Aroma Khan, a wealth manager, had a dream: to own a home in London. After moving back to Birmingham during the pandemic, she found herself saving for a deposit while paying no rent. However, buying in London on her salary seemed impossible, until she discovered shared ownership.
“I’d heard of it through a friend who used it to buy a flat some time ago,” says Aroma, 38. “I knew it involved buying part of a home and renting part, but I didn’t know any further details.”
When Aroma saw a two-bedroom flat at Peabody New Homes’ Hawking’s House in Queensbury, she traveled from Birmingham to see it. It was already sold, but her curiosity led her to view a spacious three-bedroom flat, and she fell in love.
A year later, Aroma’s best friend Fatima Patel, a regulatory risk liaison officer, moved from Birmingham to London. Initially staying with Aroma, Fatima soon saw the potential of sharing the home and its financial advantages.
When Aroma’s initial two-year fixed mortgage ended, they decided they loved living together and decided to buy the entire property. Aroma purchased an additional 20% share, while Fatima bought 50%, resulting in them owning half each and no longer having to pay rent.
“We have a legal agreement in place stating our 50 percent share each,” says Aroma. “And should one of us decide to move out, we intend to keep this property in joint names as an investment.”
Aroma advises others considering shared ownership to “go through the calculation process – you never know what you can afford until then.” She emphasizes that once you’re on the property ladder, you can gradually increase your ownership through staircasing.
“Even if you own 30 percent of somewhere, it’s like your own little savings pot – and that’s much better than putting 100 percent of your money into rent,” says Aroma. “You buy as much as you can, when you can. You can evolve your home ownership as your circumstances change.”
Hawking’s House has sold out, but shared ownership homes are available from Peabody New Homes across London and the south-east.
For those unfamiliar with the term, staircasing is the process where shared owners buy further increments of their property, ultimately aiming for 100% ownership and eliminating rent payments. These additional shares are financed through savings or mortgage increases. While there are legal, administrative, valuation, and potential stamp duty fees involved with each purchase, the new shared ownership model offers an option to buy an extra 1% annually for 15 years with discounted fees.
Aroma and Fatima’s journey exemplifies the flexibility and potential of shared ownership. It allowed them to purchase a home together in a challenging housing market while building a strong financial foundation. Their experience showcases how shared ownership can be a practical and rewarding path to homeownership, especially for those seeking a collaborative and strategic approach to achieving their housing goals.
