With the rise in house prices and the hefty deposits needed to buy a home, getting on to the property ladder can seem like an impossible prospect. But it doesn’t have to be all doom and gloom and here we explain how you can get your foot in the door with Shared Ownership.
Many of you may already be aware of the Shared Ownership scheme. It was designed to help people get onto the property ladder who may otherwise find it difficult, but there is still a lot of uncertainty and misconceptions about the scheme. In this post, we’ll outline what shared ownership is, how it works, and how you can be a part of it.
What is Shared Ownership?
Shared Ownership, also referred to as ‘part buy, part rent’, is a government-backed scheme with the aim to get people onto the property ladder who would otherwise struggle to do so.
The scheme enables you to buy 25 – 75% of a property, with the remainder of the property owned by a housing association. You will usually need a minimum of 5% deposit of the share you own, and you then pay subsidised rent on the part of the property owned by the housing association. The property is leasehold with a service charge (on a monthly basis).
How does it work?
If you wish to use the Shared Ownership Scheme, you’ll need to register on the Help to Buy website.
Once you’ve been accepted for the scheme, you can start to search for your Shared Ownership home and to secure a shared ownership mortgage.
Tip: Not all banks provide this type of mortgage, however as part of the process your affordability will be assessed by an Independent Financial Advisor. They will be able to offer advice and if you require it, assistance in finding a mortgage. Buying 25-75% of the property enables people to secure lower mortgages with a lower deposit. This is because you only pay a deposit on the part of the home you are purchasing.
Example of how it works:
For a home worth £200,000, you could buy 25% equity at £50,000 with a mortgage and a deposit. You will then pay rent on the property for the remaining £150,000 owned by the housing association. (The minimum equity share you can buy will differ depending on the development you are buying in).
Who is eligible?
To be eligible for Shared Ownership your combined household income will need to be less than £80,000 a year.
You will need to be:
- a first-time buyer OR
- have owned a home before but cannot afford to buy one now OR
- already be in Shared Ownership but want to move house
As with purchasing any home, you’ll need to show that you are not in rent or mortgage arrears and that you have a good credit history. There are various websites you can use to check your credit rating if you wish to.
For more information on eligibility, visit the Help To Buy website.
How do I buy a bigger share?
The wonderful thing about Shared Ownership is that even if you can’t afford a large share of the property when you buy, you can choose to purchase more of the property at any time. This is known as ‘staircasing’. The cost of increasing your share will be dependent on the market value at the time.
Every housing association will have a different way of working when it comes to staircasing. If this is something you’re interested in, you can call us on 0300 777 2600 to find out more about our policies and procedures.
Or you can read our Guide to Staircasing.
How do I sell a Shared Ownership property?
Selling a home with the scheme is slightly different from selling a home you own outright. This is because the housing association you have entered into Shared Ownership with will first try to find you a buyer before you can go to the open market.
The process for selling a Shared Ownership home:
- Contact your housing provider
Let your housing association know you’d like to sell your home. They will ask you to choose a valuer from a list. - Get a valuation
You’ll need to arrange for a valuation of the property, which you will need to pay for. They will set the sale price for your property. - Finding a buyer
Your property will be added to the Golding Places website as well as the Help to Buy website.
For more information on Shared Ownership, you can contact us on 0300 777 2600. You can also find out more on our Shared Ownership information page, or read our Frequently Asked Questions.
Search our Shared Ownership properties in Kent today.