What is Shared Ownership?
Shared Ownership is a successful government scheme which enables you to buy a share of a new build property and pay rent on the remaining share that you do not own.
So if a property is worth £200,000 and you’ve purchased a 50% share in the property, the total rent payable would apply to the remaining £100,000.
You need to purchase the maximum share that you can afford which is usually a share between 25% - 75% of the property at full market value. The combined monthly cost of your rent and your mortgage should be less than buying the property outright.
Is Shared Ownership only for young people?
There are no age restrictions to this scheme. First time buyers qualify for the Shared Ownership scheme on the basis that:
- The total value of the property does not exceed £600,000.
- The household income is £80,000 or less outside of London.
- Tthe mortgage available to the buyer is less than the amount needed to purchase the property outright.
Existing homeowners are not eligible for Shared Ownership, unless they have sold their present home.
Freehold or Leasehold?
Shared Ownership properties are always leasehold. This means that you will hold a lease over the property for a number of years. A typical lease term for a Shared Ownership property is 99 years or 125 years.
Can I increase my share to 100%?
Usually, after a year or two of ownership, you will be allowed to purchase additional shares until you own 100% of your home. This is called ‘staircasing’.
What will I have to pay?
This is usually 5% - 10% of the purchase price.
We advise our clients interested in purchasing a Shared Ownership property to contact us for a quote. We will provide you with an in-depth cost break down of your purchase and our fees.
Stamp Duty Land Tax (SDLT) is a lump-sum tax that is paid on a property that has a value of more than £125,000 for residential properties. The amount payable can vary depending on the size of the share you buy. There are two ways of paying:
- Making a one-off payment based on the total market value of the property.
- Pay any SDLT due in stages where you pay anything at the time of purchase and then you do not have to pay anything further until you own 80% of the property.
You can calculate stamp duty at: www.hmrc.gov.uk/sdlt/calculate/shared-ownership.htm
- Mortgage payments – your Financial Advisor will provide you with information on your repayments.
- Rent – on the share of the property which you do not own. This is usually paid to a housing association.
- Service Charges – which can include repairs to communal areas, insurance on the building and grounds maintenance.
- Council tax.
- Utility bills such as water, gas and electric.
- Contents Insurance – buildings insurance is usually covered within the service charges, but not always.
What to do next?
- Speak to an Independent Financial Advisor to assess your financial eligibility for Shared Ownership.
- Register your interest for a Shared Ownership property by contacting the Housing Association and find a property that suits you.
- Make an application to reserve the property with the Housing Association.
- Schedule an appointment with our knowledgeable and friendly Residential Conveyancing teams, situated in Banbury, Bicester, Brackley and Buckingham for assistance with the legal side of the process.
Our conveyancing solicitors are experienced in Shared Ownership and staircasing, and will assist you in buying your new home, making the process as easy as possible. We are CQS accredited, offering you the highest standard in conveyancing quality and always ensuring that all your conveyancing information is protected.