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How to use shared ownership

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Shared ownership schemes allow people to buy a portion of a property from a housing association and to pay rent on the remaining portion.

The idea is that, as time moves on and the buyer can afford it, they buy more and more ‘slices’ of the property from the housing associationuntil they own the property 100%. This process is known as ‘staircasing’.

Shared ownership was introduced in 2001 in order to help people who could otherwise not afford it to get on the housing ladder.

The schemes were critisised at this time when 95% loan to value mortgages were readily available, because the cost of paying a combined mortgage and rent was often higher than that of servicing a conventional high street mortgage.

Also, very few people went on to own 100% of their property.

A study carried out in 2012 by Cambridge University revealed that, of the estimated 145,000 shared ownership properties already sold in England, only 27,908 had been staircased up to 100% ownership since 2001.

This is at least partly because first-time buyers rarely choose properties they intend to stay in for decades; as their circumstances change, they often wish to move to outright ownership in another area altogether.

Yet thanks to the economic downturn, the drying up of mortgage finance and employment opportunities, today many shared owners cannot sell their property, and many more are in negative equity.

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