How do Shared Ownership Schemes help?
First time buyers who cannot afford a large deposit and who are unable to afford to purchase a new home outright may be eligible for a shared ownership scheme. This scheme enables buyers to own a share in their new home and pay a subsidised rent on the remaining share of the property that they don't own.
Who is eligible?
What are shared ownership schemes?
Shared ownership schemes are a part-rent, part-buy scheme that helps buyers get on the property ladder to buy affordable homes.
This scheme is provided by housing associations and some local councils. A percentage of the property value is bought by the householder depending on what they can afford, and the remainder of the balance is payable by the householder through a subsidised rent.
How does the scheme work?
You will need to put down a 10% deposit on the share amount you buy. You can own between 25% and 75% of your home and the remaining share in the property is owned by the housing association. You will pay a subsidised rent to the housing association on the remaining share of the property that you do not own. You will be able to buy a greater share in your property until you own the property outright which is referred to as `staircasing'.
When you want to sell the property you will need to notify the housing association in writing. If you own a share in the property then they will need to find a buyer for the property. If you own the property outright you can go ahead and sell it and the housing association has the right of first refusal.
Example of how a shared ownership scheme works
|Cost||Share of home|
|Total property purchase price||£180,000||100%|
|Your equity share in property||£90,000||50%|
|Housing association equity share||£90,000||50%|
|Costs per month in mortgage payments and rent|
|Mortgage payments at 6% interest only over 25 years||£405.00|
|Rent at 3% of £90,000||£225.00|
|Total Monthly payment||£630.00|
What homes are available?
Many shared ownership house builders are featured on What House? and you can search hundreds of affordable homes in the UK available from leading house builders.
What to consider
Shared ownership properties are leasehold properties with leases that are fixed for a certain period of years, for instance 99 years. When you buy your home, you become the owner of the lease which is granted by the housing association for the fixed period.
There may be additional ground rent and/or service charges that will need to be paid by you. You will be responsible for internal repairs to the property.
How to apply
Search the affordable homes that are available under this scheme and contact the house builder directly.
You will need to apply for an equity loan through your local HomeBuy agent. HomeBuy agents are housing associations who can assist people in buying homes. You can contact the HomeBuy agent who is in the area where you want to buy a property who will deal with your application.