Shared ownership may not be something you’ve considered up to now, but as it becomes more and more challenging to take the first step onto the property ladder, it is something which many buyers are exploring and as a result the existing scheme is being expanded.
We’ve put together this quick guide to help you decide if it could be for you:
What exactly is shared ownership?
As the name suggests, it is where you share the ownership of the property you move into. You will generally own anything from 25 – 75% and the remaining part will remain with the Housing Association. You will be charged an agreed, affordable rent for the portion which you don’t own – generally at a much lower rate than via a private landlord.
Who is it designed for?
Primarily, shared ownership appeals to first time buyers who are struggling to find the deposit they need. To qualify, household earnings need to be below the £80,000 threshold (£90,000 in London).
The scheme, however, is not solely for those starting out on their property journey and the following buyers can also benefit: -
• Previous home owners who have undergone a significant change in their circumstances (such as divorce) and can no longer afford to buy another
• Those over 55 years of age where it is referred to as the older people’s shared ownership scheme (also open to those with an expanding family who require a larger home)
• Existing shared owners who wish to move from one eligible property to another
How does shared ownership work?
As with conventional house purchase, you will need to have your deposit (usually 10%), your mortgage offer (or at least agreement in principle for the amount you need to borrow) and available funds to cover fees such as stamp duty, conveyancing and removal costs.
Through time you can increase your owned share of the property via a process called ‘staircasing’, moving from 10% to 25%, 50% and then eventually 100% ownership.
When you reach the point of owning your home outright you then have a choice to stay put or sell, remembering that the Housing Association must always be given the option to buy it before you put it on the open market.
At any point of shared ownership you still have the option to move but the Housing Association must have ‘first refusal’ on buying your share and they can then put the property up for sale.
Is Shared Ownership right for me?
At EHL we concentrate solely on conveyancing so we are always on hand to help with any queries you might have on Shared Ownership or any other aspect of property purchase. Whilst current restrictions may have slowed things down a little, we’re still helping clients progress to completion with the minimum amount of stress.
The information provided in all of our blogs reflects only a narrative of some elements to consider on the topic. The blogs do not contain considered legal advice and should not be relied upon as advice. Please see our website terms and conditions for full details of our disclaimer. If you are interested in obtaining advice, please contact one of our lawyers who will be happy and able to advise you on your own particular circumstances.