What Is Shared Ownership?
Shared Ownership Schemes allow buyers who meet the eligibility criteria to secure a mortgage to buy a stake (usually between 25% and 75%) in a property, while paying rent on the remaining share.
Some points to note are:
· the rent you pay on the remaining share is charged at a discounted rate.
· properties are usually leasehold and you also have to pay a monthly service charge.
· you can buy more of the home by staircasing (increasing your share) in minimum of 10% increments which in turn reduces your rent.
There are, however, some downsides of Shared Ownership - which are:
1. Be prepared for maintenance charges and the possibility of increases in the future, as the building gets older and more maintenance is required.
2. No sub-letting is allowed.
3. Buying increased shares can be expensive – it is not just the buying, as other costs include valuation fees, legal expenses and Stamp Duty.
4. Restrictions on what you can do – check these in the lease. You are likely to be required to ask the Housing Association’s permission in writing before making any alterations to your home.
5. Issues around selling your share when moving. When you are ready to sell your home, the process is not straightforward and can slow up progress. Firstly, the Housing Association is likely to have the right to buy back the property before it is marketed, but if they fail to find a buyer you can market your share of the property. But you’ll need to find a buyer who fulfils the Housing Association’s eligibility for shared ownership.
T: 01473 849949
Linda is a Solicitor and has worked in Residential Property for almost 20 years.