For hard-pressed home buyers in London and the South East, Shared Ownership might represent the best way of getting onto the housing ladder.
However, there are plenty of myths and misconceptions about this option.
To help you to better understand Shared Ownership, how it works and the pros and cons, these are the top eight things you need to know.
- Shared Ownership defined
Shared Ownership is a government-backed scheme designed to help those who are struggling to get onto the housing ladder. The process involves purchasing a share of a property, and paying rent to the Housing Association, who own the rest of the property.
- Shared Ownership criteria
To qualify for Shared Ownership, you must:
- Be a first-time buyer, or a prior homeowner who cannot afford to buy a new home
- Have a combined annual household income of £80,000 or less (£90,000 in London)
- Be legally entitled to live in the UK on a permanent basis
These criteria are specific to England, other parts of the UK will have their own version of the scheme.
- Other types of Shared Ownership
There are separate schemes available for older (OPSO) and disabled (HOLD) people who wish to part-own their home. More information about these schemes can be found on the government website.
- You can buy a bigger share
‘Staircasing’ allows you to purchase a higher percentage of the property when you can afford to do so. This is done through the Housing Association who co-owns the property. They will have a surveyor value the property and the price you pay will be linked to the latest valuation, not the original price you paid.
- You can sell your share
If you decide to sell your share of the property, it will usually be repurchased by the Housing Association, who have first refusal. Alternatively, they may find a new buyer who will take over your lease and buy your share at a price which is in line with an up-to-date valuation.
If you have extended your share to 100%, you can sell your home in the same way as any other homeowner, without involving the Housing Association.
- Houses are limited
Although introduced almost 50 years ago, Shared Ownership properties are low in numbers, so you may need to do some searching to find the right one for you.
- Shared Ownership mortgages
You will need to provide a deposit for 5-10% of the value of your share of the property. You will also need to secure a mortgage for the remainder of your share.
Not all mortgage providers accept applications for Shared Ownership arrangements. However, there are generally enough products available to enable you to shop around for the most suitable one for you. In addition, most of the bigger and better-known banks do offer them, so finding a reputable provider should not be an issue.
- Your legal status as a tenant
Throughout the Shared Ownership process, you will be legally classed as a tenant until you have 100% ownership. This means that the usual leasehold restrictions will apply, and you are at risk of being evicted if you fail to pay rent.
As a tenant, you will also be charged service and maintenance costs for as long as the Housing Association has a stake in the property.
If you think Shared Ownership might be the answer to your dreams of getting onto the housing ladder, and you want to talk about it, we’d love to hear from you, get in touch with us on 0207 808 4120.