For aspiring home-buyers put off by rising house prices, Shared Ownership presents itself as a quick and affordable route to home ownership. But while it’s easier on your wallet than buying a home on the market, it's still important pay close attention to the costs involved with the scheme.
From your deposit to rent and solicitor fees, here are all of the costs of buying a Shared Ownership home:
What is Shared Ownership?
Shared Ownership enables you to purchase a home by buying a smaller share of a property, and paying subsidized rent on the remainder. Shared Ownership will cost a different amount depending on the price of your property, so here’s a few ways you can calculate the costs involved:
How much deposit do you need?
Just like with buying a traditional home, Shared Ownership starts with putting down a deposit. However, the key difference is that the deposit you pay is much smaller - reflecting the size of the share that you buy. A Shared Ownership deposit is usually 5% to 10% of the share you are buying, so you won’t need to spend centuries saving your pennies. Looking to buy a 20% share of a home valued at £400,000? Paying 5% of this share will result in a deposit of £4,000.
How much is Shared Ownership rent?
Paying your deposit is only one half of the Shared Ownership pie - you’ll also need to pay rent on the portion that you don’t own. Though it can vary depending on your housing provider, Shared Ownership rent is usually pitched at around 3% of the share that you don’t own. So if you buy a 40% share of a property worth £200,000, your yearly rent will be 3% of the 60% share. Once you know what 3% amounts to, you just need to divide the sum by 12 to get your monthly costs.
How much is service charge?
Depending on what services your housing provider offers, you may also be asked to pay monthly service charges for your apartment. This goes into things like maintenance, repairs and if you’re lucky enough, communal areas like shared gardens or roof terraces! Service charges can change over time, but your housing provider will be able to advise you on how much everything costs
How much are solicitors fees?
The average solicitor fees can cost anywhere from £850 to £1500. Unless you consider yourself a Shared Ownership whiz kid, you will need a solicitor or conveyancer to guide you through the legal process. Especially helpful if you are buying your first home, this will ensure the exchange of your documents and mortgage application goes off without a hitch.
How much does it cost to staircase?
Paying for your Shared Ownership home doesn’t end once you’ve moved into your property. If you want to buy more of your home, you’ll be able to buy more shares through a process known as ‘staircasing’. The cost of additional shares will depend on the market value of your property, and the percentage that you want to buy, but it could cost as much as £2000 (including valuation and mortgage fees). Buying more shares isn’t mandatory, but it can help you reduce the amount of rent you pay - the more shares you own, the lower your rent gets!
Are you able to afford a Shared Ownership property? At Square Roots, you can take your pick from some of the best new build apartments in London, without spending a fortune. With apartments for sale all over London, you can find an area and a home you love in no time.< Back to News & Events