Shared Ownership Properties

by evolvedlegal on June 14, 2012

  • Sumo

Shared ownership properties are a way of getting onto the property ladder with a lower budget. Shared ownership is cheaper than conventional methods of property ownership because it allows buyers to part own and part rent their home. In a shared ownership property, buyers will usually purchase around 25%, 50% or 75% of their home and then pay rent on the remainder, which is set at an affordable rate. Obviously the bigger the share that is purchased, the less rent the owners will have to pay.

The share that is not bought by the owners is usually owned by a housing association (non-profit organisations that manage homes for rent and sale to those in need of housing and cannot afford to buy or rent). Once the owners are able to gather more funds they can then buy more shares in the property until they own the entire property. Shared ownership can be entered into by more than one individual and a housing association or by a single individual and the housing association. These schemes are complex and it is always worth getting advice from experienced conveyancing solicitors.

Who Can Buy Shared Ownership Properties

Shared ownership properties are intended for those who otherwise could not afford to buy a home. Each shared ownership scheme has its own criteria, for example, some schemes require the purchasers to be “first time buyers” and otherwise require the purchasers to be living within that borough. Priority will firstly be given to existing social tenants, followed by military personnel and then in accordance with local priorities as set by each local authority. A useful introductory guide can be found here.

Buying Shared Ownership Properties

Shared ownership properties either come onto the market following new developments or because of owners that wish to move. When shared ownership properties do come onto the market, they will usually be advertised by housing associations or by estate agents as resale properties. If you would like to apply for a new development you should contact your local authority or your local housing association.

Ownership Rules

Although buyers may not own the entire property, they still have the normal rights and responsibilities of regular owner-occupiers. Shared ownership properties are occupied under a lease between the owner and the housing association and lease will set out the rights and the responsibilities. This is likely to include a responsibility towards the costs of repair and maintenance to the home through a service charge. Before entering into a shared ownership scheme you should make sure you are aware of how much service charge and how much rent you will be paying to make sure you can afford it. If there are any terms of your shared ownership property that you do not understand then you should seek legal advice.

Shared Ownership for the Elderly

Those aged 55 or over can get help from the government’s “HomeBuy” scheme, which works in the same was as shared ownership, except that they can only purchase up to 75% of the home. Once they own 75%, they do not pay rent on the remaining 25%.

Alternatives to Shared Ownership

There are alternatives to shared ownership, such as equity loan schemes from the government, which allow the buyer to obtain a loan that has no fees for the first five years. The purpose of an equity loan scheme is to help buyers raise the money for a deposit. With equity loan schemes such as “FirstBuy”, purchasers own the entire property, but take a loan from the government and the developer to make up 20% of the deposit and contribute 5% themselves. The remaining 75% is then paid for via a mortgage in the usual way.



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