SHARED OWNERSHIP
SPOTLIGHT ON SHARED OWNERSHIP
Shared ownership is a Government-backed scheme allowing buyers in England to buy a share of a leasehold home and pay rent on the remaining share.The aim is to make
AM I ELIGIBLE? To use the shared ownership scheme, you will need to meet the eligibility criteria: Your household income is £80,000 a year or less (£90,000 a year in London) You cannot afford all of the deposit and mortgage payments for a home that meets your needs. One of the following must also be true: You are a first time buyer You used to own a home but cannot afford to buy one now You are forming a new household – for example, after a relationship breakdown You are an existing shared owner and you want to move You own a home and want to move but cannot afford a new home that meets your needs. Individual housing associations may also have their own eligibility criteria, for example that you live or work in a given area. There are also specific schemes that you may be eligible for if you are over 55 (Older Persons Shared Ownership/OPSO scheme), or disabled (Home Ownership for People with Long-term Disabilities/ HOLD). Members of the Armed Forces are prioritised. If you are planning to rent out a room in your new home (sublet), you must live there at the same time.
homeownership more affordable for those on lower incomes, or with small deposits, and is available on purpose-built new homes and preloved shared ownership homes. Debbie Clark explains how it could work for you
You can usually buy additional shares at any time but, for some homes, you might need to wait for a certain amount of time after you buy the home – check the lease. The cost of your new shares will depend on how much your home is worth when you want to buy them.You’ll need to pay for a valuation by a surveyor who is registered with the Royal Institution of Chartered Surveyors (RICS) and your landlord will tell you the price of the share after this valuation. The landlord may also charge an administration fee (usually £150- £500), and it is worth noting that if you have made improvements to your home, the current market value will be used to calculate the cost unless you had your landlord’s written permission to carry out the home improvements, in which case the unimproved value can be used.There may also be legal fees involved. You can sell your shared ownership home at any time if you decide to move on. If you own 100% of your home, you can usually sell it on the open market, but if you do not own 100% of your home, you must tell your landlord when you want to sell. This gives the landlord the opportunity to find a buyer for your share. The landlord has a "nomination period" (four, eight or 12 weeks, depending on the lease) to find a buyer. If the landlord does not find a buyer within the nomination period, you can sell your share yourself on the open market. Again, you will need a valuation by a surveyor who is registered with the Royal Institution of Chartered Surveyors (RICS), and the landlord may also charge you a fee.
fees and repair reserve funds) Stamp Duty , if applicable.
The landlord will provide you with a "key information document" about the property to check the costs before you reserve your home. In addition to the usual utilities, you will also need to be prepared to pay for repairs and maintenance, regardless of the share you own. In some cases, certain costs might be covered by the building warranty, or by the landlord if your home has an "initial repair period". HOW DO I APPLY? Once you have established your eligibility, you can start looking for a home through your local council, housing association, or by looking directly for homebuilders and developments in your desired area. When you have found a property, assuming a financial assessment confirms affordability, you will then pay a reservation fee. You will need to instruct someone to do the legal work (conveyancing) on your behalf.Your solicitor, or licensed conveyancer, will also explain the terms of the shared ownership lease to you and check the conditions of your mortgage offer, if you have one. ONWARDS AND UPWARDS You can purchase additional shares as your circumstances allow by "staircasing" and when you buy more shares, you’ll pay less rent.You can usually buy shares of 10% or more at any time but some newer leases will allow you to buy shares of 5% or more.
WHAT COSTS ARE INVOLVED?
When you’ve found the home that you want to buy, you will undertake a financial assessment to determine the share you can afford to purchase. This is usually between 25% and 75%, but you can buy a 10% share on some homes.You will need to factor in all of the costs involved, which will typically include: Reservation fee – a fee of up to £500 to reserve your home for a fixed period A deposit (usually 5-10%) Solicitor’s fees Monthly mortgage repayments paid to your lender (unless you have paid for your share from savings) Rent paid to the landlord. (If you buy a new build shared ownership home, the rent limit is 3% of the value of the share the landlord owns. Most landlords charge 2.75%, reviewed annually) Any monthly charges (for example service and estate charges, management
24 First Time Buyer February/March 2025
Made with FlippingBook Digital Publishing Software