A parent's guide to shared ownership - Case study

Posted on 5 Dec 2018 at 12:20 PM

So, your child is all grown up and ready to buy their first home. What’s the most important thing to you, as a parent, during this time? 

We’re not referring to the spare room that you can finally convert into a home office. Or the weekly laundry load that’s about to shrink considerably. Your main concern, of course, is the safety, security and happiness of your child. 

Getting that first foot on the housing ladder is an exciting time for anybody. But behind most young homebuyers is a nervous parent who wants to know that their child will be able to cope with the added demands and responsibilities of home ownership.  

Paul from Staffordshire recently found himself in that exact position. His daughter, Lucy, was ready to buy her first home, and he wanted to be sure she was making the right decision. 

Why did your daughter want to become a homeowner? 

Lucy was renting from a private landlord when she made the decision to buy a home. She was also on the waiting list for social housing, but we were aware that it could be five, ten, or even 20 years before she got a property that way. As there’s very limited supply.  

At 25 years old she’d bounced between renting and living with us, which was… interesting. Moving back in with your parents as an adult is never ideal. But add a five-year-old grandson into the mix and it can be a challenge sometimes. 

Renting was okay in terms of independence and lifestyle, but the properties weren’t fantastic. The rent was expensive, and she had no control over it. Most importantly, she didn’t have security. She was renting from an elderly couple. They were lovely, but they weren’t professional landlords to any degree. They could have pulled out at any time and she’d be looking for a new home. 

Why did she choose shared ownership? 

Shared ownership was my idea initially. I had some knowledge on how it worked, and I did research online to understand it better. We’d actually been looking at shared ownership properties for a while before Lucy could afford a mortgage on her own. So, we were familiar with how it worked. 

She recently had a promotion at work, which meant that she could finally afford a mortgage. I work in finance myself, and I was fairly confident it would be affordable for her. 

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Did you look at any other buying options? 

We briefly looked at Help to Buy. But we decided early on that a Help to Buy mortgage would be a stretch on her income. With shared ownership we had the option to buy 40% of the property, which meant a smaller deposit and ultimately worked out a lot more affordable. 

Do you feel reassured about shared ownership? 

Oh, massively reassured. Lucy has got her stake in the equity, which is a 40% share of the home, so she’s delighted to be on the housing ladder. But the main thing for me is the security of tenure, which is what she never had when she was renting. She may well choose to live there for 20 or 30 years. In an uncertain future it gives her a lot more certainty. 

It also allows her to tailor her payments and her share of the home as she progresses through life. She’s just had her first proper promotion at work, and it’s not unreasonable to suspect there may be others to follow. She also has a partner now, so there is a point in time where they may choose to live together, and she’s got the flexibility to increase her stake in the equity if he wants to buy into the property. They could even choose to buy the home outright if they want – increasing their share to 100%. 

Would you recommend shared ownership to other parents? 

I’d absolutely recommend shared ownership. It can get young people a foot on the housing ladder with long-term security. Lucy now has a new build property that’s finished to a high spec, in the location she wants, with a landlord that’s very respected in the area. 

And, most importantly… is your daughter happy with her new home? 

She’s delighted! She has a brand new semi-detached house. It’s got three bedrooms, in a good plot on a lovely quiet estate. She moved in at the start of September and it’s in a really convenient location for work.  

She’s actually paying less than when she was renting. It’s about £30 a month cheaper. She’s more inclined to improve the house and spend money on it now too. She can decorate and make it feel like her own space. 

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