The Government Shared Ownership Scheme
A Shared Ownership property is essentially a combination of buying and renting. You will own a share of the property and pay rent to a Housing Association on the part you don’t own. Shared ownership properties are always leasehold. This applies irrespective of whether the property is a house or a flat. The lease will contain restrictions which you will need to follow. The rent on the share you don’t own will be reviewed every year and will usually increase.
Some properties which are Shared Ownership can be located in what is known as a ‘designated protected area’ – These properties can only be bought by buyers who have a connection to the local area and in some cases you will only be able to purchase up to 80% of the property. When you come to sell, you may also be limited to selling back to the landlord, or another eligible person the landlord nominates.
Your Local Housing Association will be able to provide more detailed information or you can visit: www.gov.uk/affordable-home-ownership-schemes/shared-ownership-scheme
To qualify for Shared ownership the combined salary or other earnings of both you and your spouse or partner must not be more than £80,000 a year or £90,000 a year if you live in London. In addition, any of the following must apply:
- You are a first-time buyer
- You used to own a home, but cannot afford to buy one now; or
- You already own a Shared ownership property
In some cases, the property may also be located in a ‘designated protected area’ which may mean that to be eligible, you also have to have a connection to the local area. Properties of this kind are also often limited to a maximum of 80% ownership, or a requirement if you wish to sell, that you must sell back to the landlord, or another eligible buyer the landlord nominates, meaning you are not able to sell on the open market.
In all cases, you will be required to undertake an affordability assessment which will be carried out by an Independent Financial Advisor. They will assist you in assessing the share you are able to purchase and the affordability of mortgage and rent payments.
Although you will only own a share of the property, in addition to your mortgage and rent, you will be required to pay the entire cost of items such as:
- Council Tax
- Gas, Electricity, Water & phone bills
- Repair and maintenance costs for both the inside & outside of the property
- Buildings and contents insurance
- In some cases, a contribution to maintenance of shared areas, known as Service Charges
Once you have bought a property you are able to buy additional shares by a process known as ‘staircasing’. The price for additional shares will depend on the value of the property at the time you buy that extra share. This means it will cost more than your first share if property prices have increased. There are also additional costs which will be payable in addition to the price.
Usually staircasing must be in 5% shares or more at a time, however properties purchased from 2021 may allow staircasing of 1% shares at a time.
It should be noted that Shared Ownership properties located in what are known as ‘designated protected areas’ may limit staircasing to a maximum ownership of 80%, and even if this is not the case, it is usually a requirement to sell back to the landlord or another eligible buyer that the landlord nominates.
Please note that all information provided in this FAQ is for general reference only. It should not be used as a sole or definitive source, nor is it intended to be used for decision making in place of appropriate advice from a qualified legal professional. As such the information is provided as-is and Brevis cannot accept any responsibility or liability for any loss or damage resulting from any errors or ommission in, or any reliance on, information contained in this guide.