Learn more about Shared Ownership Schemes
The government’s shared ownership scheme is in place for those who want to buy a property of their own, but just can’t afford to. In these schemes, people are offered the chance to buy a share of their home, paying rent on the share that is leftover.
Shared ownership is offered anywhere between the values of 25-75% of the overall property value; once you have calculated just how much you can afford to pay, the housing association will pay for the remainder of the share. You will then be required to pay rent on this remaining share, which can be up to 3% of the value of this share.
The properties that are used for these schemes are ‘leasehold’, which, put simply, means you will only own them for a fixed period of time (this is currently around 99 years). Upon buying the house you will become the owner of this lease; with you being granted it for a fixed time period by the housing association, who will also dictate your responsibility and rights in relation to the property, along with the landlords.
Costs involved in Shared Ownership Schemes?
Let’s say your property cost, £100,000 and you own 50% of the shares, so £50,000 worth; which is equal to that of the housing associations share. Your mortgage repayments per month would then be calculated at £322 (based on a 6% interest over a period of 25 years). Your rent of 3% of the remaining £50,000 would then equate to a monthly cost of £125 (£1,500 a year). This leaves you with a total monthly payment of £447.
Please note: if you are living in a flat you may also be subject to a service charge.
What responsibilities and rights do I have?
As you are the owner of the property you can expect to have all of the responsibilities you would normally associate with owning a house. For example, if something needs repairing in the property, this will be up to you to fix; the housing association will be responsible for the outside, which would include the roof if you owned a flat. These costs are covered by a monthly service charge that you will pay to the housing association.
Can I buy more of my home?
Yes, you can. In what is known as ‘staircasing’ you can continue to buy more shares in the property until you own all of it.
You will be able to buy increasing shares in the property as soon as you have become owner of the property. In order to do this you will have to notify the housing association in writing, indicating just how much more in shares you wish to own.
The cost of the shares that you wish to buy will depend entirely upon the value of your home at the time you wish to purchase these shares. So, if house prices have fallen, you can expect to pay a lower share than you initially did, and vice versa.
Can I sell my Shared Ownership property?
As above, you can sell your home whenever you wish, as long as you notify the housing association in writing. The housing association will then have to find a buyer for your home – if you only own shares in it. If you have been able to purchase your home in its entirety, owning 100% of it, then the house is yours to sell. You will still need to notify the housing association as they have the right to buy this property back, and this right will remain for 21 years after you have taken full responsibility of the shares in the home.
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