paying for it on the open market (be aware that this is just a valuation survey to determine the value of the property and not a structural survey). If there's a difference, you should consider whether to go ahead with the purchase or if you should try to renegotiate the price. The lender is trying to ensure that if you fall behind on your payments and they need to repossess your home, they’ll be able to sell it on for a price that’s reasonable and covers the amount of the mortgage they have lent you.

The valuation fee is usually around £250. You might find that your lender will cover the fee for you, but it’s best to be covered in case it’s a sum that you'll have to meet yourself out of your household income.

You might decide to enlist the help of a mortgage broker who acts as a ‘go between’ between you and your mortgage provider. Part of their role is to search the market for the most appropriate mortgage deals for you. They'll take a look at your financial situation and your household income (amongst other things) in order to assess your affordability. You'll need to show that meeting a monthly mortgage repayment is something that you can do and that your credit rating is in good shape.

Some brokers don’t charge you a fee for their services. This is because they work on commission from the lender. Others though, charge a fee to cover the work they undertake. The fees brokers charge vary. Some use fixed fees, whilst others charge a percentage of the purchase price.

Legal costs - solicitors and conveyancers

A person signing paperwork

You'll need a licensed solicitor or conveyancer to take you through all the legal work when it comes to buying your Shared Ownership home. Their fees are usually on a fixed price basis but you will need to check whether this is the case as costs may vary. The fees usually vary between £500-£1,500, but this is by no means a definitive guide.

They will carry out a number of tasks relating to your house purchase. They’ll organise for the property searches to be undertaken and organise exchange of contracts and completion. They'll also deal with the transfer of ownership and ensure that the property is properly registered. When the property is Shared Ownership, they should also conduct a thorough inspection of the lease, bringing to your attention any restrictive covenants or other restrictions that you need to be aware of.

If you’re taking out a mortgage, you should be aware that your solicitor or conveyancer will normally act for your lender as well as you. In these cases, you’re likely to require a solicitor or conveyancer who is on an approved list of practitioners who are qualified to undertake the work.

Costs associated with a leasehold property

Shared Ownership properties are always leasehold. There may be opportunities down the line to purchase the freehold from the Housing Association, but this will depend on your Housing Association. There are additional costs associated with leasehold properties that you should be aware of, as they'll need to be factored into your monthly household income and expenditure.

With a Shared Ownership property, you may be required to pay a service charge to the Housing Association. The service charge covers the upkeep and repair of common areas, buildings insurance and maintenance of the grounds. There may be other things that the service charge covers too, e.g. it can be used to maintain and repair lifts and lighting, this list is by no means exhaustive.

Ensure that you know how much the service charge will be each month. Be aware also that the Housing Association can, subject to the terms of the lease, increase the service charge at any time. So it would be wise to keep an amount of money ring fenced to cover any increases to the service charge and to limit the impact on your household income

Some Housing Associations may also charge an admin fee to cover the services they provide, so it’s worth checking to see if this applies with your Housing Association

Due to the fact that all Shared Ownership properties are leasehold, as well as the service charges, you may be required to pay a yearly ground rent. Like the service charge, the amount you’ll pay will vary. It depends on where you live, the type of property you live in and the terms contained within your lease.

It’s vital that you instruct your solicitor or conveyancer to examine your lease in detail ahead of your purchase being finalised. Some leases contain what’s known as a ground rent doubling clause. This means that the amount of ground rent charged will double every few years - 

in some cases, ground rent prices have risen to unmanageable levels.

If you’re planning to make a mortgage application, ground rent doubling clauses are something you need to look out for. This is because many lenders are apprehensive about approving mortgages for properties with such clauses and therefore may not be willing to lend. In addition, you may also find it more difficult to sell your property in the future.

When you buy a Shared Ownership property, you may find that your legal fees are a little higher than those in a standard purchase. This is because some solicitors charge more for the additional work they undertake in respect of checking the lease and the clauses and terms within it.

Stamp Duty is another of the costs you’ll need to factor in when purchasing your Shared Ownership property.

. You could make a one-off payment, the amount of which will be based on the value of the property as a whole. If you decide to do this, this means that you won’t have to pay any further Stamp Duty if you decide to increase the share you own in the property later down the line. So, when you're buying a home, give some consideration to whether you think the property is likely to rise in value. If you think that this is the case, making a one-off payment could be the way to go.

Alternatively, you can choose to pay the Stamp Duty in stages. This means that you’d pay Stamp duty on your initial purchase share and then pay again in the event that you choose to increase your share in the property. As a general rule, if you don’t pay the Stamp Duty upfront, then you won’t have to pay it if you own less than 80% of your home.

It’s not easy to calculate Stamp Duty, or to predict which method of payment is right for you. As such, it’s advisable to seek advice from an independent professional in this regard.

If you’re a first-time buyer, you will benefit from the first-time buyers relief currently available on Stamp Duty. As part of the 2018 Budget, the Government stated that if your Shared Ownership property is worth up to £500,000, then you do not need to pay any Stamp Duty on the first £300,000. If this applies to you, and you paid Stamp Duty on your property after November 22 2017, then 

 The Government has temporarily reduced Stamp Duty rates for a fixed period between the 8th of July 2020 and 31st of March 2021. The examples in this article refer to the existing rates, that will apply again from the 1st April 2021. For more information on the temporarily reduced Stamp Duty rates, 

Staircasing - increasing the share you own

A large white staircase

It might be that you intend to increase your share, all the way up to 100% ownership. You can obtain a higher share through a process known as staircasing.

Different Housing Associations have different rules when it comes to your right to buy an additional share, so it’s always best to keep them informed of your intentions to purchase more and to be aware of any rules and restrictions they’ve got in place. Some of the schemes don’t allow you to increase your share all the way to 100% ownership, so that’s perhaps the first thing you should check if this is in your future plans. Other restrictions include:

Only being able to increase your share in specific increments.

A limit on the amount of times that you’re permitted to increase your share.

If you think that increasing the share of the property you own is something you’ll pursue, then it would be a good idea to have a savings plan so that you can cover the amount of the additional share you wish to buy. How much you'll pay for each future share is dependent on how much your property is worth at the time you intend to buy. If your property has increased in value, then so will the price of that additional share.

If you choose to increase your ownership, it's likely that you'll face other costs. It’s estimated that doing so 

 and that’s in addition to the costs of the additional share of the property itself.

Some examples of the costs that you might incur when increasing your share are:

A property valuation to determine the price of the additional amount you want to buy.

Additional solicitor and conveyancer fees.

Mortgage fees. These might apply if you need to make an application for a new mortgage to purchase more.

Having said all that, there is an upside. As you only pay rent on the share you don't own, if you increase your share then the amount of rent you pay to the Housing Association on the remainder should reduce. This may result in your monthly payments being lower overall.

Keys with a house keyring

Whether opting for a standard mortgage or diving into Shared Ownership, moving home can be an expensive business. If you’re a first time buyer, you may need to cover the cost of furnishing your home. This can really add up, particularly if you need to purchase white goods and electrical items. If you already own these items, you might need to pay for the cost of storage until you’re settled in your new home.

In addition, you may need to hire someone to help with removals.

You may also find that your Council Tax payments increase depending on where you move to and the size of the property you purchase.

Moving home, under any circumstances, is going to involve a level of expenditure. It’s always a good idea to keep a financial ‘buffer’ to one side, a pot that you can dip into as and when unexpected costs come to light.

You may find that the service charges or ground rent charged by your Housing Association increase. You'll also need to factor in the possibility that the home you’ve purchased is in need of some minor TLC or a large maintenance project. Either way, all of these things cost money that’s in addition to your monthly costs of owning a home.

When it comes to buying a Shared Ownership home, you must consider the costs involved, whether you plan to increase the share you own or not. As with any house purchase, if you don’t do your research, read all of the available information and have a solid financial plan, you’ll find that costs can spiral out of control very quickly. Ground rent and service charges, the deposit and the cost of moving - it all adds up. If this happens, there are lots of places you can go for free advice. For example Shelter or National Debtline both have a website and advice lines to help people in this situation who are unable to keep up the repayments on their homes. However, it’s best to try and avoid this situation as far as you can.

And don’t forget; once the initial cost outlay is done and dusted, you’ll need to be able to manage month to month. And ideally, have something left over with which you can do as you please. Your rent and your mortgage payments will need to be paid for the total length of the loan. This needs to be manageable, not least of all to ensure that after you've picked up your key, you get complete enjoyment and satisfaction out of the home you call your own.

Wayhome is the Gradual Homeownership option that helps aspiring homeowners take their first steps towards ownership without taking a mortgage. A simple, yet revolutionary idea: if you can afford to rent, you can afford to gradually buy. Start with as little as a 5% deposit, and rent the part of the home that you don’t own. Buy more as and when you can afford to do so.

LEARN

Shared Ownership Alternatives

An Introduction to Shared Ownership Mortgages

The cost of Shared Ownership: Deposit, Mortgage & other fees