What Does Equity Share Mean?

This question was from Zoopla User kittykat100.

When a house is for sale, what does “equity share” mean?

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Video Transcription

Hello my names Jonathan Rolande and I’m here today on behalf of House Buy Fast to answer a question from a lady in Bootle.

What does a house with equity share mean? So this is where a house is for sale and often you will see these on Zoopla for example and they’ll look surprisingly cheap and then when you read a little more closely you’ll see that they’re equity share.

Now what this means is that you have a private individual, a company, a housing association, a council who own a property and their selling a proportion of it.

There not renting to you as such, but what they’re doing is saying perhaps because of the market or mortgage availability there aren’t many people able to buy a property at full market value so they’ll say that they’ll for example sell you 60% of it for a certain price, obviously much reduced from the normal purchase price and then you either pay a small rent to the company or council or whoever it is, or you just retain the property with no rent but when you come to sell it you can only sell 60% of that property for example.

Now this is really good system, it certainly helps a lot of people to actually get their own home if that haven’t quite got enough money to purchase outright, of course there are a lot of people like that.

The difficulty can be that you really only ever own a proportion of it, so when you come to sell your share you’ll only be able to sell that to somebody who’s looking to do a equity share, so there is a slightly restricted market, so do bare that in mind.

If it’s your only route into buying property then I think that it’s a good thing to explore but as ever take good legal advice from your solicitor. So I hope that helps and good luck, thank you.

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