Can You Buy Shared Ownership Outright?

Shared ownership offers a pathway to homeownership by allowing individuals to purchase a portion of a property and pay rent on the remaining share. While owning a partial share, it is possible to acquire complete ownership of their home over time. This transition involves a structured process that enables gradual investment in the property.

Understanding Shared Ownership and Outright Purchase

Shared ownership programs generally involve purchasing a percentage of a home, typically between 10% and 75%, and then paying rent on the unowned portion. Entities such as community land trusts or other affordable housing organizations commonly administer these arrangements.

The concept of “buying outright” in shared ownership refers to gradually increasing one’s equity in the home until 100% ownership is achieved. This is accomplished through a mechanism often termed “staircasing,” where the homeowner purchases additional shares of the property. As more shares are acquired, the amount of rent paid on the unowned portion decreases proportionally.

The Staircasing Process

Staircasing involves several preparatory steps. Homeowners should review their shared ownership agreement or lease document to understand specific terms related to increasing ownership, such as any minimum share increments or limitations on how often they can staircase. An independent professional valuation of the property is typically required to determine its current market value. Homeowners must also assess their financial capacity to purchase more shares, which may involve securing a new mortgage or adjusting an existing one.

Once prepared, the homeowner formally notifies the shared equity program administrator of their intent to staircase. Legal processes are then initiated, requiring the engagement of a solicitor or attorney to handle the conveyancing aspects of the new share purchase. This includes the exchange of contracts and the legal completion of the transaction for the additional percentage of ownership. After the purchase of new shares, the rental payments due to the program administrator are adjusted downward.

Reaching 100% Ownership

Reaching 100% ownership means the homeowner ceases paying rent to the shared equity program administrator. At this point, the homeowner assumes full responsibility for all property-related expenses, including maintenance, repairs, and any applicable homeowner association fees. This transition means the homeowner becomes the sole owner of the leasehold interest in the property.

In many cases, once 100% ownership of the leasehold is achieved, the homeowner may have the option to purchase the freehold interest in the property from the program administrator. Acquiring the freehold means owning both the building and the land it stands on, providing complete control and eliminating any ground rent obligations. The procedural actions for this final step involve a formal application, another property valuation, and a legal completion process similar to the initial conveyancing.

Financial Considerations for Buying Outright

Buying out a shared ownership property involves costs. A professional property valuation is necessary to determine the current market value of the home, with fees typically ranging from a few hundred dollars. Legal fees for solicitors or attorneys are incurred at each stage of staircasing, covering the conveyancing work for purchasing additional shares and, if applicable, the freehold. These legal costs can vary widely, often ranging from $1,000 to $3,000 or more per transaction, depending on complexity and location.

If a new mortgage or a remortgage is required to finance the additional shares, homeowners will face associated mortgage arrangement fees, which can include application fees, underwriting fees, and potentially broker fees. Property transfer taxes may apply when increasing ownership, particularly if cumulative shares acquired cross certain thresholds, such as 80% or 100% ownership. These taxes vary significantly by state and local jurisdiction.

Program administrators may charge administrative fees for processing staircasing applications and managing the necessary paperwork, which can be a few hundred dollars per instance. Land Registry fees are also required to update property records. While not always mandatory, obtaining a property survey can be a prudent step, especially for larger share purchases or when acquiring the freehold, incurring additional costs typically ranging from $400 to $800.