Shared Ownership in the CPCA
What do I need to know about Shared Ownership?
Shared Ownership offers an alternative route onto the property ladder for budding buyers in the Cambridgeshire and Peterborough Combined Authority who can’t quite afford to buy a home on the open market.
Shared Ownership – Explained
Often referred to as part buy/part rent, the scheme enables buyers to purchase a share of a home – either a new build or resale property – paying a mortgage on the share they own and a subsidised rent on the share they don’t.
As you’ll usually only need to raise a deposit of 5% to 10% of the share that you are buying, deposits on Shared Ownership homes are often much lower compared to buying on the open market too.
Shared Ownership allows buyers to become owner-occupiers, benefiting from the stability and long-term security that comes with owning a home.
Shared Ownership – Eligibility Criteria
The general requirements for Shared Ownership are as follows:
- You will need to be at least 18 years old.
- Your household income must be less than £80,000 per annum. However, if you ever decide to move to London, the upper limit for Shared Ownership in the capital is £90,000.
- You must not own any other properties in the UK or abroad.
- Shared Ownership is often aimed at helping first time buyers onto the property ladder but if you do own another home, you will need to prove that you’re in the process of selling it.
- You should not be able to buy a suitable home for your needs on the open market.
- You will need to show that you are not in mortgage or rent arrears with your current lender, landlord or agent.
- You will need to be able to show that you have a good credit history and can afford the costs involved in buying a home.
- Priority will be given to members of the military.
In regards to prioritisation, some local authority planning permissions may require preference to be given to applicants who already live and/or work in the local area. Please note that this will have been put in place by the local council, not the housing association who you are buying from.
Shared Ownership – Costs
The costs of a Shared Ownership home are usually lower than buying outright for a variety of reasons:
- The rent you pay is less than the rate charged on the open market and is often charged at 2.75% of the property value per annum.
- In many cases, you can start out by purchasing a share as little as 25%.
- Your deposit will usually be 5% to 10% of the price of the share that you’re purchasing, not of the full market value of the property.
- You can usually choose to defer the payment of Stamp Duty Land Tax (SDLT) until your share reaches 80%.
- First time buyers in Shared Ownership homes will also pay zero Stamp Duty on the first £300,000 of any home that costs up to £500,000.
Shared Ownership – Buying additional shares
After buying a Shared Ownership home, the owner has the option of increasing their owned share through a process known as ‘staircasing’.
In most cases, the owner can go on to purchase 100% of their home; at this stage they would no longer pay any rent, just the mortgage on their home along with any ground rent and service charges.
The price of the shares you’re looking buy will be based on an independent valuation at the time. Visit our staircasing guide for more information about this process.
Shared Ownership – Leasehold
Regardless of tenure, most flats are sold on a leasehold basis with the freehold being held by the landlord. This will often be the housing association or a local authority.
Leasehold ownership works as a long tenancy where your lease gives you the right to live in and use your home for a longer period, also known as the ‘term’ of the lease. The term of your lease will be fixed at the very beginning – usually either 99 or 125 years – and will decrease in length each year. Your home can still be bought or sold during this time.
As part of their home ownership programmes, most Shared Ownership leasehold homes are granted by the housing association. These leases are almost always in a format approved the Homes and Communities Agency.