It was good news to hear the Government’s plans to put an end to stamp duty for first-time buyers of shared ownership homes, which was announced in the latest budget statement.
In last Autumn’s Budget, stamp duty for first-time buyers on homes worth up to £300,000 was abolished but the policy didn’t apply to shared ownership homes.
This means that previously, a buyer purchasing a £250,000 home outright, below the threshold, would not have to pay stamp duty. But someone buying a £250,000 share in a house worth £500,000 would have faced paying £2,500 in stamp duty before the recent change.
It’s now the case that the policy will apply to shared ownership homes valued at up to £500,000 and will be backdated to include homes bought through shared ownership since last year’s Autumn Budget.
This is a very welcome change to those of us who are dedicated to providing new homes in a range of tenures in order to help as many people as possible find a home of their own.
Shared ownership is an affordable way of getting onto the property ladder as the buyer only has to obtain a mortgage for a share of the purchase price – anything from 25 per cent to 75 per cent – and then pay rent for the remaining portion. It also requires a deposit only on the percentage of the home you are buying. At the same time, shared ownership is incredibly flexible because the homeowner can buy additional shares of the house if they wish to, known as ‘staircasing’.
As an example, we currently have three-bedroomed homes on offer in Wadhurst that are valued at £400,000. We are offering a 40 per cent equity share at £160,000, which would leave the new owner paying rent on the remaining 60 per cent.
“A lot of people who would struggle to get a mortgage on a £400,000 home will find it much easier to borrow £160,000,” explained Golding Places’ Head of New Business Anne Chapman.
“As their circumstances change they will be able to buy an additional share – known as staircasing – and reduce the amount they pay in rent. It’s quite possible to end up with 100 per cent equity after a few years.”
If you’re interested in the shared ownership scheme, you can register on the Help To Buy website to see if you are eligible, then you can start searching for your new home.
Our new Coming Soon page on this website highlights shared ownership opportunities due to be released over the next 12 months.