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Shared Ownership - Getting Started

Shared ownership gives first time buyers and those that do not currently own a home the opportunity to purchase a share in a new build or resales property. The purchaser pays a mortgage on the share they own, and pays rent to a housing association on the remaining share. Because the  purchaser only needs a mortgage for the share they are purchasing, the amount of money required for a deposit is a lot lower when compared to the amount that would be required when purchasing outright.

The purchaser has the option to increase his share during their time in the property via a process known as ‘staircasing’, and in most cases can staircase all the way to 100%, thereby owning the property outright. Shared ownership properties are always leasehold.

Traditionally, housing associations are not-for profit providers of rental accommodation for people on low-incomes or with specific needs. However, many housing associations also build properties for the shared ownership market, and, increasingly for outright sale. Housing associations reinvest any surplus they make in building and maintaining their homes.

In addition to the money you will need to put towards your deposit it is suggested you will need approximately £4,000 for the cost of solicitor fees and mortgage arrangement fees. This is just a guide, you may be able to shop around to find cheaper deals.

Help to Buy Agents (formerly known as HomeBuy Agents) are appointed Registered Providers who provide a ‘one-stop-shop’ and point of contact for intermediate housing options in a given area in England outside of London.  The arrangement in London is different; The Mayor of London’s FIRST STEPS scheme – delivered by Share to Buy – is the official portal for shared ownership in the capital. There are currently two Help to Buy Agents in London, Moat in the South and Lea Valley in the North, and they cover the Help to Buy shared equity scheme only. 

In total there are currently 16 national Home Buy Agents, and each will have details of the shared ownership homes available in their region.

Furthermore, Help to Buy Agents administer the Help to Buy: Equity Loan scheme, with responsibility for providing authority to proceed for people purchasing a home with assistance from this scheme. They also provide other key sign offs through the purchase process.

You can find your local Help to Buy Agent here.

The process of purchasing one a new-build property depends on a number of factors, such as the length of time required to arrange mortgage financing and the speed at which the solicitors involved can process the sale. Usually it takes around two months from start to finish, however it can take as little as 28 days if everything proceeds quickly. Although, if building work has yet to be completed on the development this may lengthen the process.

The rent paid to the Housing Association on the share not owned by you will be reviewed periodically, usually every year, and will be increased in line with any proportionate increase in the Retail Prices Index plus an amount, typically between 0.5% and 2%. Note that the rent is only reviewed on an “upwards only” basis and will not go down when reviewed. You should always check the terms of your lease carefully before you purchase a shred ownership property for details of possible rent increases.

You will need to have a financial assessment with one of the financial advisors working with the scheme. However, you can use your own financial advisor to arrange the mortgage. You may find it faster and more cost effective to use a financial advisor familiar with the schemes. If you would prefer to arrange your mortgage online, Share to Buy have a team of mortgage experts that can assist you in doing so.

You can get help from another Help to Buy scheme called ‘Older People’s Shared Ownership’ if you’re aged 55 or over. It works in the same way as the general shared ownership scheme, but you can only buy up to 75% of your home. Once you own 75% you won’t have to pay rent on the remaining share. Your local Help to Buy agent can help you get more information about this scheme in your area.

As well as eligibility criteria, certain groups have priority – meaning if someone from that group were to apply for a shared ownership property and met the eligibility criteria they would be more likely than others to be offered the property. Generally, priority goes to serving military personnel.

The Local Authorities’ priorities may restrict shared ownership housing in their area to those living in certain boroughs, or within a certain income threshold. It is still worth registering your interest in properties where you would not be a priority, as often when members of priority groups can’t be found to purchase a shared ownership property the offer will be cascaded to other groups.

Service charges are payments by the homeowner to the housing association for the services they provide. These include maintenance and repairs to common parts, insurance of the building and, in some cases, provision of lifts, lighting, communal aerials, door entry systems, cleaning of common areas and grounds maintenance, etc. Usually the charges will also include the costs of management.

Service charges can vary from year to year; they can go up or down without any limit other than that they are reasonable. Details of what can and can’t be charged by the landlord and the proportion of the charge to be paid by the individual homeowner will all be set out in your lease.

The lease should set out how your service charge will be calculated. Often it is a percentage or proportion of the total costs of repair, maintenance, management and insurance of the building. The amount you pay will normally vary but a few leases provide for a fixed service charge.

The Service Charge can increase or decrease, this would normally happen at various intervals which would be outlined in the lease.

You should refer to the terms of the lease in order to establish whether the service charge is fixed or variable. If it is variable it can go up or down and so the landlord can increase the service charge provided it is reasonable.

Yes. This is called 'staircasing'. You should check with your housing provider as to the specific terms of staircasing arrangements for the home you intend to buy. Normally, you will be able to staircase as and when you can afford to in a minimum of 10% tranches.

You can staircase to the point that you own outright. The price of the additional share being bought when you staircase will be based on the value of your home at the time you want to staircase.

You should check with your housing provider as to the specific terms of staircasing arrangements for the home you intend to buy. Normally, you will be able to staircase as and when you can afford to in a minimum of 10% tranches. In most cases you will be able to staircase all the way to 100%, but you should check your lease before purchasing, as some agreements cap the share at which you can staircase to.

Usually once you have lived in your home for a certain period of time as the shared owner  (depending on the terms of your lease), you can buy further shares in your property. This process is known as staircasing, enabling you to own a greater proportion of your home.  If you bought a resale property you can buy further shares too (depending on the terms of your lease).

The greater the share you buy in your home the less rent you will pay to your Housing Association. If you staircase to 100% you become an outright owner, and pay no rent.

You may acquire additional shares in your property at a price equal to the relevant proportion of the current full open market value of the property. For example: if your property is valued at £200,000 and you want to buy an additional 25% share, the purchase price will be £200,000 x 25% = £50,000.

There are no restrictions in the majority of cases however we would recommend in the first instance that you refer to your lease. This may require assistance from your legal representative.

At Share to Buy, we can arrange a Shared Ownership remortgage for you, and have access to a wide range of Shared Ownership mortgage lenders. This also includes shared ownership remortgages with staircasing. 

If you are looking to staircase right up to 100% ownership, depending on your circumstances you should have a choice of products from the whole mortgage market, not just shared ownership providers.

Moreover, because we offer both shared ownership and outright purchase mortgages from the whole of the market, we are well placed to assist with shared ownership staircasing to full ownership. Just remember that if you are looking to staircase as part of your remortgage you will only be able to apply once you have had a valuation conducted on your property in conjunction with the housing association.

To purchase a shared ownership property you will need to have access to a sum of money to use as the deposit (traditionally between 5% and 10% of the share you are buying), and approximately £4,000 to cover solicitors fees and other associated costs that come with purchasing a property. You will then need to take out a mortgage from a bank or building society to pay for the rest of your share.

Share to buy have a team of mortgage experts who can assist you in finding a mortgage deal.

You ultimately have the choice as to whether you purchase a property or not – a property will not be allocated by the housing association or by a third party without your agreement. In most cases, you will view the property or a show home in advance of making your choice.

Housing associations and local authorities will have certain priorities as to who is eligible or preferred to purchase the shared ownership homes available, traditionally based on the borough the purchaser lives or works in, their household size, income bracket, current tenure status. Therefore, you may find that there are certain shared ownership properties for which you are not eligible.

Part buy part rent is sometimes used to describe shared ownership because the purchaser buys part (or a share) of the property and pays rent to a housing association for the share they don’t own. 

No. Shared ownership does not mean you share the ownership of the property, or have to live with another person. It means you own a share of the property and pay rent on the share you don’t own to a housing association. Buying a house with friends, a spouse or a partner is known as joint ownership.

You pay rent to the housing association that built the property. The amount you pay depends on the size of the share of the property you have purchased and, is generally at a lower rate than you would pay when renting privately.

Shared ownership is only available on properties that have been built for that scheme by a housing association using Government subsidy. Therefore, the option does not exist to make an offer on an outright sale property on a shared ownership basis.

Generally speaking, the minimum share is available to purchase in a new build shared ownership property is 25%, and the maximum share is 75%. However, this may vary depending on the housing association. Your income and savings will be assessed by an independent financial advisor to determine what size share is affordable for you. So, the minimum share available may be set to 30% by the housing association, but if it is affordable you could purchase a 40%/50% etc share.

With resale properties, however, the minimum share will be whatever the seller has purchased previously. So, if the seller had a 70% share in their shared ownership property, the minimum share you can purchase will be 70%.

No, if you can afford to purchase 100% of the property then you do not need shared ownership and you should look in the outright sale market. Most leases will allow you to staircase to 100% eventually, but you should check this is an option in the terms of the lease before purchasing.

This depends on the full market value of the property and the size of the share you are purchasing, your Lender and your credit rating. The benefit of shared ownership is that the deposit required will be significantly lower than if you were purchasing the property outright because you only need a deposit on the share you are purchasing. Generally, shared ownership deposits are between 5% and 10%, but you should check with the housing association selling the property.

There is no longer a restriction on the number of bedrooms within the property you wish to buy. Previously shared ownership purchasers were eligible to apply for properties with up to one extra bedroom than the household size required. Now, as long as you can afford it, you can apply for properties with as many bedrooms as you wish.

The exact figures for the rent are sent to you with the viewing details. It is usually set around 3% of the unsold equity.

For example:  if you wanted to buy a 50% share in a property worth £200,000 the equity you would pay rent on is £100,000. If you divide the unsold equity by 100 and multiply by 3 you will get the total rent payable per annum. Just divide this by 12 to get the monthly rent payable.

The amount of rent will vary for each home depending on:

  • The share you buy

  • The value of your property when you buy it

www.sharetobuy.com has hundreds of shared ownership properties, and on our FIRST STEPS portal we have all the shared ownership properties in London.

Your local Help to Buy Agent website will have all the shared ownership properties in your region. You can find you local Help to Buy Agent at http://www.helptobuy.org.uk/find-your-local-help-to-buy-agent/

Your local Help to Buy Agent website will have all the shared ownership properties in your region. You can find your local Help to Buy Agent at https://www.helptobuy.gov.uk/equity-loan/find-helptobuy-agent/

Each property listing on our site includes an option to register your interest. You can do this either by an online form or by contacting the housing association by telephone. You can see the housing association details and register your interest once you are logged in to your Share to Buy account. You can register with Share to Buy here: https://www.sharetobuy.com/register

Once you have enquired about a property the housing association will add your details to a leads database, and should make contact with you when they have more information about the property or to invite you to a viewing. If you have not heard anything from the housing association it may be because they are waiting until the property is ready for its sales launch, or it could be because you do not meet their eligibility criteria.

If you are finding that a housing association fails to get back to you despite you trying a number of times please let us know via our contact us page and we will contact them on your behalf.

Shared ownership is only available on properties that have been built for that scheme by a housing association using Government subsidy. Therefore, the option does not exist to make an offer on an outright sale property on a shared ownership basis.

Resales are shared ownership properties where the current owner is selling their share. Unless they are ‘fixed equity’ you purchase the share on offer and may purchase additional shares in the future until you own it outright, if you wish.

Share to Buy is an online property portal and mortgage brokers specialising in the affordable home ownership market. Our property portal includes the Mayor of London’s FIRST STEPS scheme, making our site the only place to find all of the shared ownership, resales and intermediate rental properties available in London.

Our team of mortgage experts can assist you in finding a mortgage deal for your property, whether that be for a new property purchase, a remortgage or staircasing.

YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE.

Share to Buy Ltd is authorised and regulated by the Financial Conduct Authority. FCA register number 306800. You can find more detail on our status in our Initial Disclosure Document [109k] and Terms of Business.

For further information, contact us or write to: Share to Buy, PO Box 11998, Sudbury CO10 3BS. Registered in England and Wales no: 04909788.