Can You Rent a Shared Ownership Property?

I came to know about the shared ownership property scheme very recently. It was when a few friends of mine were discussing it and a question popped up, “can you rent a shared ownership property?” That is when I asked them about it and they told me that shared ownership is a low-cost housing option created to assist first-time purchasers who are unable to afford a home on the open market in gaining entry into the housing market. Given this, unless there are special circumstances, renting is not permitted by the conditions of a Shared Ownership lease.

Shared ownership renting

Renting is the procedure through which a leaseholder enters into a rental agreement with a third party to rent and occupy the residence the leaseholder owns. Under shared ownership, first-time purchasers and individuals who don't already own a home can buy a stake in a newly constructed or resold property.

The buyer makes a mortgage payment on the portion of the share they actually own, and on the balance, they provide a housing association with a discounted rent. The amount of money needed for a deposit is typically less than what would be needed when buying outright because the buyer just requires a mortgage for the share they are purchasing.

Can someone rent out my shared ownership property?

The buyer has the ability to "staircase" (raise their stake over their tenure in the property) and can typically staircase all the way to 100%. In this case, the joint owner will no longer be required to pay rent; instead, they will only be responsible for their mortgage, any applicable service fees, and ground rent.

Shared ownership arrangements, in which two or more persons jointly own a piece of property, are uncommon in India. In India, shared ownership programmes do come in a few different flavours, like joint ownership or co-ownership.

When two or more persons jointly possess a piece of property, it is called joint ownership. Shares that are equal or unequal can do this. With this structure, each owner is equally entitled to use and occupy the property and is liable for all maintenance costs and property taxes. In India, joint ownership is popular and frequently utilised by families or business partners to co-own property.

Similar arrangements include co-ownership, in which two or more people jointly own property yet own the property to differing extents. One person might own 60% of the property, for instance, whereas another person would possess 40%. According to this structure, the owner who holds a larger piece of the property has more authority over it.

Joint ownership and co-ownership are options that can be investigated for persons who wish to share ownership of a property, even though shared ownership programs like those seen in other nations may not be widespread in India. To make sure that all legal requirements are completed and to prevent any potential problems, it is crucial to get legal advice.

Why buy and not rent room shared ownership?

For those who want to own a home but lack the funds to do so on the open market, shared ownership is an alternate home-buying option. Costs of shared ownership are typically less than those of alternative home options for a variety of reasons:

• The rent is typically levied at 2.75% of the property value per year, which is less than the open market rate.

• If you purchase through the current plan, you can start with as little as a 25% share, or if you purchase through the new Shared Ownership model, you can start with as low as 10%.

• Your down payment will be 5–10% of the share price, not the entire property's market worth.

• Generally speaking, stamp duty and land tax can be postponed until your stake reaches 80%.

I hope this was helpful to you in understanding if can you rent a shared ownership property or not.