Getting on to the property ladder is not always an affordable affair and the Government does have schemes to help buyers who could ordinarily not afford to buy a house, make that step towards being a homeowner. One such scheme is the shared ownership and we will cover this in more detail in this article.
Under this scheme, you purchase a portion of the property from 10% to 75% and a Landlord will purchase the remaining portion and charge you rent on that portion and also a monthly ground rent and service charges. All shared ownership properties are leasehold.
There is a set of criteria that you will need to meet in order to be eligible for Shared Ownership:
- You must be at least 18 years old
- The total household income cannot exceed £80,000 (£90,000 in London)
- You must not own another property at the time the sale goes through
- You must be able to demonstrate that you cannot afford to buy a suitable property without assistance
- You must be able to afford the re-payments on the mortgage and the rent and service charges
Eligible properties under this scheme are:
- a new-build home
- an existing home through a shared ownership resale scheme
- a home that meets your specific needs, if you have a long-term disability – for example, a ground floor flat
Increasing Your Share
You can buy more shares in your property, this is called staircasing. The specific details of when you can start buying more shares and any restrictions on how much extra you can buy will be detailed in your lease agreement and it makes sense to make sure you understand any restrictions before signing the lease.
If you do want to staircase, however, you will need to inform your landlord and get in an independent surveyor to get a market value for your home. Once you have this you can arrange to buy a further percentage, according to any restrictions in your lease at that market value.
Selling a Shared Ownership Property
You can sell the shared ownership property at any time but, unless you own 100%, you must inform your landlord who will then typically have a set period of time to find a buyer themselves. If the landlord is not able to find a buyer, you can sell your property yourself. It is important to remember that, if you haven’t staircased to 100% you will have to sell the property on a shared ownership basis and the prospective owner will have to meet all the eligibility criteria for the shared ownership scheme to be able to buy your property.
Buying a home for the first time can be very expensive and potentially unaffordable, but with the shared ownership scheme taking that step is made much easier. There are pros and cons to this scheme and we advise you to take professional advice before deciding whether to sign up to the shared ownership scheme.