Shared Ownership vs Right to Buy, what is the difference?

So what is the difference between Shared ownership and Right to buy? What do shared ownership and right to buy mean and how do they compare? We’ll give you some background on both schemes.

Shared Ownership vs Right to Buy, so how do they differ?

One of the main differences is that Right to Buy is available for those living in council properties and want to buy the home that they are currently renting. Whereas, a Shared Ownership is a scheme that is designed for those wanting to buy a share in an affordable home from a housing provider. Typically a housing association or house builder.

Main benefits of shared ownership

There are many benefits of Shared Ownership and a lot of them come from the fact that they are new build homes.

Most shared ownership properties are new builds and require very little maintenance. Because of this, you may also be able to choose your own kitchen and bathroom suites as well as fixtures and fittings. This is a benefit because it means that you do not have to buy these separately or replace them if you are looking at an older house.

Another benefit is that a lot of new homes have a warranty and so any repairs will be covered by the housing association if they fall into this category. You should ask the housing association what cover you have for the house and what it includes.

Shared Ownership is seen as an affordable way to get on the housing ladder. You do not need to have saved a big deposit, as you only need to put a deposit down for the % of share you are buying. For example, if you are buying a 25% share of a £120,000 property, you would only need to pay a deposit for £30,000 of the property. This means that you would only need £3,000 for a 10% deposit.

Cons of Shared Ownership

You may find it frustrating that you are still paying rent. In addition there is a service charge to pay as well as your shared ownership mortgage.

Most shared ownership properties are leasehold. This means that the land belongs to someone else, usually the housing association.  If you staircase and buy more shares in your property you may eventually be able to buy it outright. You may be able to buy the leasehold too.  You should check with your housing association.

The property is owned jointly by you and the housing association and you can decorate your home as you wish.  However,  you will still need to seek permission for any structural changes.

What is Right to Buy and are you eligible?

Right to Buy is a scheme that allows most council tenants to buy their council home at a discount. Different rules apply for Scotland, Northern Ireland and Wales. This information is for the scheme in England.

You are eligible for Right to Buy if the property you are wanting to buy;

  • it’s your only or main home
  • it’s self-contained
  • you’re a secure tenant
  • you’ve had a public sector landlord (for example, a council, housing association or NHS trust) for 3 years – it does not have to be 3 years in a row

*Information from gov.uk

Check to see if you are eligible for Right to Buy

Benefits of Right to Buy

There are many benefits of the Right to Buy scheme, but the main ones are;

It gives you financial security in the sense that it thousands of tenants the opportunity to own a home. This may not have been something that was previously accessible for them. By allowing a tenant who has paid rent on the property for years the chance to buy the property it provides them with security.

The cost of buying your property is usually a lot lower than buying another property as you may be given a discount. You can check out our other blog to see the costs of right to buy.

It also provides a lot of choice for the owner. This is because after 3 years the owner can sell the property without having to pay the discount back. This is beneficial as it means that the owner can leave the area that they may have been allocated by the initial council, whereas if they were renting they would not have been able to do this as freely.

Cons of Right to Buy

The main drawbacks of Right to Buy are not ones that really affect the buyer, it is the knock on effect that it creates.

For example, Although more people becoming home owners is a good thing, by buying social housing this then removes the house from the council housing stock. This means that there are less affordable homes to rent and with the introduction of new schemes such as shared ownership, they may not be built.

A con for the buyer is that you are unable to sell your property for 3 years and if you do, you will have to pay the discount back. This means you would be at a loss if your personal circumstances change and you need to move.

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