What is shared ownership?
Shared Ownership is a specially designed scheme to allow more people to get onto the house-buying ladder. It helps first time buyers into their first home but also helps people to buy where there’s been a change in circumstances, such as a relationship breakdown or a change in financial circumstances.
How does it work?
Shared Ownership works by enabling you to buy a share in your new home that you can afford, and pay rent to a Housing Association or Local Authority on the part you don't own. You can buy further shares in your home when you can afford to, this is known as staircasing and in most cases you can do this until you own your home outright if you choose.
Why buy through shared ownership?
You will own part of your home, rather than renting meaning you have something to show for your monthly payments. Your monthly mortgage and rent might be more affordable than you think, it’s worth checking. You only buy what you can afford, so you don’t overstretch yourself financially.
You will have our support throughout the buying process, we understand that there is a lot for you to arrange and we will be in regular contact with you to help make sure that your purchase is progressing as expected. We can also provide you with details of solicitors and Independent Financial Advisors that deal in shared ownership.
What am I buying?
Buying through Shared Ownership is designed to be a stepping stone to completely owning your own home. It means that you buy a share of a property and rent the remainder. You are buying a share in your new home, your lease is a legal document that proves you own part of your home.
Your lease sets out:
- Your rights and responsibilities
- What you can expect from the Housing Association or Local Authority
- Details of rent and service charge reviews
What costs are involved in buying my own home?
Mortgage fees - we can give you details of some local solicitors and an Independent Financial Advisor (IFA) who have expertise in Shared Ownership. Depending on the lender you choose, there may be a fee as part of the mortgage application or mortgage valuation process. Your IFA or lender will be able to give you more details on fees that will be applicable to the mortgage you are considering.
Please also ask the IFA assisting you with your mortgage application whether any fees are charged for their advice.
Deposit - The amount of deposit you will need depends on the value of the property and the share that you buy. Depending on your circumstances and credit history, some lenders only require a 5% of the share that you are buying.
Solicitors fees - We will give you details of solicitors who have experience of Shared Ownership, however you are not obliged to use them. Your solicitor will be able to give you a quote for their work and will need payment in advance for certain things such as local searches.
Am I eligible for shared ownership?
You would normally be eligible in the following circumstances:
- Your household income is less than £80,000 a year.
- You are a tenant of another Housing Association or Local Authority
- You are an owner occupier and you have to leave your existing home (due to relationship breakdown or change in financial circumstances) and the sale price will not give you enough capital to purchase a suitable property. You must not own another property.
- You are an owner occupier and your financial circumstances have changed through redundancy or ill health, which means you are no longer able to meet the running costs for your current home, meaning that you are in the process of selling.
- You are moving to the area for employment or to receive family support. There is an application process that you need to go through so that you can go ahead a buy your new home.
Buying your home
You are now ready to start the legal process to buy your home.
You need to instruct your solicitor to act on your behalf and pay for some items such as local searches, this means that they can start work on your behalf. We will instruct our solicitor to send all the paperwork to your solicitor for the home you are buying.
Exchange of contracts is the point where you are legally obliged to complete the purchase of the property and this will normally within 28 days of your solicitor receiving documentation. During this time your solicitor will ask any questions they have and your mortgage lender will value the property and issue a mortgage offer.
Your solicitor will also receive a copy of the mortgage offer so they can make sure that all details are correct. Your solicitor will then ask you to sign the relevant paperwork and can then exchange contracts. We will be in regular contact with you throughout this process to help answer questions and keep your purchase within the timescales agreed. It is important that you keep in touch with us along with your lender and solicitor and we will ask you to chase them for updates and information.
When can I move in?
Due to the level of demand for shared ownership, most new build homes are sold off plan before they are completed.
We will give you updates on anticipated completion, this is based on information from our building contractor. At this point, we cannot guarantee any completion date but we understand that you will be keen to move in.
Once we have confirmation from the building contractor, we will let you and your solicitor know when you can expect to move in. Legal completion is the point where you own your share of the property and you can collect the keys and move in.
If the home you are buying is ready to be lived in when we exchange contracts, you will be given a completion date then.
Before you complete, your solicitor will send you a completion statement, this will document the purchase price, reservation fee paid and other costs you will need to pay to your solicitor prior completion.
What happens when I complete?
On completion day, we need to have received confirmation from our solicitors that they have received your completion monies before we can release keys or allow your belongings to go into the property.
We will meet you at the property to you:
- Give you the keys
- Go through your home user guide with you
- Take meter readings
- Set up a direct debit for rent and service charge – so please bring your bank account details
What will I have to pay once I own my home?
Once you have completed your purchase, you will be responsible for the ongoing costs, each month you will pay:
Paid each month to your lender on the share that you own.
Paid each month to the Housing Association or Local Authority on the share you don’t own.
The Management Charge is paid each month and covers the cost of management and buildings insurance. If there are communal facilities such as gardens, car parking, window cleaning or lifts then there will be an additional service charge which you will be made aware of. If you are buying early off plan, we will provide you with an estimate of the service charge and will provide you with more accurate figures as soon as possible
You are also responsible for having contents insurance, paying utility bills, council tax and all other services that you subscribe to.
What are my responsibilities as a homeowner?
You are responsible for paying your rent and all other charges regularly and on time. Rent is reviewed every year in accordance with the terms set out in your lease.
Your Shared Ownership lease explains what your landlord must do and what you must do as a leaseholder. If you think you may be getting into difficulty meeting your repayments, please contact your mortgage company and your Housing Association or Local Authority as soon as possible. Your home is at risk if you do not keep up repayments on a mortgage or any other loan secured on it.
Can I buy a larger share of my home in the future?
In the future you may want to buy an additional share of your home and maybe eventually own 100% of your home, this is called staircasing. The amount you pay for the extra share will depend on the share you want to buy and the value of the property at the time. If you buy a larger share, the rent that you pay on the remaining share will reduce and if you buy 100% of your home, you will no longer pay rent but any service charge will still be due.
What do I do if I want to sell in the future?
If you own 100% of your home, you can sell it on the open market.
If you are a Shared Owner and want to sell, you need to let the Housing Association or Local Authority know. Like staircasing, the price you sell your home for will be based on the market value at the time and needs to be valued by an independent valuer.
You need to gain our approval of the valuation and you are responsible for the costs involved in selling your home. Like any home, the value can rise and fall along with changes in the housing market.