Your Shared Ownership Guide
What is Shared Ownership?
Looking to get on the property ladder but can’t afford a hefty deposit or 100% of the mortgage? There is another way to own a home that relieves some of that financial pressure. Shared Ownership, also known as ‘part buy, part rent’, is a government-backed scheme that allows you to buy a share of your new home while paying the rent on the remaining share.
Shared Ownership homes in West London
Why is the Shared Ownership scheme a great idea?
Firstly, there are less upfront costs than traditional house purchasing, and Shared Ownership mortgages are more accessible to those with less expendable incomes. But apart from being a lot more affordable, the scheme also offers you security of tenure; you can live in your Shared Ownership property for the duration of the lease. Plus, your monthly payments are in most cases cheaper than if you had a mortgage or rented privately.
You can also up your share – sometimes buy outright – and yet you're not tied in either; you can sell at any time.
All in all, it’s an attractive option for those struggling to get on the property ladder, especially now that the popular Help to Buy scheme has come to an end.
Is Shared Ownership better than renting?
There are pros and cons to both Shared Ownership and renting. After buying a home with Shared Ownership you will be paying towards the ownership of your own home and landlords won’t be in control of rent increases and repairs. The rent you pay to the Housing Association can only increase inline with the Retail Price Index, it is not influenced by the rental market or the whims of a private landlord.
As you own the home, you can also decorate it however you choose, without needing to get permission from your landlord.
All FABRICA Shared Ownership homes are brand-new - meaning they will be built with modern fixtures and fittings, including integrated appliances and flooring throughout, so there will be no need for renovations. New-build homes are also more energy-efficient than standard homes.
In addition, with rent costs on the rise it’s often the case that monthly costs are lower with Shared Ownership than renting.
How are Shared Ownership payments calculated?
Instead of the typical 10-20% deposit required to buy a home on the open market, Shared Ownership mortgages allow you to put down as little as 5% of the share value, hugely reducing your upfront costs.
As for your share of the property, you’re required to buy between 25-75%, and you pay rent on the rest.
Am I eligible for Shared Ownership?
If you're a first time buyer, or have previously owned a home but currently are not a home-owner, or if you're an existing shared ownership homeowner looking to move house – and your household income is less than 80k (90k in London) – then the answer is yes!
It’s worth noting though that for the Shared Ownership scheme, priority is often given to those living and working in the borough, but this can vary depending on the development.
How do I find a Shared Ownership home?
Shared Ownership homes are available through housing associations. They could be newly-built homes or existing homes. All Shared Ownership properties are leasehold, though usually with the option to extend. To apply, you need to get in touch with your local Help to Buy agent – check out www.helptobuy.gov.uk.
Here at FABRICA, we have a range of Shared Ownership properties in London and the South-East. Click here to search for homes near you.
What is staircasing in Shared Ownership?
If, later down the line, you decide you want to increase your share of your home, you can do just that, though the cost of your increased share will depend on the current market value. For example, if your home has increased in value since you bought your original share, the new share price will be higher, but if it has dropped in value, it will be lower. Upping your share is called ‘staircasing’, and you can do it more than once. Of course, buying additional shares of your property means you’ll be paying less rent, and in many cases, you can ‘staircase’ up to 100% of the shares, which would mean you own the property outright and no longer have to pay rent.
How do you sell a Shared Ownership home?
Some more good news: you can sell your shared property at any time, just bear in mind that the housing association has a brief window to find a buyer before you put it on the market. Typically this period, known as the ‘nomination period’, will last between one or two months.
It's also worth pointing out that you have to pay for the valuation of the property, but once you sell, the amount you and the housing association receive depends on the amount your property ends up selling for.
FAQs
- Can I decorate a Shared Ownership property?
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Yes – you are free to decorate the property however you like. However, if you’re planning on larger changes like structural changes you should check the lease to see what is possible.
- Do you pay rent on a Shared Ownership property?
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Yes, you pay rent to the Housing Association on the share of the property you don’t own. This amount varies between developments but is often a percentage of the value of the share you don’t own.
- Who is responsible for repairs in Shared Ownership properties?
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For repairs needed within the home itself, you would be responsible just as you would when purchasing a property without Shared Ownership. However, as all FABRICA Shared Ownership homes are new-build, they are covered by an initial developer warranty for any defects (normally 2 years) and a construction warranty (normally 12 years). In addition, as all of your appliances are brand new they will be covered by manufacturer warrantees which you can extend if you choose.
- What bills do you pay with Shared Ownership?
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In addition to the rent paid to the Housing Association on the share you don’t own, you will also need to pay for normal utility bills such as electricity, water, gas (if applicable) and internet. You may also need to pay a service charge for the upkeep of the building or development, this will vary depending on the development.
- Do you have to pay stamp duty on Shared Ownership?
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Yes, but only if the percentage share you are purchasing is above the government thresholds. You do not need to pay stamp duty on the full value of the property. Currently the threshold for first-time buyers is £425,000 and for all other purchasers it is £250,000.
- Can you get a Shared Ownership property on universal credit?
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So long as you are able to obtain a Shared Ownership mortgage for the required amount then you can purchase with Shared Ownership.
- Do you need a mortgage to buy a Shared Ownership property?
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As Shared Ownership is designed to help people purchase homes who might not be able to otherwise, most people buying through Shared Ownership will need a mortgage. However, if you have enough money to purchase the share without a mortgage, for example from an inheritance, then so long you are still able to afford the monthly costs such as rent then you should still be able to purchase. Depending on the development, this decision may need to come from the local council rather than the housing association, so it may vary between developments.
- Is Shared Ownership good for first-time buyers?
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Shared Ownership is primarily designed for first-time buyers. As you are only purchasing a percentage of the property with from 5% deposit, the upfront costs are much lower than purchasing a traditional property. In addition, with rent costs on the your monthly payments can often be cheaper with Shared Ownership than renting privately. Finally, as all FABRICA Shared Ownership homes are new build, you don’t need to worry about pricey renovations, appliances or unexpected surpises like you might with a second-hand home.
- Can the housing association increase my rent?
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The amount of rent you pay can only rise inline with the Retail Price Index.
Our Shared Ownership Schemes
