The Benefits of Part Buy, Part Rent

Lenders aren’t willing to lend, house prices are high and the required deposits are growing as a result. Getting that first foot on the property ladder in the current climate is incredibly difficult, but with private rental rates increasing year on year, many feel the need to escape private housing and invest in their own property.

Shared ownership (also know as Part Buy, Part Rent) gives first time buyers the opportunity to invest in a property by purchasing between 25 and 75 per cent of the market value of the property. The rest of the share is taken on by the housing association the property is bought from. Generally, the purchase will require a deposit of 5% of the share that is purchased, requiring a mortgage to be raised for the rest of the share.

With the average price of a deposit sitting somewhere between the £20,000-£22,000 mark (at roughly 20% of the overall cost of the property), and an average UK salary of £26,244 for full time employees (according to the Office for National Statistics), many are being locked out of the property market. The smaller deposit required for a shared ownership property makes accruing enough money to purchase a share in the property that much easier. Once a share of the house has been purchased, occupants will be expected to pay a subsidised amount of rent on the share of the house still owned by the housing association. The higher the share of the property is purchased, the more the rental rate is subsidised and the less the occupant will have to pay.

At any time, those who have secured a house through a shared ownership scheme will have the option to purchase a bigger share of the house, up to the total 100%, at which time they take full ownership of the house. As a larger share of the house is purchased, so the rental rates fall, making monthly payments lower and more manageable.

Part buy, part rent enables first time buyers to purchase a share of a property that is entirely suited to their requirements rather than the size of their deposit, enabling buyers to move into adequate properties that they wouldn’t have been able to afford if they took the traditional route.

There are a number of benefits to shared ownership, but perhaps the most important aspect is that it gives opportunity and flexibility for those wanting to invest in high quality affordable housing, allowing them to make a long term investment in a property at a fraction of the outlay required through traditional purchases. The housing market has shut out a lot of people desperate to make an investment that will benefit them in the long term, people who are tired of the lack of security and rising costs of rent in the private sector, and that’s something that shared ownership can deliver.

Written by Julie Hanson

Julie is passionate about property – development, investment and portfolio planning. Along with husband Alec, Julie is actively building a property portfolio while helping others to do the same.

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