With house prices at an all-time high and rental prices increasing at a staggering rate, now more than ever is the time to take a closer look and really consider all your house buying options. Have you thought about shared ownership? Shared ownership is a flexible scheme that makes owning your own home more affordable.
What is Shared Ownership?
Shared Ownership is a fantastic opportunity if you're unable to purchase a home on the open market. It allows you to buy a share in a property on a part buy/part rent basis and pay a subsidised rent on the part that you don't own. So how does that work?
- Buy the first share in your new home - Buy your initial share in your home, starting with the amount that is affordable to you. Typically shares are between 25% or as much as 75% of your home. You will need to be able to raise a mortgage for the share you want to purchase unless you have sufficient money to enable you to purchase without a mortgage. Any deposit you pay will be smaller than if buying outright as you will be purchasing a share of your home.
- Pay rent on the remaining share - The remaining share that you don't own, is owned by us Space Homes. You will pay a subsidised amount of rent on this share of the property. The bigger the share you buy, the less rent you have to pay.
- Buy more shares in your home later - As your financial circumstances change over time, or your savings increase, you can buy a larger share in your home, until eventually you own all or more of your home.
Who is eligible for Shared Ownership?
It’s a common misconception that shared ownership properties are only available on new build properties and to first-time buyers. This isn’t the case! So, let’s see who can benefit from shared ownership.
You can buy a home through shared ownership if both of the following are true:
- your household income is £80,000 a year or less (£90,000 a year or less in London)
- you cannot afford all of the deposit and mortgage payments for a home that meets your needs
One of the following must also be true:
- you’re a first-time buyer
- you used to own a home but cannot afford to buy one now
- you’re forming a new household - for example, after a relationship breakdown
- you’re an existing shared owner, and you want to move
- you own a home and want to move but cannot afford a new home that meets your needs
That’s not all - if you already own your own home, you can still qualify for shared ownership!
If you own a home, when you buy a shared ownership home, you must have:
- formally accepted an offer for the sale of your current home (called ‘sold subject to contract’ or ‘STC’)
- written confirmation of the sale agreed (called a ‘memorandum of sale’) including the price and your intention to sell
You must have completed the sale of your home on or before the date you complete buying your shared ownership home.
How to apply
There are 4 steps to apply for a shared ownership home.
- Check if you can buy a home through shared ownership – see eligibility criteria above
- Find a home you want to buy - If you’re eligible, in order to proceed with shared ownership, you must register with your local Help to Buy agent to start the process of purchasing your new home. They will check and ensure you’re eligible, send you information about any homes for sale, arrange viewings and check you can afford the home.
- Reserve your home - If you’re eligible to buy the home, you can pay a fee (of up to £500) to the landlord to reserve it. When you pay the fee, no one else will be able to reserve the home for a fixed period. The landlord will tell you how long the fee secures the home for. The fee will be taken off the final amount you pay on the day you buy the home (‘completion day’). If you do not buy the home, you will usually not get a refund for the fee. Check with the landlord before you reserve it.
- Choose someone to do the legal work (‘conveyancing’) - You’ll need to find a legal professional to handle the process of transferring ownership from the property seller to you (called conveyancing). You can use a solicitor or a licensed conveyancer. They’ll also explain the terms of the shared ownership lease to you and check the conditions of your mortgage offer, if you have one.
So, if this sounds like a perfect fit for you
get in touch with our friendly team for more information on our Shared Ownership Scheme and see what stunning properties we have available. And to learn more about Shared Ownership, explore
part two of our mini series right here.