With ever-increasing property prices, many people cannot afford to buy a property via the traditional methods and are finding it a struggle to get onto the property ladder. If this applies to you, we can provide you with an opportunity to purchase a new home through Shared Ownership. Shared Ownership is a more affordable way to get onto the property ladder and start your homeownership dream.
Shared Ownership is a popular part-buy, part rent scheme for people who can’t quite afford to buy a home with a commercially available mortgage. You buy a percentage of your home and pay rent on the rest, based on your affordability. You can then increase your stake in the property by buying more shares – this is called ‘staircasing’.
It’s backed by the government and is a way to buy a share in a home now with the option to buy more of it in the future.
You’ll need a minimum level of income and savings depending on the value of the home you want to buy, based on share value. Depending on which lender you use, the deposit can be as little as 5% of the share value.
Who is eligible for Shared Ownership?
Shared Ownership is an option for lots of people. You can apply for Shared Ownership if you meet the following criteria:
• Can’t afford to buy a suitable home on the open market.
• Your household income is £80,000 a year or less.
• Are assessed as being able to afford and sustain shared ownership.
• If you own a home currently, either outright or through shared ownership, then you will need to sell your existing property before, or at the same time, as buying a shared ownership home.
• You should have savings or be able to put down at least a 5% deposit on the share of the property you’re buying.
How much will it cost at the start?
You will need to be able to pay the cost of the mortgage valuation or survey and legal fees. The minimum amount of savings you will need, will depend on the scheme you want to buy into. You will also need to budget for the cost of moving home, for example hiring a van or a removals company. In most cases, buying a home also involves paying a deposit.
What are the monthly costs?
Every month you will need to make the following payments:
• Your rent (on the part of the property you don’t own)
• Your mortgage repayment to your mortgage lender
• A service charge and management fee for services you receive
• Buildings insurance
Can I buy more shares in my property?
Yes, you can buy more shares in your home or buy outright whenever you can afford to. This process is called ‘staircasing’. The amount you pay for additional shares will be based on the value of your home at the time you staircase. When you buy more shares your rent will reduce, and if you buy outright you will no longer be required to pay rent.
So, what are these recent changes to Shared Ownership I’ve heard about?
• Lower minimum shares: The minimum share a buyer can purchase of a Shared Ownership home is 25%, however, the government’s new model for the scheme will see this lowered to 10%. Meaning that the deposit needed is much lower.
• Buying additional shares: As it currently stands, owners can choose to buy additional shares in their Shared Ownership home– via a process known as ‘staircasing’ – in chunks of 10% or more. However, the new format will give Shared Owners more flexibility and allow them to staircase in 1% increments.
• Home repairs and maintenance: The revamped Shared Ownership scheme will introduce a 10-year period for new Shared Owners whereby the landlord or housing association will cover the cost of certain specified repairs and maintenance in the home. Shared Owners will be able to claim up £500 in repair costs per year, with any repair and maintenance costs in excess of this being the responsibility of the owner.
• Introduction of longer leases: On Friday 28th May 2021, Homes England published new model leases that apply to Shared Ownership. The new model will see the leases on new build homes increased from 99 to 990 years, helping leaseholders to save on the extra cost of extending their leases.
To apply
• Complete an application online with Help to Buy. It’s Help to Buy Agent 1 for the North.
• Enter the Development name into the “property search” box and the properties will appear. Then click “apply online”, follow the instructions and apply for the property.
Chris Forrester AssocRICS Property Sales & Marketing Manager Willo Homes, part of Salix Homes
