What is Shared Ownership?

Written by Fatiha Butt on behalf of Saracens Solicitors- saracenssolicitors.co.uk/

Home ownership may seem a mere dream for fledgling property owners. However, despite general frustration about hefty deposits and unavailable mortgages, wannabe property owners are wising up to the stepping stone route to property heaven; shared ownership.

The way shared ownership works is quite straight forward – you buy as much of a property as you can afford and pay a subsidised rent on the rest to the housing association that you buy from. You only need a deposit and a mortgage for the share you are purchasing. You can purchase between 25-75% of a shared ownership property. As time goes by, you can increase your percentage ownership by purchasing more shares in the property which is commonly referred to as ‘staircasing’.

There are approximately 170,000 people currently in the process of applying for shared ownership property, many of whom are first time buyers but not exclusively. Shared ownership is attractive to young and old, from manual labourers to doctors, and developments can be found in diverse locations across the UK. Many shared ownership properties are newly built or only a few years old, and benefit from contemporary design, lay-out, and green credentials.

Am I eligible?
Shared ownership is generally only accessible to applicants whose collective household income is less than £60,000.00 a year, and for leasehold properties only.

There is a related scheme called ‘Older People’s Shared Ownership’ eligible to people over the age of 55, where up to 75% of a shared ownership property can be purchased,  after which point rent is no longer payable on the remaining 25%.

Buyers can often save around a quarter of their usual housing costs through buying shared ownership property. For example, you can budget more tightly by deferring payment of any stamp duty land tax (SDLT). You don’t have to pay SDLT if the share you are purchasing falls below the minimum SDLT payment threshold which currently stands at £125,000.00.  As and when you increase your shares, you can make a one-off payment based on the total market value of the property or pay any SDLT due in stages.

Fantastic! What’s the catch?
Rent and service charges are still payable to the housing association, which can increase over time. Shared ownership mortgages can be more expensive and you will need your lender’s consent to staircase.

Shared ownership properties cannot be sub-let unless the housing association consents, however refusal is usually only with good reason.

Some housing associations will require you to offer to sell the shared ownership property back to them first for the first 21 years of your outright ownership before you sell it to anyone else. Any alternative purchaser must satisfy the shared ownership criteria before you sell on.

Shared ownership presents property buyers with an opportunity to purchase a home that they could not otherwise afford.

For legal help with fulfilling all types of home ownership dreams, contact Saracens Solicitors residential conveyancing department at saracenssolicitors.co.uk/ or on 020 3588 3500.

 

SARACENS SOLICITORS – saracenssolicitors.co.uk/