Shared Ownership
What is Shared Ownership?
Shared ownership is a form of low cost home ownership that combines renting with buying and is available through housing associations. There are both Government-backed and privately operated schemes available.
Shared ownership works by enabling you to purchase a share of a new build property - from 25 per cent to 75 per cent - and pay rent on the share that you don't own.
It is also possible to purchase shared ownership properties that were built and sold in the past, and are now available for purchase on a part buy, part rent basis as their owners wish to move on.
What are the main advantages of buying a Shared ownership property?
Under shared ownership you would purchase a share of a property, ranging from 25 per cent to 75 per cent. It means the mortgage you need to secure will be significantly smaller than if you were to buy without using this scheme.
Am I eligible?
You can qualify for the shared ownership scheme if:
- You are a first time buyer
- Your household earns £60,000 a year or less
- You rent a council or housing association property
What costs are involved?
- You will need to secure a mortgage for the percentage share you wish to purchase
- You will be required to pay a subsidised rate of rent to the housing association on the share of the property that you do not own
- Variable service charges may apply to properties on estates with shared areas
- This is to cover the maintenance and upkeep of the grounds and communal areas.
- Additional fees such as a mortgage valuation or survey, legal fees, and stamp duty may apply
- In most cases, you will need a deposit for your mortgage
- The deposit amount required will vary depending on the mortgage provider you choose to use, the terms of your mortgage and your credit rating
How do I buy more of the property?
Purchasing a greater share of your property is known as 'staircasing' and can happen any time after you become the owner of the property in question. You can continue to staircase until you own the property outright. By purchasing a greater percentage share of the property you will reduce the amount you pay in rent. Once you own the property outright you are no longer required to pay rent.
The cost of additional shares is dependent on the value of your home at the time when you choose to purchase additional shares. Should the value of your property increase, the price of additional shares will be higher, and likewise should the value of your property decrease, the price of shares will be lower.
Should you wish to staircase, you will need to contact the housing association who will provide you with a valuation. You will be charged a valuer's fee.
What happens when I want to sell?
When it comes to selling a shared ownership property, the process is dependent on the amount of shares that you own.
If you have staircased and now own 100 per cent of your home, you are able to sell this yourself. The housing association will have the right to buy back the property first - known as 'first refusal'. The housing association have this right for 21 years after you fully own the home.
If you own a share of your home, the housing association has the right to find a buyer for it. The property is then known as a shared ownership resale property.
How do I buy a shared ownership resale property?
The Resale shared ownership scheme is just the same as for new build homes. One difference is that the minimum share for sale is equal to that owned by the seller. Other than that, you can buy up to 75 per cent, or whatever share you can afford. You pay a rent, subsidised by the Government, on the part of the property you don't own.