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What is shared ownership for older people?

Holly Thomas / 29 May 2015 ( 26 March 2020 )

Struggling to make ends meet in retirement? Want the security of owning your home but can’t quite afford a property? We explain what the Older People’s Shared Ownership (OPSO) scheme is and how it works.

Mature couple looking over their finances
The schemes give people options if they like the security of home ownership but need to free up cash

Shared ownership schemes were brought in by the government to assist cash-strapped households struggling to keep up with soaring property prices.

They are most widely known for helping first-time buyers where they fail to build up enough of a deposit to get on the property ladder alone.

There is also a scheme aimed at helping older people who are finding it hard to make ends meet later in life, which should make owning property more affordable.

How does shared ownership work?

Under the OPSO, you can buy shares of between 25% and 75% of the full purchase price and the rest is owned by a housing association. Rent is payable on the share of the property that the housing association owns.

As time goes by, you can increase your percentage ownership by purchasing more shares in the property which is commonly referred to as ‘staircasing’. The upper limit is 75%.

If you choose to purchase the maximum 75% share in the property, you do not have to pay rent on the remaining 25% owned by the housing association.

These schemes give people options if they like the security of home ownership but need to free up cash. They also offer buyers a flexible, low cost way of buying a new home, even if they can’t afford the full market price.

Are there any pitfalls?

The downside is that a proportion of the property's value must be returned to the housing association when it is sold, but residents retain the right to live in the property for as long as they choose.

Am I eligible?

There are a number of stipulations to qualify for government help. It is reserved for those unable to purchase a home suitable for their needs without assistance.

You must be aged over 55 and your annual household income can be no more than £80,000 outside London or no more than £90,000 in London.

You will need to sell any existing property owned before buying through the OPSO, but you will not require a Local Authority nomination in order to be approved as eligible.

Applicants with outstanding credit issues will not be approved.

Not all retirement developments allow you to use the shared ownership schemes so check at the outset.

Where can I get help with this?

It is important to consider alternative options. Downsizing is an obvious alternative for cash-strapped pensioners. But there are legal and moving costs to take into account.

Read more about downsizing

Equity release is another way to free up money by releasing some of the capital in your property.

Renting property is usually the least popular choice as it is not considered as secure.

You can discuss all of the options with a financial adviser or talk to a local help to buy agent about shared ownership.

Use our free Equity Release calculator.

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The opinions expressed are those of the author and are not held by Saga unless specifically stated. The material is for general information only and does not constitute investment, tax, legal, medical or other form of advice. You should not rely on this information to make (or refrain from making) any decisions. Always obtain independent, professional advice for your own particular situation.