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How to make the most of shared-ownership schemes
All you need to know about shared ownership schemes and why you might just qualifyShould I make the leap onto the property ladder now and ignore advice to wait? Can I get a good mortgage deal with a 10 per cent deposit? Are shared-ownership schemes an attractive alternative for first-time buyers?Your questions poured in during the latest in our series of live debates on The Times property web page, where a panel of experts advised first-time buyers on making that first intrepid step into the property market.

One couple who logged on to our live debate were struggling to buy a two-bedroom flat in London, despite a joint income of £80,000 and £46,000 in savings to cover a deposit and fees. Our experts advised them to look further afield for somewhere where a short train ride into the city might not take any longer than their daily commute on the Tube.

Many buyers asked our panelists for tips on the alternatives to buying a property outright. Here, we have distilled that advice into a bite-size guide on how to make the most of shared-ownership schemes.

Where can I get help with shared ownership?

There are several initiatives available — all with similar-sounding names. The biggest one is New Build HomeBuy, which is a form of shared ownership. Do not confuse it with HomeBuy Direct, a shared-equity scheme.

Who qualifies?

Generally, you can apply if you earn less than £60,000 a year and would not be able to buy a home otherwise. You may be a first-time buyer, a housing association or council tenant, or a “key worker” such as a nurse, teacher or police officer. The rules vary, depending on each development and housing association.

How does it work?

With shared ownership, you buy a share of between 25 per cent and 75 per cent of a newly built property and pay rent on the remaining tranche to the housing provider or association. The rent will be capped at 3 per cent of the housing association’s share of the property and is reviewed every year. With shared equity, you take out an equity loan from the housing provider instead of paying rent. It is usually interest-free and you pay it back after about five years.

Will I need a mortgage?

You take out a mortgage to pay for your own share of the property. The housing association should put you in touch with specialist lenders.

What about a deposit?

You used to be able to take out a mortgage on your full share of the property, but the credit crunch meant the end of 100 per cent deals. Now you need a deposit of at least 10 per cent of the share you want to buy; a larger deposit of about 30 per cent will qualify you for a better rate.

Are there any other costs?

You’ll still need some money to cover the costs of buying a house, such as legal fees and stamp duty.

What else do I need?

A clean credit record. A steady job also helps. Lending criteria have tightened everywhere.

Can I increase my property share?

You can increase your share until you own your property outright. This is called “staircasing”. You will pay what the shares are worth at the time you buy them, not what they cost when you first bought your home.

What if I want to sell?

The housing association will normally handle the sale. It will buy the property back or pass it on to somebody else wanting to buy through shared ownership. The property is sold at the market value, so you will benefit or lose depending on prices.

What next?

Visit the London Affordable New Home Show tomorrow, from 11am to 4pm at the Queen Elizabeth II Conference Centre, Westminster, London SW1P 3EE. To register, and for the chance to win an iPod Touch, go to: affordablehomesshow.co.uk.

Case study: “Within days our offer was accepted”

Despite the gloomy mood about the fate of first-time buyers, Kat Baker, 24, (pictured) and her fiancé James Spybey, 23, made their first step on to the property ladder with relative ease through a shared-ownership scheme.

“To buy outright we would have needed a deposit of £40,000 for the properties we were looking at,” Baker, a journalist, said. “People in their twenties don’t have that kind of money.” The couple, who have a joint income of about £50,000, made an offer for a 40 per cent share in a £230,000 one-bed flat in Southfields, South London, through the L&Q housing association. “I was dreading the process after hearing how impossible mortgages were to get,” Baker said, “but within days our offer was accepted and, once all the admin has gone through, we’ll even be saving around £60 per month.” She said they planned to increase their share to 100 per cent in five years.

For more information: DirectGov guide to affordable housing schemes; The Homes and Communities Agency’s NewBuild Homebuy page; Places for People’s guide to the help available with buying; Housing Options’ searchable map of affordable homes.

The Times 05.02.2010