At some point we have to leave the nest – or so I’ve been told – but as a millennial trying to get their foot on the property ladder in Do I rent? Do I buy? And what about the new option – shared ownership – is it really the best of both worlds?
Now as a twenty-something individual 😉 who went away for university, I got used to my independence and while living at home comes with its perks I’m interested in gaining my independence. But, I like many people my age the prospect of entering the property market seems so daunting with more and more fees popping up that I didn’t expect. And the deposit… don’t get me started on deposits! So that makes me think about renting, it all looks so much easier. But then I remember I would be paying someone else’s mortgage with little/nothing to show for it and then I’m back at the beginning again wondering dauntingly how on earth I can get on the property ladder. And then I found out about shared ownership, but is really the answer I’ve been looking for?
What is shared ownership
Shared ownership is allegedly the answer to the first-time buyer’s problems – at least that’s the way it’s being sold. Shared ownership allows you to buy a share of the home usually between 25% and 75%, and you would then pay rent on the remaining share and a service charge as well as – of course – the mortgage repayment. You also have the option to purchase more shares of the house later on down the line which is known as “stair casing”, however the cost buying more shares are not froze will depend on how much the property is worth at the time and you will have to pay property valuation fees to find this out. Finally, it is important to note that shared ownership homes are leasehold, so you only own the property for the length of the lease, when that lease comes to an end the property returns to the landlord – unless you buy them out.
- Lower deposit
- Part own a home – and potentially all of it (through stair casing)
- The home isn’t fully yours
- Can be hard to buy greater shares
- Still may liable for any maintenance and damage costs (they don’t want to share costs just ownership)
- Harder to resell
It sounds so simple right. You take your money, you buy the house and do you own the house. But what if you’re like me, an average joe with student loans, who just started saving? What then? The prices of hoses have soared over 200% in the last 18 years. I currently live in London and I have no plans of moving and when on average you need over £80,000 just to put down a deposit getting my foot on the property ladder is like climbing Mount Everest! Furthermore, the cost does not stop at a deposit. There are numerous fees that have to be taken into consideration too which may take in excess of a couple grand more out of your account (interestingly termed ‘stamp duty’). And let’s not forget furniture costs! It’s all starting to add up and feeling a little overwhelming. But despite the costs once you’ve brought it you’ve brought it. The house is yours. No one can take it from you – unless you don’t keep up with the mortgage payments – and it is an amazing investment which may prove lucrative in the future. It’s just getting your foot on that first step.
- The property is yours
- The property is yours
- The property is yours
- Getting the initial deposit and stamp duty
- Responsible for maintenance costs
We’ve weighed up a few options, what does this mean for my dilemma? Despite all the costs associated with it I will choose to buy. As I prefer the property belonging completely to me, instead of leasing a share of the property and being held accountable to some other body (e.g. housing association). Furthermore, I can’t get rid of y mothers voice in my head that tells me to take my time, save and invest in my future instead of lining someone else’s pockets. However, this is possible for me as I have somewhere to stay whilst I save up for a deposit. If you are not able to, shared ownerships provide a viable solution it is simply a top up between long and short-term gain. With shared ownership you can put down a deposit faster and still shares in a house and you have the option to fully buy the house at a later date. But buying for me is the long game, it would mean taking some time to save now in order to own (once the mortgage is paid off) my own property with full control. It is also worth mentioning, that if you do choose to buy, there are finance options available. For example, the government’s help to buy schemes could put you in a better position to buy, so it’s definitely worth checking out – alternatively let me know if you would like a post weighing up the different options available.
Either way, no matter what route you decide to go down, the time to start thinking and planning for it is now!