Now that the property bubble seems to be deflating steadily and not bursting as many financial analysts seem to think it would, it would appear that the time has come for some innovative thinking when it comes to property acquisition. Obviously the rules of the property market are being rewritten with the banks being exceptionally cautious to whom they lend money, and dictating terms that will ensure that the money they are lending is as safe as it can possibly be under the tricky financial situation that it looks like we will be living through for the next few years.

Whilst it is expected that property values could continue to fall as low as 25% of the value they were before the beginning of the credit crunch in the spring of 2007, they will still be much, much higher than when the property boom began in the mid nineteen nineties. In those days, when property prices were still realistic, first time owners has to find the equivalent of six months salary to put down as a deposit and undertake to repay a mortgage that was around 10% of their net monthly salary. So what did it matter to a young couple starting out in life that their first home had an extra bedroom or two, the family would soon grow into it.

In 2008, the picture is entirely different Even with today’s property values being in reverse mode, a first time buyer will need to be able to put down equity that is equal to almost two years net salary for an individual and just over one year for a typical couple either married or not. If the potential buyer has that kind of money at their disposal, then the next thing that they will need to take into account is the weight of the mortgage repayments. Once again, this is  no minor consideration, amounting to around thirty percent of the average net salary of an individual or slightly less than twenty percent for a couple.

If one thing that can be learned from these statistics is that there is safety in numbers. For this reason, a considerable number of first time buyers are considering the option of shared equity, share mortgages and shared ownership. The benefits are obvious, and the disadvantages are few. However anyone entering into such an agreement should do so with their eyes open and their pocket calculator at the ready.

So what are the implications of shared property equity.

The implications are that each partner will own a clear share in the property which will be calculated according to two clearly defined factors.

If these factors are clearly ascertained from the outset, then there is absolutely no reason why the arrangement shouldn’t work.

Shared ownership can provide some interesting possibilities for people who want to get their foot on that vital first rung of the property ladder.

In most cases it will be a couple staring out on life, although it may well be a single man or woman. It might be family members, it might be parents and it might even be parents and children.

What is important is that it is two or maybe more people coming together to share and lessen  the burden of property ownership in these testing financial times. And what can make it more interesting is that one of the partners may not even live in the property that they are part owners of. They may look upon their share in their property as a long term investment, a  cautious entry into the property market,  of simply allowing a family member or a close friend the opportunity of at least partially owning a property.

As long at arrangement are clear cut, there is no reason that a shared ownership arrangement will not succeed and all those involved will benefit.

Popularity: 35% [?]