Shared Ownership - Buy & Rent

Housing associations and charitable trusts sometimes offer first-time buyers - who may be single people, single parents, or students - the chance to part-buy/part-rent low-cost properties.

The main principle is that you buy a percentage of the property, say 50% and you rent the rest, with a service charge if it is an apartment. As time goes by you can 'staircase up' to 100% ownership. This is a scheme specially designed for those who cannot meet the full cost of outright purchase straightaway. Usually, your total monthly outgoings are smaller than they would be if you purchased outright.

Most local authority housing departments have lists of shared ownership schemes in their area. If you are eligible for a particular scheme you can fill in and submit an application form. If you are accepted, you will be offered a vacant property or put on a waiting list.

Conditions associated with shared ownership include:

• Payment of a reservation fee, usually a couple of hundred pounds, which is non-returnable but does go towards the price.
• Getting a mortgage to buy your 50% or 75% share of the property.
• Your mortgage lender will carry out a valuation report, which will cost you around £150.
• You'll need to appoint a conveyancer to carry out the transaction. This may cost around £400.
• When you move into the property you will be paying a mortgage to the lender and some rent to the association each month.
• After you have lived in the property for a certain time, you can buy more shares in it (until your own it outright), or sell your shares back to the association (at a fair market rate).
• Once you own the property outright, you can sell it on the open market.