Latest news with #youngbuyers
Yahoo
16-06-2025
- Business
- Yahoo
Is shared ownership worth it? Pros and cons to be mindful of
First-time buyers using the government-backed shared ownership scheme may find it easier to get on the property ladder, but should be aware of multiple issues that can come with these properties – including high maintenance costs, punitive charges and difficulties when coming to sell. Young buyers have become increasingly reliant on such schemes in recent years – especially since the closure of the Help to Buy scheme – with high house prices leaving many unable to buy without support. Currently, buyers purchase between 10pc and 75pc of a property using a mortgage, and pay monthly rent on the remainder, which is owned by a housing association or other third party. Shared ownership was designed to help buyers achieve their dream of home ownership much sooner. It can deliver on this, but many buyers also find the scheme has many hidden pitfalls. What is a shared ownership property? Difficulties selling shared ownership The cost of staircasing Shared ownership FAQs Buying a shared ownership property is a way of vastly reducing the cost of taking that first step on to the property ladder. If you don't earn enough to qualify for a mortgage on the full price of a home, this scheme offers first-time buyers a way to buy just part of a property − between 10pc and 75pc − then pay rent on the rest. You only need to put down a deposit on the share that you are buying, which means that if you purchase 25pc of a home worth £230,000, you would have to find just 5pc of £57,500 (a quarter of the total value) for the deposit, i.e. £2,875. You then take out a mortgage for the remainder of the 25pc and pay rent on 75pc of the property. Buyers have the option later to purchase the remaining portion of their home in stages, gradually reducing their rent as they do. This is called 'staircasing'. To be eligible for the scheme you must not already own a home, and must earn less than £80,000 a year as a household, rising to £90,000 in London. You must also be a first-time buyer or if not meet another eligibility requirement – such as owning a home in the past but being unable to afford to buy one now. Some of the people who have been hardest hit by the cladding scandal are leaseholders in shared ownership schemes. Because of the way their leases are set out, they now face paying 100pc of remediation works despite only owning a fraction of their properties. These costs could exceed the total amount that owners have in their homes, leaving them in negative equity. Properties must be sold via the housing association you're renting from, which usually involves paying hundreds of pounds to market the property. At the same time, since you also own a portion of it, you need to pay a solicitor to deal with the legal side of selling. Combined, this can make selling up very expensive – especially if it takes a long time to sell. If the housing authority fails to sell the property, it can move to the open market – but you'll have to pay to market it yourself. Homeowners can lower their monthly rent by purchasing a greater share of the property – known as staircasing – but this has historically been expensive. However, since April 2021, buyers have been given the option to buy further shares in 1pc instalments. Buying back a stake in a home could be costly, as borrowers have to fork out fees for instructing a survey, legal costs and any stamp duty. But, as the rent you pay tends to be linked to inflation, increasing the proportion you owe may shield you from rising rents. That said, you'll have to weigh it against mortgage costs – which are also markedly higher than they were a few years ago. What's more, if you need to move your mortgage in the process of staircasing, you should be wary of any early repayment charges. Despite possibly only owning a small proportion of the property, under the shared ownership scheme property owners are responsible for 100pc of the maintenance costs for their homes – given that many shared ownership properties are in blocks of flats, which can come with hefty annual maintenance fees and service charges, this can add a significant expense. Shared ownership properties can have issues that could mean owners might not get the price they want when they come to sell. The property's lease can be a major issue, with prices tending to plummet if there is less than 80 years left on the lease. Since 2021, shared ownership properties have been offered on leases of 990 years, rather than 99 years or 125 years, but the new rules have done little to protect the investments of those who bought beforehand. While shared ownership has its drawbacks there are also positive elements to the scheme: Makes home ownership more accessible: The main appeal of using shared ownership is that it is far more accessible than full ownership as a way to get on to the property ladder. As you are only buying part of a property the deposit required is much smaller and overcomes the issue of saving that is a serious hurdle for many first-time buyers. There's a chance to make a profit when you sell: As you own part of your home through the scheme, you will benefit form any increase in property value. This gives shared ownership an advantage over renting and the chance to make a profit when you come to selling. You can increase ownership over time: While you begin only owning a portion of your property, the shared ownership scheme lets you work your way to full ownership via a process called staircasing. This is where you gradually increase the equity you hold in the property, reducing the amount you need to rent, all the way to becoming the 100pc owner and freeholder. Buying a property through a shared ownership scheme does not protect you from paying stamp duty land tax. There are two options for how you pay, either in stages or for the full value of the property. If you opt to pay in stages, this means you may have to make an initial stamp duty payment for the portion of the property you are buying, possibly plus an additional amount based on the rent you will be paying on the remainder of the property. You do not have to pay any stamp duty unless you are buying or own 80pc of the property, but your bill may be larger than you expect as your steps to 80pc may be included, rather than just your most recent increase. You can choose to pay the stamp duty due on the whole value of the property upfront. This means there is no further stamp duty to pay when you increase your equity. The rules around stamp duty on shared ownership properties are complicated. More granular information can be found on the government website. It's generally not allowed to sublet a shared ownership property unless you have explicit permission from the landlord, or you own 100pc of the property. You may be able to sublet a room if you are still living in the property. The 'key information document' that comes with your home will provide details on the rules for letting it out. Shared ownership properties can be more difficult to sell than properties purchased in the traditional way. You will usually need to give the freeholder the right to find a buyer before you put the property on the open market, although the buyer will need to be interested in owning through shared ownership. Once it sells you will receive a share of the price in proportion to the part you own. Broaden your horizons with award-winning British journalism. 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Mail & Guardian
22-05-2025
- Business
- Mail & Guardian
Sustainable homes help build sustainable futures
Green buildings, which have features such as solar power, grey water and rainwater harvesting, are essential to reduce global warming and lower owners' costs. Photo: Supplied Across South Africa, a quiet revolution is reshaping the property market. It's not driven by buzzwords or branding exercises, but by necessity. The way we build, buy and live in our homes is being recalibrated; sustainability is no longer an optional extra. For years, 'green' features in property were seen as add-ons, marketed to high-end buyers or used to tick boxes on glossy brochures. Sustainable living has moved from the fringes to the centre of buyer demand. What was once considered a premium is now a practical baseline. In our country where power cuts, water shortages and rising utility costs have become part of daily life, a home that can stand resilient is also worth more, both financially and emotionally. For the next generation of homeowners, particularly in younger, tech-savvy markets, sustainability is not a niche interest. It's the minimum standard. Buyers now ask up front: iIs it solar-ready? Is there an inverter backup? What's the water system like? Sustainability is no longer about greenwashing or ideals. It's about running costs, stability and long-term value. Energy-efficient homes lower monthly bills, reduce reliance on unstable municipal services and tend to hold their value better in uncertain markets. Green design isn't at odds with affordability. Homes that are well-insulated, solar-equipped and water-conscious are becoming the more affordable option over time, despite a slightly higher upfront cost. The same logic applies to investors and developers. Sustainable homes attract higher-quality tenants, reduce vacancies and are more resilient to future regulation. They represent a smarter risk profile over a 10 to 20-year period. For developers, the responsibility is twofold. First, to respond to demand with meaningful design, such as solar power, hybrid systems, greywater recycling and thermal insulation. Second, to push for the kind of systemic change that allows sustainable development to flourish at scale. There are still significant barriers. Regulatory bottlenecks, lack of clarity in municipal processes and a shortfall in green finance offerings hold back progress. Most homeowners have bought existing properties that need adapting. They can start small. Use solar for exterior lighting. Install LED bulbs. Fit a geyser blanket and a timer. Add a back-up water tank. Upgrade the insulation. These low-cost changes can significantly reduce the environmental footprint and bills. For those ready to invest more, the next steps are: solar panels and inverters, heat pumps, rainwater harvesting, greywater systems and smart meters. These can be added over time. But access remains unequal. Incentives and support programmes exist, but they're too often buried in red tape or poorly publicised. If the government and financial institutions offered clearer, more accessible pathways, such as rebates, tax benefits or low-interest green loans, the adoption curve would steepen dramatically. The real estate sector has a responsibility to reflect this shift with integrity. That means not just selling homes but advocating for smarter living. It means guiding buyers to see green features not as luxury upgrades, but as future-proofing. And it means urging developers and investors to treat sustainability not as a cost centre, but as a growth strategy. Developers must build green as standard. Banks must incentivise the right kinds of choices. Municipalities must streamline approvals for sustainable infrastructure. And buyers must be empowered with information to make decisions that serve both their wallets and the planet. Let's be clear: the green evolution in property is not about idealism or marketing spin. It's about meeting real needs with real solutions. Eva August is the chief executive of Century21 and Frank Haupt is a co-owner of the company.
