Shared ownership

Equity sharing is another name for shared ownership or . It takes one property, more than one owner, and blends them to maximize profit and tax deductions. Typically, the parties find a home and buy it together as co-owners, but sometimes they join to co-own a property one of them already owns. At the end of an agreed term, they buy one another out or sell the property and split the equity.

Equity sharing became desirable in the United States when in 1981 Section 280A of the Internal Revenue Code allowed mixed tax use of a single property for the first time permitting the occupier to claim principal residence tax deductions and the investor to claim investment property tax deductions. Since shared ownership is conferred by the federal tax code, this ownership vehicle can be used in any state.

There are many uses of the term "Equity Sharing" in the UK. Often applied to different forms of Low Cost Home Ownership schemes. These include equity loans, sometimes referred to as Equity Sharing Loans and some forms of Shared Ownership (part buy/part let) leasehold schemes being referred to as an Equity Sharing Lease. Some local authorities may also refer to resale price restrictions under planning documentation as being Equity Sharing arrangements.

The UK government facilitates shared equity chiefly through the Homes and Communities Agency. As of 2009^[update] this was under the banner of HomeBuy. This aims to help households earning up to £60,000 p.a.

New Build HomeBuy is where purchasers buy at least 25% of a newly built home, and pay rent on the remainder. The HCA generally subsidises housing associations or other providers to hold the remaining share. The rent is capped at 3% of the value of the unsold share, but typically set at 2.75%. Purchasers may buy additional shares whenever they can afford to do so; this is known as "staircasing".

HomeBuy Direct was introduced in 2009, under which the government and a housing developer jointly fund an equity loan of 30% of the valuation, so that the purchaser only needs to pay a mortgage on 70% of the value. If the purchaser buys an additional share, all three parties participate in any increase in value. The HCA allocated £300 million to the scheme for 2009—2011, and 10,000 homes are available under the initiative.

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