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Shared ownership

Due to rising property prices, owning your own property is now very hard for many people.

Shared ownership helps people who are unable to afford to buy a property outright. Through the scheme, you can buy a share of the property and you pay rent on the other share which remains in the ownership of the housing association.

How it works

The share you purchase will normally be funded by a mortgage which you will need to arrange through a bank or building society. You will then pay rent on the share of the property still owned by the housing association. The size of the share purchased can vary between 10% and 75% of the property's full market value depending upon your income and savings. The larger the share you buy, the less rent you will have to pay. You must also bear in mind that if you buy a flat, you will have to pay a service charge.

You can buy a home through shared ownership if your household income is £80,000 or less a year and you cannot afford all the deposit and mortgage payments for a home that meets your needs. You must also be a first time buyer, used to own a home but now cannot afford to buy a new one, you currently own a home and want to move but cannot afford a new home suitable for your needs, you are forming a new household (for example after a relationship breakdown) or you are an existing shared owner and want to move.

The current model of shared ownership with the initial purchase share starting at 25% will continue until 2023. There is a new model of shared ownership which reduces the initial share from 25% to 10% and this was available to purchase from 2022. There will be a transition period in which both the former and new shared ownership models will be available. It is important to check which model you are applying for. Under the new shared ownership model there is a 10 year repair during which the shared owner receives support from their landlord to pay for essential repairs.

Once you have sourced a property you want to buy, a mortgage advisor will assess your income and outgoings and assess the percentage share you can afford. When you have bought your home you can purchase more shares in the property, which is known as ‘staircasing’. Under the new shared ownership model, a 1% gradual staircasing model has been introduced. This means shared owners can staircase in smaller instalments of as little as 1%, down from 10%. It must be remembered, however, that house prices can go up or down, which means you may pay more for additional shares or, if you decide to move, you may have to sell at a price less than you originally paid.

Sourcing a property

If you would like to receive information and advice to help you get onto the housing ladder and be kept up to date on all low cost home ownership opportunities available in the borough,sign up to the Low cost home ownership register.

Low cost home ownership register

You can buy a new build property or an existing property for sale through a registered provider’s shared ownership resale scheme.

A shared ownership lease

When a purchase is made through shared ownership, the housing association will grant you a lease, usually for 99 years, which sets out your rights and responsibilities.

This lease entitles you to live in your home as an owner-occupier. It also entitles you to buy further shares in the property and explains how this can be done.

Your lease will also set out your responsibilities, for example for repairs to your property and the payment of rent. Although you have not bought your property outright, you will have the normal rights and responsibilities that come with home ownership. It would be wise to take your own legal advice on the terms and conditions of the lease.

Costs involved

Before deciding whether shared ownership is for you, it is important to think about the costs involved in buying and running your own home.

Legal fees

You will need to get a solicitor or licensed conveyancer to assist you in the purchase of your share. As fees can vary, it is worth getting estimates from a number of firms.

Deposit

You may be required to put a deposit down on the property.

Stamp duty

You will need to check with your solicitor or licensed conveyancer whether stamp duty is payable at the time of purchase. This is tax on the transfer of property. If it is payable, you can either pay the duty on your share of the property or on the total value of the property. Your solicitor/licensed conveyancer will advise you on the best option to take.

Mortgage indemnity insurance

Your mortgage lender may require you to takeout mortgage indemnity insurance.

Removal costs

You will need to think about the distance you are moving, as removal costs can be costly.

Running costs

Once you've considered the initial costs, you will need to think about how much it is likely to cost you to run and maintain your home.

Mortgage repayments

You may need to borrow all or at least part of the cost of your share from a bank or building society in the form of a mortgage. The amount you have to repay will vary according to the amount borrowed, the length of the mortgage, interest rates and the type of mortgage.

Rent

You must still pay rent on the share of the property owned by the housing association. The monthly rent will be based on the rent for the total property and the amount charged to you will be calculated on:

  • the amount of share you own
  • the repayments you make as an owner-occupier
  • your share of any insurance, maintenance and repairs

Once these have been taken into account, the rent will be less than the normal rent you would pay if you were renting the whole property. Your rent is usually reviewed every year.

Council tax

You will be responsible for paying council tax for the property.

Repairs, insurance and service charges

If your home is a flat, all repairs and redecoration inside the property will be your responsibility. The housing association must ensure that the building itself is in good structural repair and will insure the structure and keep all communal areas such as staircases and corridors, lit, decorated and clean. A share of this cost will be passed onto you in the form of a service charge. The housing association must tell you how this service charge is spent and consult you before any major repair or maintenance work is undertaken. If your home is a house, you are responsible for all repair and redecoration, both inside and outside of the property. The housing association will insure the structure of your home. You will have to pay a small management charge to cover this and to help meet the costs of rent collection.

Other costs

You are responsible for your own bills for heating, lighting and water rates, and for supplying your own fittings and furniture in the property. You will also be responsible for the cost of insuring the contents of your home.

Shared ownership for the over 55s

There are some properties aimed specifically at over 55s. If you’re aged 55 or over at the time of buying your home, you can buy up to a 75% share through the older people’s shared ownership (OPSO) scheme. Once you own 75%, you will not pay rent on the rest. These properties are advertised alongside other shared ownership properties on the Low cost home ownership register

Contact details

If you have an enquiry about any low cost home ownership opportunities, email the Housing Strategy Team

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