Don’t Rent, Buy with Shared Ownership

To rent or to buy? We’ve heard the dilemma before.

All the to-ing and fro-ing, weighing up the pros and the cons. In the current economic climate with the cost of living so high, finding a deposit for a mortgage can be tricky and even feel like an impossibility. So, of course you naturally look to renting instead, maybe only as a short-term solution, only to find that the rental market has exploded exponentially and the rental rates are also at an all-time high. There’s simply no way you can rent and save for a deposit and live at the same time, right? Wrong!

There is an alternative, one that gives you a foothold onto the property ladder and a pathway to owning your home outright with lower monthly costs than renting and also a lower deposit than buying traditionally. Sound too good to be true. It isn’t! Shared Ownership is a unique scheme that allows you to part buy, part rent your home with a low initial deposit, and it could be the perfect option for you.


It’s been said many times before – “renting is dead money”, “you don’t want to rent just to line someone else’s pockets”. But for some, buying might be the dream and the end goal but is simply a little out of reach. That’s where shared ownership comes in.

What is Shared Ownership?
Shared Ownership is a fantastic opportunity if you're unable to purchase a home on the open market. It allows you to buy a share in a property on a part buy/part rent basis and pay a reduced rent on the part that you don't own. So how does that work?

1. Buy the first share in your new home - Buy your initial share in your home, starting with the amount that is affordable to you. Typically shares are between 25% or as much as 75% of your home. You will need to be able to raise a mortgage for the share you want to purchase unless you have sufficient money to enable you to purchase without a mortgage. Any deposit you pay will be smaller than if buying outright as you will be purchasing a share of your home.
2. Pay rent on the remaining share - The remaining share that you don't own, is owned by us Space Homes. You will pay a subsidised amount of rent on this share of the property. The bigger the share you buy, the less rent you have to pay.
3. Buy more shares in your home later - As your financial circumstances change over time, or your savings increase, you can buy a larger share in your home, until eventually you own all or more of your home.

 
Benefits of Shared Ownership
Shared ownership is undoubtedly the most affordable route to owning your own home as you need a lower initial deposit. As you are buying a share of the property rather than buying outright you only need a partial deposit. You only need to provide a deposit for the share you are purchasing which could be as little as 5%. This makes it more affordable to get onto the housing ladder. Not only that but your monthly mortgage payments will also be smaller as your mortgage is for a share of the property and therefore smaller.
Your monthly rental costs through a shared ownership scheme could be significantly lower too as you only pay rent on the remaining share of the property rather than the whole property. Added to this is the fact that you are also building up equity in the property. The money you pay each month will go towards building your equity in the property. Win win!
 
Real Time Example
Sounding good so far? Lets put this into real terms with an example at one of our stunning new build properties in Beverley.

Take a look at The Westwood at St John’s Park in Beverley. A stunning collection of 3 bed semi-detached or terraced properties. The Westwood's ground floor has a spacious open plan living space, with a kitchen/dining area and living room. Also on the ground floor is a utility room leading into the rear garden, WC and storage space. For this property, a minimum deposit on a 10% share is currently £27,780 or just £13,890 for an initial 5% deposit.

So, with rent, mortgage and services included the monthly payment to own a share of your house comes to around £730p/m.

When we completed a search of 3- bedroom rental properties in the area we discovered rents varied between £800-£1200p/m with a general average of approximately £900p/m. If we compare our shared ownership to any similar 3-bedroom rental property currently on the market in Beverley, you can see a significant difference in cost. A potential saving of up to £170p/m.

So not only could it be easier on your pocket initially without the need to save for a hefty deposit, its also budget friendlier every month with your ongoing rent. Crucially you are also on your way to owning your own property.
 

With shared ownership you essentially get the best of both worlds. A foot on the housing ladder without the need to save for a huge deposit, the option to buy the remainder of the property at a later date, giving you chance to navigate the mortgage/rental increases and budget accordingly and ultimately lower monthly rent costs.

As we’ve shown here in Beverley you could now be paying out the same or less a month to own a share of a property compared to when privately renting. With shared ownership you can have your dream home sooner than you think. If you feel this may be the best option for you right now, have a look at our exclusive range of homes available and get in touch with our dedicated team for more information.