If your hunt to find and buy your own home is restricted by what you can afford then Shared Ownership maybe a great way for you to get on the property ladder.
What is Shared Ownership?
Shared Ownership is a part-buy, part-rent government-backed scheme which allows first-time buyers to purchase a 35–75% share of a new home and pay rent on the remainder to the housing association or private developer that own the building. The rent you pay is charged at a discounted rate.
Who can apply for Shared Ownership?
You need to be 1. a first time buyer. 2. in permanent employment, 3. live or work locally, or have family connections to the area you want to buy. 4. have a total household income of under £80,000.
You will also need a 5% deposit on your share of the property and pay for a reservation fee, mortgage valuation or survey, legal fees, stamp duty and removal costs.
What are the benefits of Shared Ownership?
This is great if you’ve found the perfect home but you can’t afford to take out a mortgage on the full asking price. Also at a later stage you can buy more of the home by increasing your share. Shares can be bought in 10% increments. This in turn will reduce your rent.
What are the downsides to Shared Ownership?
As Shared Ownership schemes are provided by a variety of different housing associations and private developers the details of the lease, the costs and restrictions involved will vary. It is very important to research each scheme carefully and read the lease agreement before going ahead. Some of the things you should be aware of are:-
- Maintenance charges: -Because properties are usually leasehold you will have to pay a monthly service charge as well as contribute to major maintenance works.
- Sub-letting:-Because properties are usually leasehold you will not be allowed to rent out the property.
- Buying up increased shares in your property can be expensive. It is not just buying the increased share, there are other costs involved too e.g. Valuation fees, Legal expenses, Stamp duty and Mortgage fees.
- Restrictions on what you can do:– the lease will probably state that written permission is required before any structural alterations are made to the property.
- There could be a risk of negative equity if house prices fall
- The process of selling your share when moving home is not as straightforward as the housing provider is likely to have the right to buy back the property before it is marketed to anyone else.
At Peter Robinson & Co our team of Conveyancing specialists will advise you on every aspect of the shared ownership scheme. Once instructed they will carry out the process from start to completion for you. From checking title deeds, raising any enquiries, keeping you informed of any issues you need to be aware of. We will negotiate your contract and upon completion register your property with the Land Registry for proof of ownership. Why not let Peter Robinson & Co. advise you on every aspect of the shared ownership scheme. Call now on 0161 678 7996.