Today, we're delving into the world of shared ownership, a housing option used as a stepping stone towards homeownership. If you're pondering whether shared ownership is the right fit for you, read on as we break down the pros and cons and provide valuable insights into the process.

Are you tired of the rental cycle but find the prospect of trying to get on the property ladder daunting? Shared ownership might be the key to unlocking the door to your dream home without breaking the bank. 

Curious about the ins and outs of shared ownership? Let's dive in.

Pros of Shared Ownership:

• Affordability: Shared ownership allows you to enter the property market with a smaller financial commitment, making it an attractive option for those with limited resources.

• Staircasing: Shared ownership does give you the option to increase your ownership share through what's called Staircasing. Depending on your contract, you're able to purchase additional percentages of the property during certain periods, providing an avenue for increased financial stability over time.

• Foot on the Property Ladder: Shared ownership can be your first step onto the property ladder, offering a sense of accomplishment and long-term financial security.

Cons of Shared Ownership:

• Limited Control: When you opt for shared ownership, you'll share decision-making with a housing association. This shared control might not align with everyone's vision of homeownership, as major decisions regarding the property are often made collectively or by the housing association as the leaseholder.

• Restrictions on Modifications: Making changes to your property may be subject to restrictions. You may need approval from the housing association before making alterations or improvements, limiting your freedom to personalise your living space.

• Resale Challenges: Selling a shared ownership property can be more complex than selling a traditional home. The housing association often has a right of first refusal, and finding a buyer who meets the shared ownership criteria may take longer.

• Staircasing Challenges: While staircasing allows you to increase your ownership share over time, it might not be suitable for everyone. The process can involve additional costs, and the feasibility of increasing your share depends on your financial circumstances at the time.

• Potential Rent Increases: If you own a share of the property but still pay rent on the remaining portion, be aware that rent may increase over time. This can impact your overall housing costs and should be factored into your long-term budget.

• Limited Availability: Shared ownership properties might not be as readily available as traditional homes for sale. Limited availability could mean waiting longer for the right property to become available in your desired location.

• Market Fluctuations: Like any property investment, the value of your shared ownership property can be subject to market fluctuations. Economic downturns or changes in the local housing market may impact the resale value of your share.

• Mortgage Criteria: Securing a mortgage for a shared ownership property might come with stricter criteria, and not all lenders offer shared ownership mortgages. It's crucial to explore your financing options thoroughly.

• Income Restrictions: Some shared ownership schemes have income restrictions, meaning you may not be eligible if your income exceeds a certain threshold. This limitation can exclude higher-earning individuals or couples from participating.

• Leasehold tenure: Shared ownership schemes are on leaseholds, not freeholds. There can be lots of challenges with leaseholds, including but limited to short lease terms or high ground rent. Some mortgage lenders may also hesitate to lend on properties with certain leasehold conditions.

• Maintenance costs: the fact is that shared owners are responsible for 100pc of the maintenance costs on their property despite only owning part of it.

Still ready to take the plunge into shared ownership? Here are some actionable steps to guide you:

1. Research: Make sure you gather a comprehensive understanding of shared ownership and also review any documentation on any purchase thoroughly. Make sure you read the fine points and details on the leasehold documentation. The reality is that while some are better than others, many shared ownership schemes aren't quite as great as they promise.
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2. Financial Planning: Assess your current financial situation and future prospects to ensure shared ownership aligns with your goals. Ensure you understand what you're getting into and how easy it is to move on or sell your shared ownership property and the restrictions meet your needs and level of flexibility.
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3. Consultation: Seek advice from financial advisors and housing experts to make informed decisions. Please don't take our word for it. Make sure you speak to experts in your local area and get first-hand experiences from those living in the complex or others under the same management.

Shared ownership might just be the key to unlocking the door to homeownership for many stuck in the renting cycle and could be your ticket to a place you can truly call home. However, although the scheme clearly can and does benefit a number of households, the experience of many shared owners can fall short. 

Want to know more? The Homeowners Alliance organisation has just launched its Better Shared Ownership Campaign, which wants to see a code of practice introduced to prevent the mis-selling of shared ownership schemes, as well as more transparency on the outcomes. It's a great resource to get started.

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