SHARED OWNERSHIP EXPLAINED
percentage of the property that you haven’t bought, as well as a service charge; but there are significant differences to just renting. • You have complete security; as long as you pay your mortgage, rent and service charge, the only time you will have to move is when you choose to – not when a landlord decides to sell. • You have a stake in the value of your home, which may increase in worth over time (although this is not guaranteed). • The rental part of the payment is controlled, so rises are predictable, rather than at the whim of a landlord. The vast majority of Shared Ownership leases started since October 2023 are only permitted to have a rent increase once a year, which can be no more than the Consumer Prices Index (CPI) plus 1%. Housing providers are free to charge less than this, and rents cannot be increased at all if CPI is minus 1% or lower. Some affordable housing that was already in development at this time may be subject to an older-style lease agreement, so do check carefully. • Unlike renting, in most cases as a shared owner you are responsible for repairs and maintenance to your home, either through paying yourself (such as replacing a leaking tap) or paying service charges (for maintaining communal areas). However, the latest Shared Ownership model lease introduced an “initial repair period” which means that the housing provider is responsible for essential repairs to the outside of the building and walls, floors, ceiling and stairs inside your home for the first 10 years. During this period, you can also claim back up to £500 a year for repairing or replacing faulty boilers, radiators, sinks, baths or pipes, but you must have your boiler serviced every year. • There are fewer restrictions. If you rent from a private landlord you may not even be allowed to put up a picture hook, but with Shared Ownership the home is yours to decorate as you please – so you can paint, wallpaper, put up shelves, add fitted wardrobes etc. However, you will need permission for structural changes such as a conservatory, extension or loft conversion, and there may be restrictions on hard flooring if you live in an apartment. Replacing a kitchen or
bathroom may need permission from some housing associations. • Many housing associations allow pets, but you will usually need permission. WHO CAN USE THE SCHEME? Households must have a combined income of not more than £80,000 or £90,000 in London to use the scheme. Shared owners can be first time buyers, people who have sold a previous home and are unable to buy on the open market (perhaps because of a relationship breakdown or divorce), or those who are selling and cannot afford the kind of home they need (to accommodate a larger family for example) on the open market. Buyers need to be over 18, with no rent arrears or bad debts, and must be able to afford the legal and other costs involved in buying a home, and the ongoing costs of mortgage, rent and service charge. It helps to have a good credit history, but some providers are more accepting than others of poor credit as long as you are still able to get a mortgage for your share. WHAT TYPE OF HOMES ARE AVAILABLE? Shared Ownership is available right across England on purpose-built new homes, and on secondhand homes known as “resales”. Property types tend to reflect the surrounding area – in Greater London, apartments outnumber houses 120 to 1, but in central and northern England the position is very different with more than four out of five properties being houses. The most recent Government figures reveal that across the country, 65% of Shared Ownership sales were houses, 33% were apartments and 2% were bungalows. All Shared Ownership properties are sold as leasehold, although houses (but not flats) can usually be converted to freehold if you eventually own them outright. WHAT’S THE BUYING PROCESS LIKE? You can find Shared Ownership homes via Homes for Londoners, Sharetobuy.com, direct from housing associations’ websites and on property websites.You may need
to fill in a registration form to check your eligibility. When you find a home you like the look of, contact the provider and arrange a viewing. If you want to go ahead, the provider will ask for a reservation fee of up to £500 to hold the property for you while you have a full financial assessment, which will look at your income, savings and outgoings and will set the percentage of the home that you are able to buy.You will need to provide proof of your identity and detailed financial information at this stage, so make sure you have everything ready. If all goes well at the assessment you can then arrange a mortgage and instruct a solicitor to handle the conveyancing.
EVOLVING SHARED OWNERSHIP
The Government has made changes to Shared Ownership which are designed to widen access to the scheme, but as the old scheme is being phased out gradually until the end of 2026, you will need to check whether a home you are considering falls under the old scheme or the new one.These changes include: • With the new scheme, buyers can purchase as little as 10% of a property, instead of the previous minimum of 25% (although you must buy the largest amount that the financial assessment says your income can sustain). • The standard lease length on the new scheme is 990 years, up from 125 years . • Buyers can increase their share in 1% increments for the first 15 years without a new valuation (rather than the previous 10% minimum staircasing and requirement for a survey). • Providers must contribute towards some essential repairs and maintenance for the first 10 years.
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