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Why Christmas might not be the time for sharing

Image showing shared ownership


The price of property in the UK has been a hot topic for much of 2015 and was even the focus of most parties’ election campaigns during the elections in May.

Much has been made of the Government’s attempts since to tackle talk of a “housing crisis”, fuelled by property prices rising beyond the reach of most while rents have also increased, leaving many on the breadline.

Help To Buy, Build To Rent and even Custom Build projects are among the solutions we’ve seen so far but there’s talk too of an increase in shared ownership, which some are touting as the only way many will be able to afford to buy property – at least in the short term.

What is shared ownership …? It’s not so much the concept of sharing the cost of buying a home with a long-term friend or partner but more about taking on a housing association or similar as a funding partner.

You see a property you like, you buy 50% and your funding partner takes on the rest; you then pay them rent at a set rate over a set period, with an option to buy them out should your income increase to a sufficient level.

It sounds great in principle and even Shelter has been touting the concept as the way ahead for low-income families with aspirations for home ownership. The thing is what happens if things don’t go to plan and the “tenant” begins to struggle with payments?

There is a legal precedent and, perhaps unsurprisingly, it wasn’t the tenant who came out on top. The courts ruled the tenant wasn’t paying a lease but an assured tenancy and, as she had defaulted, the property was forfeit. She lost both her home and the money she had paid for it in the first place.

Also, if you’re in a shared ownership agreement and can see trouble ahead, selling the property could be difficult and may have an adverse effect on the asking price.

So, if you’re determined renting outright isn’t for you and owning property is the best investment, be careful. Shared ownership may mean your dream home is within reach – but you also need to be sure there are enough contingency plans in place to prevent it becoming a nightmare.