Shared Ownership, dumb question I can't find answer to, help please!

[Shopboughtmeatballs]

Hi all,
I'm a bit befuddled... if someone has enough cash (via an inheritance) to buy the first 25% of a SO property outright can they just move in and start off renting the remaining 75% with no mortgage or do they have to get a mortgage on the next slice straightaway?

Shared ownership is a still a purchase of a property, so you can't just move straight in anyway - you'd need to get a solicitor and have them do all the legal work to help you buy the property / provide a report on it etc etc. It would still take a good few weeks or months...

I think you usually do have to have a mortgage involved usually though because the whole idea of shared ownership is to help people who couldnt usually afford to purchase a property, so most people would usually need a mortgage. I think there are some exceptions though so it may depend on the specific shared ownership property you're looking at...

Sorry @Rosiestraws, I must have been as clear as mud. My apologies.

Its my kids. They've both inherited 70k and with some savings of their own they'll have a pot each of around 80 soon. They're 20 and 22 and looking to buy property. Trouble is we're in London. Generally 25% shares here start at 80k (but obs go higher)
If they both splurge (nearly) all their inheritance and savings on that first 25% - what happens next? Do they have to remortgage straight away for the next 25% ? Or having bought the first 25%, can they just pay the rent part on the next for a year or two while working on career progression?

Providing they meet whatever the local criteria are for buying a shared ownership place, they can buy the first 25% & then take as long as they want on the rest.

Each housing association will have different rules on this. For some it will be fine to buy 25% outright. Others will look at it that if you can afford to buy the share outright, you don't need affordable housing.

As someone who has previously had a S/O I wouldn't ever recommend it unless it's the only option.

do they have to get a mortgage on the next slice straightaway?

You never have to buy any other %. It's completely optional and you could have 25% forever.

Depending on their salaries, they might not need to do S/O. If they earn £40k or above, with that deposit they’ll be able to afford a one bed flat around the £250k mark, which there are plenty of in SE london. I bought my flat last year for 200k with a 20k deposit - not shared ownership. Prices have risen a bit since then but they’ve got a much larger lump sum than I had so they shouldn’t need to use a buying scheme unless their salaries are lower than that.

Thanks all.
I wish there were an alternative. We've even seriously considered houseboats, but mooring fees, upkeep etc.
Moving out no good either as both have London -centric careers. One particularly so.

A better option might be for them to buy together and pay off a traditional mortgage for the next 5 or so years

Your percentage will depend on your circumstances and preferences. You will usually buy a share between 40%-75% on your initial purchase - occasionally you can even go as low as 25%. From there you can continue to purchase more shares, once you purchase your Shared Ownership home you have the chance to continue to buy shares – this is called ‘staircasing’. Depending on the lease, In most cases, you can eventually own 100%.

You will have an affordability assessment, this is to work out how much you can initially afford to purchase ( as you have the money already, this will be based on future borrowing and the rent & service charges.)

I work in marketing for a shared ownership provider so happy for you to pop me a message, if you have any questions.

Two final points to make -

To be eligible for Shared Ownership you must have a household earning of under £80,000 (if living outside of London) £90,000 inside London.

You will not be eligible if you currently own a property.

Yes that is fine. A single mum friend did this. Her parents gifted her the 25% share (no need of a mortgage) and she claims UC on the rent part.

Thx @fizzwhizz1 @JodieG84 sorry for the late reply, my phone wasn't coping with Mumsnet anymore and I had to clear my cookies which was.... an adventure 😅
I will drop you a line later @JodieG84, thank you. X

Also, there have been some mixed comments about shared ownership. I think it very much depends on your housing association. If you're purchasing a flat instead of a house please factor in service charges (which can be extortionate on some properties) and read carefully the information provided about 'staircasing' buying the rest of the property and also re-selling as a shared ownership home. Good luck!