What is shared ownership?

How does it work?

Shared Ownership is designed to offer affordable housing by allowing you to part own and part rent a property.  So, for example, you would purchase a share in a property (usually 50% but this can vary) and then rent the remaining share from the Landlord.  In most cases you can purchase additional shares in the property and this is called Staircasing.  The rent would then be reduced accordingly to reflect the changes.  You can of course remain with your initial share as there is no obligation to staircase.

Responsibilities and costs

If you were to purchase a property under the Shared Ownership scheme you would be liable for certain costs upfront.  These would include:

  • Legal fees including searches and disbursements
  • Moving costs
  • Mortgage arrangement fees
  • Valuation fee
  • Deposit for the mortgage

It is important to obtain professional advice when buying/selling a property, there are however non-refundable costs (such as solicitor, valuation and financial adviser fees) that may be incurred if a purchase/sale does not go ahead.

Once you become the new owner you are responsible for the general maintenance and any repairs that are required.  In some cases the property would be covered for any repairs that would be considered a defect for the first 12 months after the property has been finished.

Buildings insurance is already covered under the policy described here so you will only need to take out contents insurance to protect your own possessions.  This remains the same unless at some stage you decide to purchase additional shares and then own the property outright.

A service charge will also be payable to cover the cost of the buildings insurance, upkeep of the communal areas (lighting, grounds maintenance, cleaning, etc.) if there are any and any other relevant expenditure on your property.

Do you qualify for this scheme?

In order to apply for a property on the Shared Ownership scheme you will need to satisfy certain criteria:

  • You cannot own another property
  • You must have a household income of less than £80,000 per year
  • Be unable to purchase a property on the open market
  • It will be your main principle home
  • Property cannot be let out
  • You must have a genuine housing need
  • You cannot have any adverse credit ie CCJ’s/IVA’s
  • Pass the affordability assessment

In addition to this in some case you may need to demonstrate that you have a local connection to the area that you wish to purchase a property in.  This can include schools, working locally, family locally or living in the area. This is called a S106 connection.

What happens if I wish to remortgage, staircase or sell my share?

Please refer to Remortgaging, Staircasing and Reselling your Share for more information and details of any fees that may be involved.

Any other questions?

We hope that this has helped to explain the process in a clearer light and if you have any questions please do not hesitate to contact us (Commercial Property Team) on 0330 1234 034 or cpt@bromford.co.uk