Shared Ownership: How Millennials Can Get On The Property Ladder
Contributed by @EarnPreciously
Getting onto the property ladder is the dream for many young adults but the reality is that it’s sometimes near impossible to achieve this goal working a ‘decent' job. Shared ownership - is it good or bad?
Let me cut to the chase.
I was a 24-year-old Lecturer, living with my in-laws and pregnant.
This is where I found myself after 18 months of being married to my amazing husband, who did the best to provide for our household and save for the future. The only issue was, our income wasn’t enough to embark on the traditional route to home ownership, and finding a property was my number one priority.
This was when the Shared Ownership scheme saved us.
You may be in a similar scenario to the one I described, or you may just be seeking an alternative to the conventional housing options we are given. Saving a massive deposit of tens of thousands of pounds may not be an option for you, especially when generational wealth is seldom passed down. This is why I have decided to share my tips on the much discussed, but often misunderstood Shared Ownership scheme.
What is Shared Ownership?
Firstly, let’s define what a Shared Ownership is, it’s a housing scheme that allows you to buy a share of a property ( usually ranging between 25% and 75% of the overall value of the property) and pay rent on the remaining share.
Now that we have the basics in check, let’s talk through the process of applying for one.
Step 1: Have your finances in check
Check your credit score! Having bad credit makes getting a mortgage with a decent rate of interest nigh-on impossible to avoid getting into debt - Do not use your overdraft if you don't need to, NEVER take out a payday loan. If you use a credit card, pay it back in full.
Step 2: Save, save, save - (sacrifice your social life if you have to)
Take advantage of the new Help to Buy ISA. The Government will contribute an extra £50 for every £200 you save up to a maximum of £3000. In other words - it’s like getting a 25% interest rate savings account! Take advantage. (We were saving over £2000 a month to ensure we have enough for a deposit and admin fees).
Step 3: Do your research and decide on what you want
If you want to have a family in the near future, there is no point looking at one bedroom penthouse properties.
Step 4: Register with as many housing associations as possible
A few good London-based housing associations are Genesis Housing Association and Network Homes. They tend to send emails of their available properties to subscribers, so they are worth signing up for if you are interested.
Step 5: Create an account on sharetobuy.com
It's an online portal focused on shared ownership properties- really helpful.
Step 6: Check your account regularly and apply for properties you are interested in
Most housing associations have a criteria and competition is tough.
Step 7: If you find a property you love, apply early and proceed with your application
Contact the housing association directly and speak to the housing officer personally.
Step 8: View the property
Unless it a new build, you are technically buying it off the current owner so be nice and let them like you enough to hand over their property to you. They have an influence on who they sell their property to.
There are positive and negative elements to Shared Ownership. I think it is a great stepping stone if you plan properly and are confident your income is going to increase as time goes by.
If you plan on having a family in the near future then Shared Ownership is not necessarily the best option in my opinion (I speak from experience). Having to suddenly live on one income from two is difficult, especially with the added expense of childcare. The ideal plan will be to buy at least 50% of the property and aim to buy the second half in one go. By doing this. you reduce paying multiple solicitors and admin fees.
Additionally, if you do not have any children, I advise you to save as much as possible even if it means living in a room for a couple of years. It will be worth it when you have your ‘forever home’. Furthermore, you’d only have to pay towards your mortgage and you wouldn’t have to worry about moving once your family grows.
I hope you enjoyed this post. Do check out more of my content and please comment, share and subscribe. I would love to hear from you!