With Zoopla revealing that average UK house prices are tracking at a record high of £235,000, it is perhaps little wonder that shared ownership is becoming an increasingly vital lifeline for anyone wanting to buy.
The scheme allows you to purchase a share while paying rent on the rest to a housing association.
It can be a good way onto the ladder for those in expensive areas such as London, where deposits seem unachievable.
Here, we answer some of the most commonly asked questions about the Shared Ownership scheme.
Am I eligible for the scheme?
You can apply if you’re 18 or over with a good credit history. It’s not just open to first-time buyers, existing shared owners who want to move, or those homeowners who are looking to upsize but struggling to afford a suitable one on the open market. Household income is capped at £90,000 (£80,000 outside London).
Where do I look for a shared ownership home?
Both new and resale shared ownership homes are available through housing associations. Find them online through individual providers’ websites, or on sharetobuy.com or sharedownershipweek.co.uk.
Once you’ve spotted somewhere that takes your fancy, contact your local Help to Buy agent for the go-ahead to apply, via ownyourhome.gov.uk/scheme/find-a-help-to-buy-agent/
How do I work out the size of the share I want to buy?
The initial minimum share is currently between 25-75% of the full value, though is set to be reduced to 10%.
‘The share is determined through the assessment process and usually people buy the maximum that they can comfortably afford,’ says Rupi Hunjan, managing director of Censeo Financial which specialises in obtaining mortgages for first-time buyers.
Is it harder for shared owners to get a mortgage?
‘I wouldn’t say it was harder but I would say it’s trickier,’ says Rupi. ‘Fewer lenders offer shared ownership mortgages, but all the main lenders do. Lenders will still look at your credit worthiness and assess your affordability and make sure that you fulfil their criteria, just like taking out any other mortgage, and you will have to be assessed to make sure that you qualify to buy the property.’
I’m buying on my own and would love a spare bedroom. Am I restricted to a one-bed home?
There is no restriction on the number of bedrooms you’re allowed.
Is there a difference in quality between shared ownership and private sale homes?
‘There is very little difference in our specifications between both tenures,’ says Rob Carter, marketing manager at The Guinness Partnership.
‘In rare cases – like at our Bromley-by-Bow development, Leaside Lock – minor improvements are sometimes made, for example relating to flooring, worktops and kitchen appliances.’
Can the rent on the part I don’t own suddenly go up?
Fortunately not, as Qammer Hussain, head of property sales and marketing at Newlon, explains.
‘The rent doesn’t go up suddenly, but there is an annual increase, which is based on RPI inflation plus an uplift (typically 0.5% and 1%). Details of how the increase is calculated are outlined with the shared ownership lease.’
Can I buy with a friend?
Yes, as long as everyone is eligible and your combined income doesn’t exceed the earnings threshold.
Can I carry out home improvements?
Shared owners can decorate as they wish, but need authorisation from the housing association to make structural changes.
What if I want to buy a bigger share?
Buying more shares – called staircasing – is always an option and typically funded through a mortgage extension or savings.
The minimum initial increment is usually 10%, though the government is proposing to drop this to just 1%. As the proportion you own increases, rent decreases and there’s no rent to pay at all once you own outright.
How do I go about selling?
‘You can choose to sell your home at any time,’ says Nick Lieb, head of operations at Share to Buy.
‘If you haven’t staircased to 100%, your housing provider will often have a set period of time to try and find another buyer through shared ownership. If the property does not sell during this period, you will be able to advertise it yourself.
‘The buyer must meet eligibility criteria. If you have staircased to 100%, you are free to sell the property and your buyer does not need to meet any eligibility criteria.’
sharedownershipweek.co.uk
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