Shared Ownership is a scheme which enables you to buy a share of a property subject to affordability whilst paying a subsidised rent on the remainder. The more of the property you own, the less rent you pay.
There are two shared ownership models available and the model available will be detailed within the property description you are interested in. Please read on for further details.
Below is an example based on buying a 40% share of a £200,000 property.
This means that monthly outgoings are split into part mortgage and part rent. Once you have bought your initial share, you may be able to purchase the remainder of the property as and when your circumstances change. This is an optional process known as Staircasing.
All shared ownership properties are leasehold and therefore usually attract a service charge. In the case of houses, the freehold would usually be transferred to you on 100% Staircasing (subject to lease restrictions)
The service charge will include buildings insurance as well as a charge for the cleaning and/or maintenance of any communal areas such as car parks, greenspaces and so on. Maintenance of lifts (where installed) as well as communal grounds in the case of flats may also be included. In some cases, an external organisation may be set up to maintain aspects of communal areas therefore customers may be required to make contributions to a Management Company. Lastly, there may be a requirement to contribute towards something called a reserve fund which is designed as a contingency to cover the costs of any large prospective works. For details about any particular development, please contact us.
There are a number of criteria which need to be considered when thinking about this option. The guidelines are as follows:
Please note: Applicants who have been in mortgage or rent arrears within the last year are not eligible.
There is also an upper limit for your household income which you cannot exceed. This does change periodically so please check with us for the current restriction.
Once the initial share of the property has been bought, you may have the option to buy further shares depending on your lease requirements – in most cases up to 100% should this be appropriate for you. This is known as ‘Staircasing’
The percentage of further shares that you can buy at any one time can vary depending on which model of shared ownership that you are on. Please see the table below to see the minimum percentage for each model.
Please be aware that some of our properties may be subject to restrictions meaning you might not be able to own more than 80% of the property. This is simply to safeguard affordable housing available in the area, ensuring that affordable housing remains accessible to local people indefinitely. You will be notified at the time of application should the home you are interested in have such a restriction.
Your rent will be calculated as a percentage (normally 2.75%) based on the amount of your home you have not purchased. Your rent is reviewed annually and you will be notified prior to any changes taking effect. Your lease will also state the maximum amount your rent can be increased by.
The rent (and any service charge) is paid to Stonewater by Direct Debit. You will be asked to complete and return a signed Direct Debit Mandate as part of the contract paperwork prior to buying your home.
Whether or not customers are responsible for the maintenance of their property depends on which shared ownership model they are on and will be impacted by factors such as how long they have been in the property. Please see the table below outlining the details of shared ownership models 1 and 2 for more information.
In order to find out how much the mortgage repayment would be, Stonewater will put you in touch with an independent financial advisor who will inform you of any specific costs taking into account your financial capability.
Purchasers are recommended to buy the maximum share they can afford. This will of course be done in accordance with a purchaser’s individual circumstance in mind and will be completed by the independent financial advisor.
There are other costs to consider when buying your new home. For example, legal fees, mortgage arrangement and valuation fees. Purchasers may also be liable for stamp duty land tax in respect of shared ownership purchases. This however can often be deferred and advice should be sought from your solicitor in respect of the options available to you.
Any other questions regarding stamp duty can be raised with the HM Revenue & Customs Helpline: 0845 603 0135. Alternatively, further information is available on the website: https://www.gov.uk/guidance/sdlt-shared-ownership-property
As with any home ownership, once a property is purchased there are the day to day running costs to take into account such as council tax, utility bills, rent, service charge, mortgage and the costs of general maintenance and repair.
|Shared Ownership 1||Shared Ownership 2-(please read key information document which will show all details including any exclusions)|
|Minimum share is detailed against each plot up to a maximum of 75% (initial tranche)||10-75% equity share to be bought|
|Staircasing at 10% minimum until 100% is reached (in most cases)||Staircasing at 5% minimum with option for 1% per year for first 15 years|
|125 year lease||990 year lease|
|All repairs are the responsibility of the leaseholder.||First 10 years £500 per year from landlord to spend on qualifying repairs and maintenance- £500 per year can be carried over to the next year|
|8 week nomination period to the housing association for resale||4 week nomination period to the housing association for resale|
Interested in buying a shared ownership home?Find out more about shared ownershipFollow our simple three step guide