September 26th 2024.
Fatima and Aroma, two long-time friends, had been renting a flat in London since 2015. However, Aroma, who worked as a wealth manager, had always dreamed of owning her own home. When the pandemic hit, she moved back to her family home in Birmingham and was able to save up for a deposit without worrying about rent.
But even with her savings, Aroma didn't think she could afford a home in London on her salary. That's when she heard about shared ownership from a friend who had used it to buy a flat in the past. She knew the basic concept of buying a part of a home and renting the rest, but didn't know much else about it.
One day, Aroma came across a two-bedroom flat in Peabody New Homes' Hawking's House in Queensbury. She traveled all the way from Birmingham to view it, but unfortunately, the last two-bedroom home had already been sold. Still curious, Aroma decided to take a look at a three-bedroom flat and immediately fell in love with it.
Contrary to her expectations, the flat was spacious with high ceilings and it just felt like home to her. Aroma, who was always quick in making decisions, knew right away that this was where she wanted to live. To her delight, Peabody confirmed that she could afford a 30 per cent share in the flat, and a few months later, it was officially hers.
Little did Aroma know that this initial stay in the flat would turn into a financial plan for her and her best friend Fatima. A year later, Fatima, who worked as a regulatory risk liaison officer, moved from Birmingham to London and ended up staying with Aroma in the flat. As time passed, the two friends realized that they loved living together and decided to combine their incomes to buy 100 per cent of the home between them. Aroma bought an additional 20 per cent share, while Fatima bought 50 per cent, making them equal owners with no rent to pay.
They even made sure to have a legal agreement in place stating their 50 per cent share each, and in case one of them decides to move out, they plan to keep the property in joint names as an investment.
When asked about her advice for others considering shared ownership, Aroma wholeheartedly encourages them to go through the calculation process as they might be surprised at what they can afford. She also highlights the benefits of staircasing, which is the process of gradually buying further shares in the property until reaching 100 per cent ownership. This allows for flexibility and the ability to evolve home ownership as circumstances change.
For Aroma and Fatima, shared ownership made perfect sense. They are able to live together and contribute towards paying off their mortgage, rather than paying rent to someone else. While Hawking's House may have sold out, there are still shared ownership homes available from Peabody New Homes across London and the south-east.
For those wondering what staircasing is, it is the process of incrementally buying more shares in the property until reaching 100 per cent ownership. This can be financed through savings or an increase in mortgage, but there may be additional fees involved such as legal, administrative, and valuation fees. It's important to check the terms of the lease as some housing providers may have restrictions on the minimum amount that can be bought at a time.
Under the new shared ownership model, there is also an option to buy an extra one per cent annually for 15 years with discounted fees. This allows for a gradual and affordable way to reach 100 per cent ownership without the burden of a large lump sum payment.
In conclusion, Fatima and Aroma's story is a true testament to the benefits of shared ownership. Not only were they able to achieve their dream of owning a home in London, but they also found a way to invest in their future and build a strong financial foundation together as best friends.
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