Buying a home later in life can seem daunting but one way to make it more affordable is with the Older Persons Shared Ownership scheme. If you’re aged 55 or over, this scheme enables you to own part of your home while renting the remaining share. Here, we’ll explain what the scheme is, the eligibility criteria and the pros and cons of using it.
What is Older Persons Shared Ownership?
Similar to the standard shared ownership scheme, Older Persons Shared Ownership (OPSO) is specifically designed for buyers aged 55 or over. If you’re unable to afford the deposit and mortgage payments required to buy the home you need, this scheme offers a solution.
With OPSO, you buy a share of your home and pay rent at a discounted rate on the remaining share. You can increase your share of the property when you’re in a position to do so. This is done via a process called staircasing. Under the scheme, you can do this until you own 75% of your home. Once you’ve reached this share, you no longer have to pay rent on the remaining share.
Properties available via the Older Persons Shared Ownership scheme
Shared ownership properties are available through housing associations, home builders, local councils and other organisations. You can buy a new-build home or an existing home that’s available through a shared ownership resale scheme. Whether you buy a house or a flat, your home will be classed as a leasehold property when buying it via the scheme.
Many properties available for the OPSO scheme are built with quality of life in mind for older individuals. For example, residences may include common areas to socialise in, on-site restaurants and landscaped gardens. The properties often have additional security features too, such as secure entrances and emergency alarms.
Are you eligible for Older Persons Shared Ownership?
To be eligible for the Older Persons Shared Ownership scheme, you need to meet the following criteria:
- You must be aged 55 or over.
- Your annual household income must be £80,000 or less (outside London). In London, your annual household income must be £90,000 or less.
- You cannot afford the deposit and mortgage requirements to buy a home that meets your needs.
- You need to be able to secure a mortgage or, if retired, be able to pay for your share in full.
- There must not be any outstanding credit issues.
One of these circumstances must also apply:
- You’re a first-time buyer.
- You used to be a homeowner but now cannot afford to buy one.
- You have an existing shared ownership home and want to move.
- Your situation means that you need to form a new household. For example, if your relationship has broken down.
- You’re currently a homeowner and want to move but cannot afford a property that meets your needs.
The advantages and disadvantages of using the OPSO scheme
There are various pros and cons to consider before buying a home using the OPSO scheme.
Pros
- As you pay a lower deposit and lower monthly mortgage payments, it’s a more affordable way to buy a home.
- The rent payable on the remaining share is discounted compared with the market rate.
- You buy the share of your home that you can afford with the option to increase your share up to 75% via staircasing.
- Once your share reaches 75%, you no longer pay any rent on the remaining share.
- If stamp duty applies to the value of your home, you have the option to pay it in stages. This helps to lower your initial costs.
- Properties offered via the OPSO scheme are often built with features to enhance the quality of life for older individuals.
- Additional care is offered by some developments via a scheme called Extra Care. This enables you to live independently in your home but with access to care and support services that are tailored to your needs. You need to meet certain criteria to apply for this.
Cons
- Your property is leasehold, regardless of whether it’s a house or flat.
- As a leasehold property, monthly service charges are payable and you may need to pay ground rent.
- Rent is payable on the share you don’t own until you reach 75% ownership.
- If your property’s value has increased at the point that you’re ready to increase your share, the cost to do so may be higher.
- As you cannot buy a share that’s higher than 75%, you’ll never fully own your home.
- If you wish to sell your home, certain terms must be adhered to under the scheme.
- The availability of properties offered via the OPSO scheme may be limited, narrowing your choice of area and type of property.
Is Older Persons Shared Ownership right for you?
If you need a helping hand to buy a property later in life, give us a call on 01322 907 000 for expert advice. Our mortgage brokers can guide you on the schemes available – such as Older Persons Shared Ownership – as well as mortgages specifically designed for older borrowers. For example, a retirement interest-only mortgage or a lifetime mortgage. They can discuss your circumstances and offer impartial advice to help you determine the best decision for your needs.