A Guide To Shared Ownership

Shared ownership makes home ownership more affordable. You buy a 'share' of your home and pay rent on the remainder. It is particularly suitable for people with a regular income who wish to buy their own home but cannot afford to do so through conventional methods. Find out how shared ownership works and if you qualify.

Who is eligible for shared ownership property?

The scheme is intended for people who cannot afford to buy a suitable home in any other way. It is provided through "HomeBuy agents", who will decide if you can buy a home this way. HomeBuy agents are housing associations that have been authorised to run schemes for people who have difficulty buying a home.

You can only buy a home through shared ownership if:

your household earns £60,000 a year or less,
you can't otherwise afford to buy a home in your area.

A household is the number of people who are buying the home. For example, a household might be you alone or you and your partner.

Shared ownership is open to:

people who rent council or housing association properties
first-time buyers (you are a first time buyer if you haven't owned a home before)

You can also get help through shared ownership if you used to own a home, but can't afford to buy one now.

How does it work?

You might buy 25%, 50% or 75% share in your home. You will need to obtain a mortgage to fund the share that you own. You pay a rent on the share that you don't buy - usually up to 3 percent of the share's value. The bigger the share that you purchase, the less rent you have to pay. The other share is usually owned by a housing association. Your income will need to be high enough that you can reasonably afford the rent and mortgage payments but low enough that you do need assistance.

Shared properties are always leasehold. This means that you own them for a fixed period of time, usually 99 years.

When you buy your home, you become the owner of the lease. The housing association will grant you a lease for the fixed period. Although you do not buy outright, shared ownership means that you will have sole right of occupancy. You have the normal rights and responsibilities of a full owner-occupier as set out in your lease.

Gradually you may buy further shares in the property, known as staircasing, and eventually own your home outright. If you wish to purchase additional shares you'll need to serve notice on the housing association who will than have the property valued. The price you pay will be the percentage of the market value as per the valuation which relates to the percentage you are purchasing.

How to apply

If you are interested in buying a home though shared ownership, you will need to get in touch with the HomeBuy agent in the region that you wish to live. Each HomeBuy agent will have an online application form which you will need to submit for approval.

How do I sell my shared ownership property?

Sometimes you'll want to sell the shared ownership property. You can sell the house at any time, but you must tell the housing association in writing. There are two ways that you can do this. Firstly you can just sell the share that you own or secondly you can staircase to 100% simultaneously with the sale. With the second option the buyers will not need to be approved as when completion takes place it will no longer be shared ownership.

By: Turtle Homes

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This article was written by Richard Tuck of Online Estate Agent Turtle Homes. Experience a new way to buy a house online and find a property online in the UK. Visit our online estate agency website.