What is shared ownership?
Shared ownership means buying a share of your home (between 25% and 75% of the home’s total value) and paying rent on the remaining share. It’s designed for people who would otherwise be unable to buy their own home.
Shared ownership or shared equity schemes are generally run by housing associations (HA) and/or registered social landlords (RSL). You will need to take out a mortgage in order to pay for your share of the home’s purchase price.
Shared ownership is becoming the most realistic option for many people who are struggling to afford to buy their own home, usually because of high property prices and mortgage lending limits. There are currently a variety of schemes already in existence, and more may well be established. All schemes have common features, such as the buyer paying a reduced percentage share of the property. For example, if the property is valued at £100,000, the buyer may purchase a 40% share for £40,000. The remaining percentage is retained by the HA or RSL and the buyer will pay an annual rent on that share.
The majority of schemes have terms allowing the buyer to pay for further percentage shares as their circumstances change, with the ultimate goal of eventually buying the entirety of the property. However, all of these schemes have quite complicated terms and conditions and there are only a handful of mortgage lenders who will lend money as a part of shared ownership. Each lender will therefore have their own specific requirements for these schemes, meaning it is vital that you seek advice from a solicitor who is experienced in this area. Through our many years of dealing with these schemes, the team at Stephensons can offer expert shared ownership legal advice to help you navigate what can be a complex process.
Is shared ownership a good idea for everyone?
Shared ownership might not be the right solution for everyone, in order to get onto the property ladder. Your suitability for a shared ownership scheme will depend on your specific circumstances and financial situation.
Benefits include a smaller mortgage and deposit being required, but it needs to be taken into account that as well as rent being due on the share percentage that you don’t own, annual ground rent may also be due and you might be restricted with any changes you want to make to the property.
How do I know if I am eligible for shared ownership?
Not everyone will be eligible for shared ownership or shared equity schemes – there are a few factors to keep in mind. For example:
If your household earns £60,000 a year or less, OR £71,000 a year or less in London for a 1 or 2 bedroom property, OR £85,000 a year or less in London for a 3 or more bedroom property, you may be eligible for shared ownership.
If you are a first-time buyer, or you used to own a home but can no longer afford to buy one, you may be eligible for shared ownership.
If you are currently renting a council or housing association property, you may be eligible for shared ownership.
If you are aged 55 or over, you can get help from another home ownership scheme called “Older People’s Shared Ownership”. It works the same way as the general shared ownership scheme, however you are only entitled to buy up to 75% of your home. When you own 75%, you will no longer have to pay rent on the remaining share.
If you have a long-term disability, you may be able to buy a home that is for sale on a shared ownership basis through “Home Ownership for People with Long-Term Disabilities”, also known as HOLD. You are only able to apply for HOLD if the properties available in alternative Help to Buy schemes do not suffice; for example, if you require a ground floor property in regards to your disability.
How to apply for shared ownership?
If you want to apply for a shared ownership property, the first thing to do is check whether there are any schemes running the area in which you want to buy a property, by contacting your local Help to Buy agent.
How does shared ownership work when you sell?
If you want to sell your shared ownership property, there are additional steps that you need to go through, when compared to a standard property sale. Your housing provider should be approached first as they may already have a buyer waiting through a similar scheme.
You will need to pay for a valuation of the properly, get an EPC certificate and agree a contract of sale with your housing provider. If your housing provider is unable to find a buyer through their scheme after an agreed period of time, you can advertise the property privately or through an estate agent. However, the buyer will need to meet the criteria set out by your housing provider to purchase using a shared ownership scheme themselves. You will need a solicitor to help you through the selling process and ensure that exchange and completion go ahead as required.
How long does shared ownership conveyancing take?
The length of the process for buying a shared ownership property can vary, depending on whether it is a new build or an older home. In most cases for a new build home, conveyancing can be done within a few weeks.
However, some shared ownership properties might have more complex circumstances, which can mean that conveyancing takes longer than usual and can be more costly, as more work is required by your solicitor to ensure the sale goes through.
How much do solicitors cost for shared ownership property purchases?
Solicitor conveyancing costs can vary somewhat for shared ownership property purchases, as they can be quite complex in some cases. Your solicitor will be able to provide an estimate of costs when you instruct them.
Shared ownership can be a fantastic way to get on the property ladder. Buying a property may seem like a distant goal to many people, but with schemes in place such as shared ownership and shared equity, you may be able to purchase a home sooner than you think. It’s important that you are equipped with all of the knowledge you need to help you through the process of using this type of scheme. With a proven track record of conveyancing for shared ownership properties, Stephensons are here to help. The cost of shared ownership solicitors’ fees will depend on the individual circumstances involved but we endeavour to offer great value for money conveyancing services for every client.
If you would like further information on shared ownership, please contact our specialist conveyancing team on 0161 696 6187 for a free, no obligation initial chat with one of our legal advisors or to get a shared ownership conveyancing quote. Alternatively, you can request more information via our online enquiry form.