Shared Ownership Lease

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In a shared ownership scheme you buy a share in your home, usually between 25% and 75%, and rent the remaining share at a reduced or subsidised rent from a Housing Association which provides the scheme.

You can take out a mortgage to help you pay for your share in the property. If you need help in getting a mortgage to assist you in buying a shared ownership property you should seek advice from your mortgage lender.

You will enter into a Lease with the Housing Association. This sets out the shares in the property which you and the Housing Association respectively own.

The lease also sets out the other things such as the rent you will pay, your obligations such as to keep the property in good repair. Your Lease may prevent you from using the property as a “buy to let”.

You will need the help of a Solicitor or Conveyancer to assist you in buying the property and to advise you on the details of the shared ownership lease.

You will be able to buy more shares in the property at a later stage. In many cases you can buy your house outright but some leases limit the shares you can own so that the property remains an affordable home. This is called Staircasing

The amount you pay for further shares in the property depends on how much your property is worth when you want to buy the further shares. You will need a Surveyor to decide how much your property is worth and to work out how much you will have to pay for the further share. You will have to pay for the Surveyor’s fees.

If you want to sell your property and you do not own it outright, your Housing Association will have the right to find a buyer for it. If you want to sell your property and you have owned it outright for less than 21 years, your Housing Association will have the right to buy it back first. This is called a Right of First Refusal.

Many Housing Associations have waiting lists of people who want affordable housing. You may have to pay them a fee but you will not have to pay estate agents fees. If your Housing Association fails to buy your property within a reasonable time you are free to sell it in the normal way.

Can I Apply for a Shared Ownership Property?

You can buy a home through shared ownership if:

  • Your household earns £60,000 a year or less (in London £64,000 or less for a 1-2 bed property and £77,200 or less for a 3 + bed property)
  • You are a first-time buyer (or you used to own a home, but can’t afford to buy one now)
  • You rent a Council or Housing Association property.

I Own a Shared Ownership Property, Can I Buy More Shares?

Buying further shares, known as Staircasing, will mean that you pay a lower rent to your Housing Association and increase the equity (the money left over after repaying a mortgage and sales costs) you have in your property.

Depending on the shares you buy, the type of Lease you have and whether your home is a flat or a house you may get to own your home outright. If you own your home outright you may be able to sell it anyone using an estate agent of your choice.

If your rent is up to date most home owners have the right to Staircase at any time after you bought your Shared Ownership home.

How to Find Further Shares You Can Buy

This depends on what is said in your shared ownership lease:

  • There will usually be a minimum amount you can buy, typically 10% or 25%;
  • Sometimes there will be a maximum amount you can buy, perhaps 80%;
  • There may also be restrictions on the number of times you staircase, usually 3 times.

When you bought your first shares in the property, your solicitor should have sent you a copy of your shared ownership lease. It’s important to check out what is said in it. Alternatively, you can send us a copy of your shared ownership lease and we’ll help explain it to you.

What is the Cost?

The price depends on the current value of your home. For example if your home is worth £150,000 and you wish to buy a further 25%, the price you pay is £37,500. If the value of your home has increased since you bought it, the price for the new shares will be based on that increased value. However, if you have made any improvements to your home, such as double glazing, a new kitchen or bathroom the value that these have added to your home (not the cost you of carrying out the improvements) will not be taken into account when your home is valued.

If you need help in obtaining finance to assist you in the cost of Staircasing you should seek advice from your mortgage lender.

Other Fees and Expenses  

Housing Association’s Administration Fee
You should check with your Housing Association if they charge a fee for dealing with your application to Staircase. You may have to pay the fee when you apply and this may be non-refundable if you decide not to go ahead so make sure you have enough money to pay these fees.

Legal Fees
You will have to pay your own solicitor’s legal fees and expenses for dealing with the Staircasing, as it requires changes to be made to your Shared Ownership Lease and the title to your home.

Valuation Fees
You should check with your Housing Association if they charge a fee for dealing with your application to Staircase. You may have to pay the fee when you apply and this may be non-refundable if you decide not to go ahead so make sure you have enough money to pay these fees.

Stamp Duty
Stamp duty may payable when you Staircase if the price you pay for the additional share exceeds £125,000 or if you chose only to pay stamp duty on the initial share of your home when you bought it.

Other Forms of Affordable Housing

Need Help?

Contact your local Housing Association for more information about shared ownership property in your area.

Co-op Legal Services has a range of partners of specialist Conveyancing Solicitors and Licensed Conveyancers who are experts in all areas of affordable housing. They can guide you through the process and give you clear and simple explanations of what is involved.  

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