The affordable housing ladder: Shared Ownership Vs. Help to Buy
Both Shared Ownership and Help to Buy are government initiatives to help people get on the property ladder.
The definitions –
Shared ownership is a part-buy part-rent scheme where you purchase a share of a home (between 25% and 75%) and pay rent on the other part. You can ‘staircase’ in this instance, which means you can buy a bigger share of the home when you can afford to in stages up until you own 100% of the property.
Help to buy (Help to Buy: Equity Loan) is when the government helps you out with 20% of the cost of a home and you pay 5% cash deposit and then find a mortgage for the remaining 75%. In Greater London they have a London Help to Buy scheme where the government loans from 20% to 40% (to reflect the cost of house prices in London).
The details –
Help to Buy
- You must purchase a newly built property
- The value of the house must be less than £600,000
- It must be the only home you own, you must not own any other property
- Buyers only need to put down 5% of the property as a deposit
- You cannot sublet your home
- The property must be in England (Scotland, Wales and Northern Ireland have their own schemes)
- The government loan is interest free for the first five years
- The scheme is run by Government-appointed Help to Buy agents
- Your household income must be equal to or less than £80,000 in order to qualify (£90,000 in London)
- You can purchase a newly built property or a property through the resale programme
- You’ll need to secure a mortgage for your share of the property, or have the money available
- Staircasing is the process whereby you buy additional shares of the property as and when you can afford, if you choose to
- Shared ownership homes are always leasehold
- You can find shared ownership properties through housing associations
- There are legal costs when you staircase
- There are different schemes in Scotland, Wales and Northern Ireland