FAQs - Shared Ownership

What is shared ownership?

Shared ownership is essentially a bridge between renting and buying to make the process of purchasing property more affordable. Traditionally, the scheme has been offered to council tenants, people on a local authority housing list and key workers (e.g. teachers; nurses etc), but many housing associations will now consider wider criteria covering many other first time buyers.

You can start off by buying as little as a quarter of a property and renting the remainder and then increase your stake by buying further chunks in the property (known as stair-casing), until you either own it outright or sell your stake and move on. It is affordable due to the fact that the rents are generally subsidised and therefore much lower than equivalent rents on the open market.

Properties are available via 'registered social landlords', usually Housing Associations, although sometimes people owning part of a shared ownership property sell their interest, in the usual way, via local estate agents. Due to the subsidised rent provided by the government, local authorities have a major say in who qualifies to be offered a shared ownership property and this may well vary between local authorities. Where these properties are not taken up by applicants on the council list, the housing association is normally allowed to offer these to a broader section of applicants.

It is not unusual for property developers seeking planning permission for desirable sites to offer to make several units in the development available to local housing associations on completion. Therefore it is often possible to buy a shared ownership property in some very prestigious developments on prime sites in our major towns and cities.

What shared ownership mortgages do you offer?

At share to buy, we are a whole of the market broker specialising in shared ownership mortgages. We are therefore able to offer shared ownership mortgages from right across the range, including:

• Shared ownership mortgages for 100% of a share
• Shared ownership mortgages with adverse credit
• Shared ownership mortgages from high street lenders, smaller building societies and specialist lenders.

I don't know much about shared ownership – how do I get started?

If you are just starting out on the path to shared ownership the whole process may seem a little daunting but before contacting us to see if you can obtain a shared ownership mortgage your first step should really be to see if you can qualify for shared ownership housing schemes in the areas where you want to buy.

Unfortunately, there is no single set of criteria for deciding who qualifies for shared ownership housing schemes but there is a single point of contact to assist you in establishing your eligibility for schemes in your area. This point of contact is called a 'HomeBuy agent'. You can click here to find your homebuy agent. HomeBuy Agents can register your interest, assess your eligibility and provide details of schemes in your area.

What are the different types of shared ownership?

A number of shared ownership schemes fit under the same umbrella term of ‘affordable housing’. These include:

• New build home buy: a new term for what is essentially traditional shared ownership where you part-buy part-rent a property from a housing association and can staircase up to 100%. Download the housing corporation's leaflet to find out more.
• Open market home buy: this is a new scheme from the Government whereby you buy 75% of a property and receive two equity loans of 12.5% from the mortgage lender and Government/homebuy agent respectively for the remaining 25%, and there are more recent variations along these lines that can involve just one loan. Click here for the housing corporation's information about open market home buy (and see the downloadable leaflets under 'related information').
• Shared equity: with these schemes you usually purchase, with the aid of a mortgage, about 60-70% of a property. You do not generally have to pay any rent on the portion of the property that you have not purchased. However, on the sale of the property, which is usually subject to strict rules, the equity will be shared according to the percentage of the property held.
• First time buyers' initiative: this is a shared equity scheme that aims to help eligible first time buyers to buy a share in a new home. They must buy at least half of the property, and a Government agency called English Partnerships will retain the rest. Click here for further information from English Partnerships about the First-Time Buyers' Initiative.

Can you assist with staircasing and shared ownership remortgages?

Staircasing is the process of increasing your shares in a shared ownership property. This may or may not involve a remortgage but can happen at the same time and you should first contact the housing association for direction as to their staircasing process. On the other hand, it is also possible to remortgage a shared ownership deal and retain your current share (i.e. without staircasing). Click here for more information on staircasing and shared ownership remortgages.

What is shared ownership rent and how do I calculate it?

The important thing about shared ownership is that you generally purchase a share in a property and rent the remainder from a housing association. Hence, this method is usually referred to as 'part-buy/ part-rent'. In order to know what you can borrow you ideally need to have some idea of the amount of rent you are likely to be paying as this will have to be deducted from your income (in order to know your rent, you will also need to know the size of share you are buying and this will be between 25-75% of the property).

The rent is based on the remaining value of the property (i.e. the portion you are not buying) and the level of this subsidised rent can vary, however you could use 3% as a guide, therefore if you are buying 50% of a property valued at £200,000, then the rent could be £100,000 X 3% = £3,000 per year, or £250 per month.