Shared Ownership is when you buy a percentage of a property and usually a housing association owns the remainder. You pay rent on the share of the property that you don't own.
Shared Ownership Explained
With Shared Ownership, you buy a portion of a property. This can be anything between 25% and 75%. A local housing association will ownthe rest. You have the option to buy a greater share of the property in the future. This is known as Staircasing.
You will need to foot the costs of your portion of the property. Typically, this will mean paying a deposit and getting a mortgage, which you will have to pay off as per the agreement with your lender. You may also need to pay stamp duty, home insurance and maintenance fees.
The housing association will own their portion of the property, and you will have to pay them rent for their share in return for living there. This will usually be at a reduced rate. Even so, you need to ensure that you can afford both the cost of any mortgage you may haveand the cost of the rent.
A Shared Ownership property will always be purchased as a leasehold, rather than a freehold.
Who is Shared Ownership for?
Shared Ownership is mainly aimed at first-time buyers, although previous home-owners may be eligible and there is a scheme for those who are over 55. There are certain criteria that applicants must meet to qualify for the Shared Ownership scheme, and these vary across the UK.
In England, you may be able to enter into the Shared Ownership scheme if:
- You're aged 18 or over
- You're a first-time buyer or you cannot afford to buy a property (even if you previously owned one)
- Your household income is less than £80,000, or less than £90,000 if you live in London
- You rent a council or housing association property
- You are not in mortgage or rent arrears
- You have a good credit history.
If you are interested in Shared Ownership and you would like to find out if you are eligible, you simply need to speak to your local council or housing association. It does not matter what your profession is, although priority will be given to armed forces personnel.
If you are told that you are eligible, you will then need to find out if you can get a mortgage (unless you do not require a mortgage). Some lenders do not offer mortgages to people entering in a Shared Ownership scheme, and all lenders will want to carry out financial checks.
Is Shared Ownership the Same as Help to Buy?
No, Shared Ownership and the 'Help to Buy' scheme are not the same thing. With Help to Buy, the government provides a loan to help you with the deposit for a property. This loan is interest-free for the first five years.
With Shared Ownership, you are expected to find the money for your deposit. However, the deposit will only be in relation to your share of the property. This means that the deposit will be smaller than if you were buying the property entirely on your own.
Buying a Shared Ownership Property
As long as you are eligible for the Shared Ownership scheme and your mortgage has been agreed in principle, you can start your property hunt. A comprehensive list of Shared Ownership properties can be found on the Share to Buy website.
Once you have an offer accepted, you need to instruct a Solicitor or Conveyancer who will handle the entire conveyancing process on your behalf. You need to ensure your Solicitor or Conveyancer has experience in Shared Ownership transactions.
Selling a Shared Ownership property
Depending upon the terms of your lease, if you want to sell your Shared Ownership property, it is likely that the housing association has the right to nominate a buyer or have a set number of weeks in whichto find a buyer. In other words, they may have the right to buy it or find another buyer before you can market it yourself.
If they do not buy the property or find another buyer within a reasonable amount of time, then you can proceed to sell your home yourself.
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