SHARED OWNERSHIP EXPLAINED
• You have complete security; as long as you pay your mortgage and rent, 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. Most shared ownership leases peg annual rent rises to the inflation-based Retail Price Index plus 0.5%. However, as inflation has been so high, housing associations have accepted a Government recommendation to cap 2023 increases at 7% (although for- profit shared ownership providers are not bound by this). • Unlike renting, in most cases as a shared owner you are responsible for repairs and maintenance to your home, either through paying yourself (replacing a leaking tap or repairing a boiler) or paying service charges (maintaining communal areas). Newer scheme require providers to pay up to £500 a year for the first decade for certain essential repairs. • Many housing associations allow pets, but you will usually need permission. • 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. 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 a divorce), or those who are selling a home but 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 33 to one, but in central and northern England the position is reversed with more than four out of five properties being houses. 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? You can find shared ownership homes through Homes for Londoners, Sharetobuy.com or direct from housing associations 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.
RECENT CHANGES TO SHARED OWNERSHIP
The Government has made changes to shared ownership that are designed to widen access to the scheme, but as the old scheme is being phased out gradually until 2026, you will need to check whether a home you are considering falls under the old scheme or the new one.The 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 essential repairs and maintenance for the first 10 years, but this is capped at £500 a year and only covers things like structural repairs to walls, floors, ceiling and stairs and repairing or replacing sinks, baths, radiators and boilers.You will have to get approval from the landlord that the repairs are essential, use a tradesperson approved by the landlord, pay for the repairs yourself and claim the cost back.
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