What is Shared Ownership?
Shared ownership is an alternative to renting and full ownership. It is particularly suitable for people with a regular income who want to buy their own home but cannot afford to do so outright.
With the cost-of-living crisis and hikes in inflation having a significant impact on borrowing rates, shared wwnership is often the ideal solution for many, at a time when buying on the open market is no longer a viable option.
With shared ownership you buy a share of your home and pay rent on the remainder. Shared ownership does not mean that you share your home with someone else.
Shared ownership is usually arranged through Registered Providers (RPs) like Housing Solutions. They are non-profit making organisations that provide good quality affordable homes for rent and shared ownership.
The total monthly costs of the rent and mortgage should be lower than the cost of a mortgage needed to buy 100% of the same home. This is because shared ownership is often supported by government money which reduces the level of rent to be charged.
Who can apply?
Shared ownership is designed to help people who are struggling to buy a property outright get onto the housing ladder. Which means there are some restrictions on who can buy. You can take advantage of shared ownership if you are:
- unable to afford to buy a home outright on the open market;
- have a household income of less than £80,000;
- Meet the relevant local authority eligibility criteria;
- have sufficient savings to meet the one-off costs of buying a shared ownership home, and access to capital or a mortgage to fund your share of the purchase;
- be first time buyers, although some applicants who own or have previously owned a home may be eligible. This includes people who have lost a home through a relationship breakdown and shared owners whose family has grown and they need a larger home but who are still unable to afford to buy outright.
- In some areas you will also need to register with your local authority and we will need a nomination from them before we can sell you a shared ownership property.
Priority is given to:
- Existing social tenants and serving military personnel;
- Those that will address housing problems in local and regional housing markets as defined by the local authority;
- Other first time buyers.
How much do I have to earn?
A minimum income level will be required for each home we sell. This will vary depending on the size of the home and the location. However, if you can afford to buy the property outright you will not qualify for shared ownership. All applicants are assessed by an Independent Financial Advisor, approved by the HCA, who will calculate how much you can afford to spend on buying a home without struggling to make ends meet.
I have a poor credit rating—am I still eligible?
Housing Solutions cannot accept your application if you have had arrears of rent in the past six months or if you have outstanding County Court Judgments against you or other outstanding credit issues, such as unsatisfied defaults. Please telephone us to discuss this issue.
What sort of initial costs should I expect to budget?
You will need to have sufficient funds for a deposit and also to pay the legal costs of purchasing the home. As a guideline, we envisage typical costs to be in the region of £3,500. This would cover:
- Reservations fee – We charge a £500 reservation fee, this goes towards the purchase price of the share of the property you are buying.
- Mortgage arrangement fee – Some lenders will charge you an administration fee and the cost may vary from lender to lender.
- Valuation fee – Lenders require a Valuation fee. Your lender will arrange this for you. The cost may vary from lender to lender and is also based on the purchase price of the property.
- Legal fees and stamp duty – You will need to instruct a solicitor to act on your behalf. The solicitor will give you an estimate of the legal fees you will have to pay including their own fee, stamp duty, land registry fees and other associated costs.
Buying a Shared Ownership Property with us
Shared ownership is the ideal step onto the property ladder. It is designed for people who cannot afford to buy a property outright on the open market.
The shared ownership scheme allows purchasers to buy a share of a property and then rent the remainder from us at an affordable rate. The initial share purchased is normally between 35% and 75% of the property value.
Shared Ownership allows you to buy in stages. After 12 months you can increase the share you own, this is called staircasing, or you can stay with your original share. It’s your choice!
For more information please contact firstname.lastname@example.org