If you can’t afford to buy a property outright, shared ownership can be a great way to get a foot on the property ladder as it allows you to buy a share of a home. In this episode we want to give you an overview of how shared ownership works.

What’s it all about? Shared Ownership is a part-buy, part-rent government-backed scheme which allows buyers to purchase a share of a new home (usually between 25% and 75%) and pay rent on the remainder to the co-owning housing association. This is great if you’ve found the perfect home, but you can’t quite afford to take out a mortgage on the full asking price, and as you only own a percentage of the property, the deposit needed is usually only around 5% which makes it a popular scheme for first-time buyers.

When it comes to the percentage split of the property, anything in your favour above 40% is a great starting point. You then have the option to ‘staircase’ your share in your home, this is the process of buying more shares, or even buy the whole property in the future.

Whilst the principle is similar across the UK, the rules can vary between http://www.nihe.gov.uk/index/advice/buying_a_home/co-ownership.htm (Northern Ireland), http://www.gov.scot/Topics/Built-Environment/Housing/investment/grants/hso (Scotland) and http://gov.wales/topics/housing-and-regeneration/housing-supply/buying-and-selling/help-for-buying/homebuy/?lang=en (Wales) so make sure to double check this before signing on the dotted line.

Shared ownership properties in England are always leasehold, which means that whilst you will own a part share of the property, this is only for a fixed term and you will not own the land on which it sits.

Are you eligible? Shared ownership schemes are open to anyone with a total household income that does not exceed £80,000 a year outside London, and £90,000 within London. You don’t even need to be a first-time buyer to qualify, so long as do not already own a home or you will have sold your current home before you purchase.

How does Stamp Duty work on a shared ownership property? There are two ways you can pay Stamp Duty Land Tax (SDLT) when buying a share in a property through an approved Shared Ownership Scheme; you can choose to make a one-off payment or pay it in stages. If you choose to make an up-front payment, you will pay a percentage based on the total market value of the property at the time of purchase. Once you’ve paid this, you will not pay any more on the property sale, even if you decide to staircase your ownership later on.

If you decide to pay in stages, HMRC charge SDLT on the premium you paid for the grant of the lease. Whilst this means that you’ll pay less, to begin with, you may have to make further payments if you increase your share of the property at a later date.

What do I do when I want to sell up? You can sell your shared ownership property at any time, but you must first notify your housing association, who then has the right to try to find a buyer before you put it on the open market. They have an eight-week period in which to find a purchaser for your home, after which, you are free to market your share of the property. The total sum you and the housing association will receive will depend on the market value of the property at the time.

What are the downsides to shared ownership? Availability When it comes to shared ownership, you are restricted to specific properties and availability can often be limited in the area you’re interested in. Also, not all mortgage providers cater to shared ownership schemes, so check with your agent before committing to a sale.

Maintenance charges Generally, even with monthly mortgage repayments and rent fees, shared ownership is a cheaper option than buying a property outright, but there are additional charges you’ll be expected to pay that could drive up the cost. As well as your monthly ground rent payments, you will also have to pay a general service charge for caretaking and maintenance...