- Shared Ownership FAQs
- Shared Ownership Eligibility
- Shared Ownership Pros and Cons
- Shared Ownership Purchase Process
- Cost of buying a Shared Ownership home
- Shared Ownership homes near me
- Shared Ownership New Build homes Vs Resale homes
- Shared Ownership Mortgage Lenders
- What are your options after buying through Shared Ownership?
- Shared Ownership Myth Busting
- Eligibility Check
Shared Ownership vs renting
Not sure whether renting privately or buying a home through Shared Ownership is right for you? Read our complete guide as we compare the benefits of buying with Shared Ownership and renting privately.
Is Shared Ownership better than renting?
Shared Ownership is an affordable home-buying scheme designed to help people step onto the property ladder who otherwise wouldn't be able to afford a home on the open market.
You will buy an initial share of your home (usually 25%) and pay rent on the percentage you don't own. This means that you need a much lower deposit, as it's based on the share you buy only, compared to buying on the open market.
Shared Ownership has helped thousands of people buy their own home, but is it right for you or are you better off renting? Take a look below as we compare what it means to rent privately vs buy a home with Shared Ownership.
Guide to Shared Ownership
Cost of buying with Shared Ownership vs renting
Shared Ownership
With Shared Ownership, you usually buy an initial share (25%) of the home and pay rent on the part you don't own and a service charge to cover communal spaces. The rent part is usually subsidised meaning the monthly cost to buy with Shared Ownership may be cheaper than renting.
You do need to get a mortgage, so will need to put down a deposit, however, this is a lot less than if you were buying on the open market.
Renting
With renting, you won't be subject to legal costs of buying a home like solicitors, however you usually need to put down a deposit (Which would be lower than buying a Shared Ownership home).
The amount of rent you pay is subject to what your landlord deems reasonable and has less control than rent charged through Shared Ownership, and in recent years average rents have spiraled to very high levels in London.
Cost of buying a Shared Ownership home
How secure is Shared Ownership vs renting
Shared Ownership
One of the main benefits of Shared Ownership compared to renting is security. When you buy a Shared Ownership home, as long as you keep up with your mortgage payments and don't go into rent arrears, you have the full rights of an owner-occupier.
You will usually have a lease term of 125 to 250 years depending on your lease agreement. This means you cannot be evicted from your home giving much more security compared to renting.
Renting
There is a lot less security when it comes to renting privately. With renting, you will sign a rent agreement (usually 1 or 2 years) as a minimal rental period. However, the landlord can give notice to end a rental agreement and you will need to move out and find another place to live. This can be quite stressful and gives less security in some instances when it comes to controlling how long you can live in your rental home.
How flexible is Shared Ownership vs renting
Shared Ownership
Buying a Shared Ownership home makes you an owner-occupier usually with a lease term of 125 to 250 years. So as long as you keep up to date with payments you can live freely in your home for this period with the option to extend your lease term further. Whilst you do have the option to sell your home at any point and move if you wish, this is a more complex process than just moving from a rental property.
Renting
One of the main benefits of renting is the ability to move freely between rental properties. Ending a rental agreement is quite straight forward which allows you to move to different locations at short notice if you need to. This is great if you are moving jobs or simply want to try living in a new area without the complexities of selling a home.
Can I decorate a Shared Ownership and rental home?
Shared Ownership
As you are an owner-occupier, Shared Ownership allows you to freely decorate your home to match your style. Whether you prefer a scandinavian interior or art-deco style, you can decorate to your heart's content. Another benefit with buying a new build Shared Ownership home, is that you will often have a blank canvas to work from, making decorating easier to do.
There may be restrictions on structural changes like removing an internal wall and will need to seek permission from the housing provider before making any bigger structural changes.
Renting
When renting a home, you will usually not be able to decorate the interior without getting prior approval from your landlord who can say no. This is therefore more restrictive than buying a Shared Ownership home and you may find that a rental home style does not match your own. If you do get permission, you will also be putting money towards decorating someone elses home without adding value in the long run for yourself.
Conclusion - Is Shared Ownership better than renting?
In summary, Shared Ownership is a fantastic option for those struggling to buy on the open market, but want to get out of the rental cycle and start to build equity in a home of their own.
It gives you the security of home ownership whilst being able to purchase with a much smaller deposit than buying on the open market. You can also decorate freely and stamp your mark on a home that is yours.
Ofcourse renting can give you greater flexibility with moving around, so do consider what is most important to you before deciding whether buying through Shared Ownership or renting privately is right for you.
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Find out what our Shared Ownership buyers say
Buying a first home, getting married and preparing for the arrival of a baby are all busy life events. Raph and Jaye would know, after experiencing all these milestones simultaneously. They purchased a 25% share of a two-bedroom apartment at The Switch in Wimbledon, with a £42,600 deposit.
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After spending years renting in London, wealth manager Aroma Khan purchased a 30% share of a three bedroom apartment in Queensbury, northwest London. She had no idea that, just two years later, she would be staircasing her way up to 100% ownership with a friend.
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Luca moved to London from Italy to work at a university. After a few years renting in London, Luca was able to purchase a 50% share of a bright two-bedroom, two-bathroom home through Shared Ownership at Arden, in Lewisham.
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Shared Ownership Pros and Cons
Are you considering Shared Ownership but not sure if it's right for you? See all the pros and cons to buying a home through Shared Ownership.
Cost of buying a Shared Ownership home
You should be aware of all the costs associated with buying a home through Shared Ownership. Discover an example cost breakdown for buying a Shared Ownership home and know all the costs involved with buying.
Shared Ownership homes near me
Are you looking for a Shared Ownership home near you? Peabody New Homes offers a wide selection of new build and resale homes throughout London as well as the Home Counties.