Shared ownership housing
Legal services and advice for shared ownership, shared equity and affordable housing purchase schemes.
For most of us buying a house or a flat is the single biggest financial outlay we'll ever make, so it's no wonder that the process is often described as being one of the most stressful things in life - up there with marriage, childbirth, redundancy and bereavement according to some studies.
Shared ownership and shared equity house purchase
Although the rate of house price rises seems to have reduced lately, many people still find it difficult to raise a mortgage to buy a property outright given larger deposits demanded by lenders and a still high price for properties in some parts of the UK. To help alleviate this, a succession of affordable housing schemes have been set up by successive governments. Intended to encourage people to own their own home through shared ownership (also known as shared equity) these initiatives allow people to buy a share of a property now, with the option to purchase the remaining share when their finances allow and own the property outright. In the meanwhile, they enjoy all the benefits of home ownership without the crippling mortgage repayments required to buy outright.
Shared ownership schemes
The latest government-backed affordable housing shared ownership scheme is called New Build HomeBuy. Those eligible to buy under this scheme include all key workers, existing social housing tenants and those in priority housing need. Up to four people can enter into shared ownership and need not be related, but all applicants must jointly and individually meet the eligibility criteria: i.e. be an existing social housing tenant, have priority housing needs or be considered a key worker.
Am I a key worker?
To get an exact definition, you should contact your local HomeBuy Agent. In general terms a key worker is anyone in a job considered to be essential to their community, but who doesn't earn enough to afford to buy a property in the community in which they provide those vital services. That could include police, fire and prison officers, nurses, midwives, occupational therapists or social workers and members of the armed forces in the lower, non-commissioned ranks. You can register with the relevant HomeBuy Agents who will confirm your eligibility and send you details of the scheme together with an application form.
Buying a property under New Build HomeBuy
There are a number of rules to adhere to as well as legal stages that must be undertaken as with any conveyancing (house buying and selling) process. Further details can be found by looking at our buying and selling a house frequently asked questions. If you're eligible you can initially buy 25%, 50% or 75% of the property value with the benefit of mortgage finance. The outstanding share is then rented from a registered social landlord - typically a housing association or local authority - for an affordable rent. Your outgoings therefore will consist of the affordable rent plus the mortgage repayments - but those will be based on a much lower amount than you'd need to buy outright. You can buy additional shares (known as 'staircasing') until eventually you own the property outright. The proportionate cost of those additional shares will be determined by the market value of the property at the time you decide to buy and the number of additional shares you wish to purchase.
Selling a property under New Build HomeBuy
When you wish to sell your shared ownership in the property there may be a requirement to offer it to another household nominated by your landlord (the council or housing association) for the agreed market rent. If you've fully 'staircased' your property and now own 100%, you should be free to sell it like any private property owner. Your landlord may wish to buy the property back from you to offer it to other households who want to enjoy low-cost shared ownership. They'll tell you if they want to do this when you tell them you want to sell. The selling price is not fixed by them and the property is sold at market value, so you will benefit from any equity built up on the share you do own.
Staircasing is the conveyancing term for increasing the share of your equity interest in a property where you current hold an equitable interest typically in a leasehold flat or house where the freeholder is a housing association or equivalent registered social landlord. Please consult our pricing information or contact us today for further details.
What do I do next?
We've successfully helped many people buy their home under this shared ownership scheme. We'll talk you through all the stages and advise you on whether going for straight rental rather than a combined rental and mortgage arrangement would best suit your current circumstances. Call us on 0370 086 2200 for free advice on how to apply for eligibility under New Build HomeBuy, an explanation of the process and the associated costs of purchasing your home this way.